Boat Insurance Basics

What you should know regarding boat insurance.

This overview will help you make an informed decision when you're helping your client buy boat insurance. Boat insurance programs are normally designed to cover boats up to 26' in overall length. If the size of your vessel is greater than 26 feet, it's generally considered a "yacht", and therefore qualifies for yacht insurance.

Boat insurance provides physical damage coverage to repair the boat if it's accidentally damaged or destroyed by a covered peril such as collision, fire, theft, windstorm, lightning or vandalism. This coverage is broad, and provides coverage for the boat, including its machinery and auxiliary equipment, outboard motors, boat trailer and personal property.

A Boat Insurance policy can provide physical damage coverage on an Actual Cash Value (ACV) or an Agreed Amount Value basis. Both types of boat insurance policies offer important coverages for your boat but there are significant differences.

Actual Cash Value policies pay for Replacement Costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the approximate market value of your vessel. A partial loss is settled by taking the total cost of the repair less a percentage for depreciation.

Agreed Amount Value policies means the insurance company has agreed on the value of your vessel and in the event of a total loss you will be paid that amount. Agreed Amount Value policies also replace old items for new in the event of a partial loss without any deduction for depreciation. Most Agreed Amount Value policies require actual cash value on certain damaged property such as sails, protective covers, batteries, dinghies, trailers and aged outboard motors, lower drive units or outdrives.

Example of Actual Cash Value vs. Agreed Amount Value with $10,000 damage to a 4 year old Outdrive.

Physical Damage coverage is usually subject to a deductible. The boat and motor usually have the same deductible with additional deductibles for the trailer and personal effects. The deductible is the amount you are willing to pay in case of a loss. The higher the deductible, the lower your insurance premium. Boat policy deductibles are usually calculated as a percentage of your coverage (1%, 2%, 3% of the vessel value) or can be on flat amounts of $250 or $500.

A good boat insurance policy should also offer Personal Effects coverage to provide protection for those items not intended for the normal operation of your boat, such as portable TVs, cellular or portable phones, stereos, radios and cameras.

Boat Liability

The Liability section of the policy provides protection the insured become legally responsible for damages to property or injury to someone. Boat Insurance liability provides protection if the insured is sued as a result of hitting another boat, or if someone is hurt onboard the vessel because of your negligence. This coverage is usually offered in increments of $100,000 up to $1 million.

Medical Payments

The Medical Payments section of the policy provides protection for reasonable medical, ambulance and hospital costs should someone be injured while in, upon, boarding or leaving the boat.

Uninsured Boat Owners Coverage

The Uninsured Boat Owners section of the policy provides coverage for injuries caused by an accident that an insured is entitled to recover from the owner or operator of an uninsured boat or "hit-and-run" boat.

Commercial Towing and Assistance enables the insured to be reimbursed for the reasonable costs incurred when you break down at sea and need a commercial tow to port.

These are some of the basic coverages you should look for when purchasing boat insurance. As a market leader in the boat insurance industry, United Marine Underwriters offers broad coverages at great rates for virtually any type of vessel.

This overview provides general information on boat insurance coverages and is not intended to offer advice on your particular insurance needs or coverages. For specific policy and coverage information contact UMU.