You’ve finally done it – achieved your dream of owning a boat. Whether it’s a simple dinghy or a super yacht, you’ll need insurance to cover your boat, yourself, your guests and any employees while you’re using your boat and even while it’s docked.
Insurance coverage differs from company to company and policy to policy, so it’s important to know exactly what kind of coverage you’re purchasing before you buy a policy. It is ultimately up to you to decide the right combination of coverage and price that suits your needs.
The basics you’ll be starting with are physical damage and liability. The physical section covers accidental loss or damage to the boat and its machinery. This should not only cover the engine(s) but also the sails and other equipment on board required to operate the boat. The best policies provide “all risk” coverage, which means that if the cause of loss is not specifically excluded, it is covered.
Typical causes of loss that are covered include: weather-related perils such as wind, rain, hail, lightning and wave action; fire; loss or damage caused by theft or vandalism; and collisions with docks, submerged or floating objects or other boats. It is wise to select a policy that continues to cover your boat while it is stored on land, or while you transport your boat over land by trailer.
You should also check if your insurance offers “new for old” coverage or if it will only pay out an amount that reflects the depreciation of your boat’s value over time. Make sure you also understand the deductible you’ll have to pay before making a claim.
The liability section covers your legal obligations to third parties. Legal liability can arise from bodily injury or loss of life, or damage to someone else’s property, as a result of the ownership or operation of your boat. Liability coverage also helps pay for your legal defense if you are sued for a liability that may be covered under your boat insurance policy. Since 60% of boating accidents result in an injury to at least one party, liability insurance is extremely important.
Other forms of boat insurance include personal property coverage, towing and assistance coverage, wreck removal coverage, and separate coverage for your liability under the Federal Longshore and Harbor Worker’s Compensation Act, which covers liability to temporary shore-based workers if they are injured on your boat. If you have crew, you’ll also need a policy that covers your liability to them under the Jones Act and General Maritime Law. You may also want uninsured boater coverage in case you are in an accident with another boater who does not have insurance.
If you plan to live on your boat, discuss this with your insurance company. Living on your boat will generally increase your insurance premiums.