How to Protect Your Investment with Boat Insurance

sail boat

Most people are excited to get their first boat. This is a big purchase, and a major investment that can bring you enjoyment for years to come. If you’re buying new, or if you’re buying a used boat that you’ve had professionally inspected, you can feel confident that it’s going to last you a good, long while.

But that doesn’t mean your boat is impervious. An unexpected accident could instantly render your boat unusable. And a theft could make it permanently disappear.

That’s why it’s important to protect your investment with boat insurance. But how exactly does boat insurance work? And what’s the best way to get it?

Boat Insurance and Home Insurance

First, you should be aware that your homeowner’s insurance policy may have an extension that covers your boat. For example, in the United States, if you have a boat with horsepower of 25 to 100, your homeowner’s policy may cover it in the event of theft or damage. This may only apply to your use of the boat on inland waterways, rivers, and lakes. Of course, check your policy to be certain.

If you want to protect a bigger boat, or if you want to cover your boat in more ways, you’ll need to have a separate, dedicated boat insurance policy.

Is Boating Insurance Legally Required?

In most developed countries, you’re legally required to have motor vehicle insurance to operate a motor vehicle on public roads and highways. But boating insurance isn’t so clear-cut. In most areas, you aren’t legally required to have boat insurance; for example, in the United States, only two states (Arkansas and Utah) formally require boat insurance, and even then, this law only applies to boats powered by engines of 50 horsepower or more.

However, it’s still in your financial best interests to purchase a boat insurance policy to protect your vessel.

Types of Boat Insurance to Consider

When buying boat insurance, there are a number of policy types and variables worth considering.

For example, you may need to decide whether you want an “agreed value” or “actual cash value” policy. In an agreed value policy, your insurance policy will cover the boat based on its value when the policy is developed. It’s a bit more expensive upfront, but you won’t have to worry about depreciation. In an actual cash value policy, your insurance policy will cover the boat based on its value at the time of your claim; in this scenario, you’ll pay less upfront, but as your boat ages, the policy will pay less and less.

Different boat insurance policies will also cover different types of damage and loss. An “all risk” policy will usually offer the best level of protection; this policy will cover any risk that isn’t specifically defined as excluded by the policy. Most policies will outline some reasonable forms of damage that aren’t covered, such as usual wear and tear, manufacturer defects, design defects, or damage from ice and freezing. Make sure you read your policy thoroughly to understand what it does and doesn’t cover.

You should also consider a policy with liability coverage. Liability coverage will protect you in the event you’re found liable for damage to another person’s boat (or another person).

You may also consider including add-ons to your boat insurance policy, such as:

  • Towing coverage, in case you need to tow your boat back to shore.
  • Consequential damage, which covers damage that resulted from wear and tear.
  • Cruising extension, which will cover you if you leave your home country.
  • Specialized coverage, which could protect other elements of your boat, such as your navigation equipment.

What Influences the Cost of Boat Insurance?

Boat insurance is an important purchase that can protect your investment, but it can also get expensive if you aren’t careful.

There are several factors that will influence what you pay for boat insurance, including:

  • The size and specs of the boat. Bigger boats and more powerful boats tend to be more expensive to insure than their smaller and less powerful counterparts.
  • The age and condition of the boat. As you might expect, older boats and those that have already suffered extensive wear and tear are more expensive to insure.
  • Residence status. If you’re using this as a houseboat, you’ll pay more in insurance.
  • Typical operation. Insurance companies also want to know where and how you typically use this boat.
  • Boating safety. Taking a boating safety course and becoming certified could help you get a discount on your insurance rates.
  • Your liability limits. Higher liability limits will result in higher premiums.
  • Your deductible. Similarly, a lower deductible (the amount of money you’re responsible for) will result in higher premiums.
  • Your personal history. A history of boating accidents or other irresponsible behaviour could negatively impact your boat insurance costs.
  • Other insurance policies. You may be able to earn a discount on your boat insurance if you purchase all your insurance policies through the same company.

Tips for Shopping for Boat Insurance

Finding the right boat insurance policy for the least amount of money can be tough, but it’s much easier when you follow these tips:

  • Shop around. Don’t settle for the first boat insurance quote you happen to find; shop around and see if you can get a better deal.
  • Compare apples to apples. When comparing policies, make sure you’re reviewing the same limits and types of coverage. Just because a policy is cheaper doesn’t mean it’s better.
  • Research and understand what you’re reading. If you encounter terminology that you don’t understand, take a second and look it up.
  • Improve your boat safety. Decrease your rates further by taking a boat safety course and/or getting other certifications that can earn you discounts.

The right boat insurance policy can protect your boat for as long as you own it. But first, you need the right boat! If you’re in the market for a new or used boat, TheYachtMarket is the place to be. Check out our massive selection of boats for sale, and find exactly what you’re looking for!

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