The propsail guide

Shopping For Insurance

Boat purchases typically comes with a significant price tag and protecting that investment should be one of your first priorities in boat ownership. It’s important to find the right insurance provider, but to also understand the policy. Explore the basics of insuring your boat.

Do you need boat insurance

In most states boat insurance is not required by law, but most lenders will require you to carry comprehensive and collision coverage. Additionally most marinas and harbors will 
require you to show proof of liability coverage, which comes standard a boat insurance policy. So you might very well be in a position where you aren’t required to have a Boat Insurance policy, but it is a good practice and the team at Propsail all agree that it's a must have. Like all insurance, you only want it if you don’t have it and it’s too late. We would always advise you to carry some coverage. 

When is boat insurance required?

While it is always a good practice, boats need to be insured when financed. The lender will need to be added to the policy as will the marina where it’s kept. Coverage needs to start at the time the watercraft is titled to you. Beyond the value of the physical assets to the medical coverage and environmental cleanup protection you’ll need because if your boat sinks, the costs to raise and remove it and clean up the oil slick won’t be insignificant. Make sure your policy covers salvage and review the liability limits that will keep insurance costs affordable.

What does boat insurance cover?

Boat insurance generally won’t cover maintenance or general wear and tear. However, it can protect your boat from physical damage, as well as any damages you cause to others. These are the most common coverages available on a boat insurance policy:

• Liability: Pays for any damages or injuries you cause to others while boating, up to the limits of your policy.
• Comprehensive insurance: Covers damage to your boat due to events out of your control, such as weather, theft, or fire.
• Collision insurance: Covers any damage to your boat if you collide with another watercraft or object, regardless of fault. You’re also covered if your boat capsizes.
• Salvage: Coverage that pays to remove your boat due to damage, from substantial to minor.
• Uninsured/underinsured boater (UB/UIB): Pays for your injuries if you’re hit by a boater with little or no insurance.
• Medical payments: Pays for your passengers’ medical bills, as well as your own, after a covered accident. In some states, this coverage will begin once you’ve exhausted your health insurance coverage limits.
• Towing: Towing your boat across a body of water to safety can cost $400 per hour.
• Cruising Extension: You can get temporary, additional coverage if you plan on leaving the USA (typically to Mexico or the Bahamas).

There are a variety of other coverages you can get with your boat policy. Here are just a few additional coverages your insurer may offer:
• Consequential Damage: Covers a loss that was the result wear and tear rather than an accident (rot, mold, corrosion).
• Total loss replacement: Your insurer will reimburse you or replace your boat at the original amount you bought it for — regardless of what it’s worth now.
• Trailer trip interruption: Covers expenses for food, lodging, and transportation if your trailer or tow vehicle breaks down more than 100 miles from home.
• Replacement for personal items: Typically covers the cost to replace fishing equipment or any other personal property lost or stolen from your boat.
• Specialized Coverage: Coverage for something specific on your boat like an expensive prop or navigation equipment.

Insurance factors

If it floats, you should be able to get insurance. Insurers consider many factors when deciding whether or not to offer a policy. Nearly any vessel can be insured, for a price. Type 
of boat, age, size, value, horsepower, how and where will you operate are the factors in determining coverage.

Types of Coverage: Agreed Value vs Actual Cash Value

With an “Agreed Value” policy the entire agreed amount is paid out, with no deductible, for a total loss. “Agreed Value” policies provide better coverage but also come with a 
higher cost.

Whereas an “Actual Cash Value (ACV)” policy will provide coverage up to the current market value of the vessel in the event of a total loss, taking into account depreciation and 
other additional factors. An insurance professional can help you determine the best product for your needs.

Hurricane Plan

Depending on where you keep your boat, your insurer may expect you to provide a hurricane plan. If a storm approaches, will you have it stored in a hurricane-proof facility or will you tow it or relocate it to a safer harbor. The answer can affect your rates, even lower them, but be prepared to follow the plan, because your coverage may hinge on it.

Insurance Discounts

There are a few ways to reduce your boat insurance costs. If your boating is restricted by seasons and your boat is in storage during the winter, you can get deductions for winter layup. Many insurers offer discounts for good driving records and for anyone who has completed boater education classes. Finally, it usually costs less to be insured in fresh water versus salt, so be sure to discuss where you boat with your agent. You may earn extra savings by bundling your coverage with the same company that insures your home and/or car.