Boat Insurance: The Basics

Unless you're moving to the middle of the dessert, boat owners should understand how marine insurance differs from that of your car. Thought one goes by land and the other by sea, there are variations beyond the basic coverages common to both. In fact, "boat and yacht" policies can even vary between companies that specialize
in marine insurance.

Liability and physical damage coverage form the core of any policy.

      Liability Coverage
       Covers legal obligation to third parties due to injury,
      loss of life or property damage.
 
      Physical Damage Coverage
       Reimburses for damage to the boat and its machinery.
      The best physical damage policy is an "all risk" which
      covers any cause of loss not specifically excluded in the
      policy, like wind storms, vandalism and collisions with
      the dock. It is recommended selecting a policy that
      continues to cover your vessel even when it is stored or
      being transported by trailer.


When comparing physical damage coverage you should know whether an insurance settlement is based on "agreed value" or "actual cash value".
 
      Agreed Value
       Reimburses the insured for the amount listed on the
      policy in the event the vessel is a total loss.
 
      Actual Cash Value
       Takes into account depreciation and the condition of the
      boat at the time of loss. The latter option provides less
      coverage but the premium is usually reduced.


Additional Marine Coverages:
 
      Medical Payments
       Pays your first aid, ambulance and hospital bills in case
      of accident. Also covers any passengers injured on your
      boat.
 
      Towing and Assistance
       Pays for emergency assistance such as boat towing,
      emergency repairs while underway or fuel delivery at
      sea.
 
      Personal Property
       Reimburses for loss of personal personal effects,
      clothing, fishing gear and more.
 
      Uninsured Boater
       While not mandatory, this coverage compensates you
      and your passengers for injuries caused by another
      boat owner who carries no liability insurance.


How much your insurance will cost depends on several factors, including the value of the boat, it's length, age, the type (sail or power), mooring location, intended area of navigation and how high a deductible you choose.
 
Methods of reducing your premium include accepting a higher deductible, reducing your area of navigation, installing safety devices (like a fire extinguishing system in the engine compartment or a vapor detector in the bilge) and making sure the policy provides for "lay up" periods when your vessel is out of the water.