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Insuring Your Boat

Boat Insurance Coverage FAQs

Small Boat (29' or less) Insurance FAQ

What is the best coverage for my boat?

It is best to have what is known as an "All Risk" policy, which will provide coverage for all types of losses except those specifically excluded in the policy. Typical exclusions may include wear and tear, gradual deterioration, marring, denting, scratching, animal damage, manufacturer's defects, defects in design, and ice and freezing.

How much should I insure my boat for?

You should insure your boat for the amount it would cost you to replace it with like kind and quality. This is called "Agreed Value" or "Stated Value" coverage, and in the event of a total loss, will pay the full insured amount. Beware of policies providing "Actual Cash Value" (ACV) coverage, which means the value of your boat will be replacement cost less depreciation.

What other coverages can I expect with my policy?

The following are standard coverages with standard deductibles and average limits:

  • Medical payments, $5,000
  • $1,000 limit Personal effects, $250 deductible,
  • Uninsured boaters liability, between $300,000 and $500,000
  • $500 to $1000 limit Towing and assistance, no deductible
  • $1,000 limit Fishing equipment, $250 deductible

Who is allowed to operate my boat?

Most policies will allow anyone to operate your boat so long as you have given them permission. There are exceptions, of course, especially with high performance boats or personal watercraft so always read your policy. But beware, too many additional drivers often results in increased premiums.

I live in an area where I can't use my boat in the winter, but my lender requires it be insured year-round. What can I do?

Ask your insurance agent if they offer what is commonly referred to as a “lay-up” discount. You have year-round coverage with a discount for the months your boat is in dry storage.

When I finance my new boat purchase how can I be certain all the insurance paperwork is in order so I can get my boat on time?

Most insurance agents will offer to fax a binder and lienholder certificate directly to your dealer or lender.

Large Boat (Greater than 29') Insurance FAQ

What are the differences between boat and yacht insurance?

Generally "boats" are considered to be 26' and smaller, and "yachts" are 27' and larger. Generally speaking yacht coverage is broader and more specialized because larger boats travel further and have more unique exposures.

What should I look for in a yacht policy?

There are two main section s of a yacht policy. Hull insurance is all risk direct damage coverage that creates a very broad insuring agreement. It will include agreed amount hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss. A true yacht policy also includes replacement cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries, outboards and sometimes outdrives, which are depreciated. Protection and indemnity insurance is the broadest of all liability coverages, and because maritime law is unique, you will need coverages that are designed for those exposures. Such things as Harborworkers and Longshoreman's coverage and Jones Act (crew) coverage can be critical, as an uncovered loss in this area could run into hundreds of thousands of dollars. Besides providing payment of judgments against you, P&I also provides for your defense in Admiralty Courts.

What's not covered?

Exclusions on a yacht policy generally include wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer's defects, defects in design, and ice and freezing.

How much should I insure my boat for?

Usually you should insure it for the purchase price plus additional equipment (and tax if you want).

What is a normal deductible?

A yacht policy usually carries a percentage of the insured value deductible, for instance a 1%, deductible means a boat insured for $100,000 would have a $1,000 deductible. Most lenders allow a maximum deductible of 2% of the insured value. Beware of "named special deductibles" such as storm damage of 10% or more.

What are some of the other standard coverages I can expect?

These standard coverages have standard deductibles and average limits:

  • Medical payments, $10,000 limit
  • $5,000 limit personal effects, $250 deductible,
  • $500,000 limit uninsured boaters liability, no deductible,
  • $1,000 to $3,000 limit Towing and assistance, no deductible,
  • $1,000 limit Fishing equipment, $250 deductible
  • $1,000 Hurricane haul out coverage. Small percentage of limit as deductible. Hurricane warning must be posted by NOA. Payment made to move boat to safe location, haul out or make special preparations to withstand storm.

What is Breach of Warranty?

That is coverage that primarily protects the lienholder's interest in your boat, paying off the balance owed but nothing more. If you breach the warranties in the policy, such as promising not to go outside your navigational limits, not to use your boat during the lay-up period, not to use your boat for anything but private pleasure use, and you do NOT have this coverage and experience a loss, you don't get paid for that loss and neither does the lender. You could end up making payments on a boat you cannot use.

This information provided by www.marinelenders.org