Boat Insurance

What You Need To Know

 

United Marine Underwriters is a preferred provider for all your boat insurance needs. We are specialists in the marine insurance field and provide boat owners with the best boat insurance rates and insurance options. We have been providing quality and competitive boat insurance quotes and services to boat owners and insurance agents since 1990.

When shopping for insurance, it is important to remember that all boat insurance companies have different policy terms and conditions. You may find them to be similar; it is the slight variation that can make the difference between good coverage or excellent coverage. The simple wording "all loss resulting from" can make a significant difference in your coverage. We recommend you deal with someone that understands the differences. If your agent is not a specialist, make sure they are dealing with one. United Marine Underwriters does business with hundreds of insurance agents.

Most of us do not have time to read insurance policies, so we created this boat insurance guide. The goal is for you to find the best rate and coverage for you and your boat.

 

What Does Boat Insurance Cost?


 

“The bitterness of poor quality remains long after the sweetness of a low price is forgotten” - Benjamin Franklin (1706-1790)

 

Many factors affect the cost, we have provided rate factors below but for an exact premium use our Quick Quote or call us at (800) 477-7140. You can customize your quote using our edit and shop options or quickly compare quotes for additional boats.

The location of the boat has a significant impact on the cost. Insurance premiums in Florida and the Gulf coast are the highest in the country. You can have a boat in Florida with a premium of $1,600 and move the boat north into fresh water, and the same boat will have an insurance cost of $600. The length of the boating season is another item that affects the premium. Boats located south with a 12 month boating season will have a higher premium than boats located in the north with a limited season.

The type of boat affects the premium. Performance boats will have the highest rates due to the speed and machinery on these boats. A bass boat, ski boat, pontoon, cruiser, houseboat, and PWC will all have different rate structures.

 

Other Factors That Affect Cost

  • Boat's Value
  • Boat's Length
  • Use Of The Boat
  • Age Of The Boat
  • Type of Engines
  • Navigational Area
  • Insurance Claims
  • Boat Ownership Experience
  • Boating Education and Safety Equipment
  • Age Of The Operators
  • Your Credit Score
  • Motor Vehicle Driving Record

 

 

Best Rates

Shopping for the best boat at the best insurance cost, use our Quick Quote to get a quote in about 90 seconds for most boats or you can call 800-477-7140. Once you have the quote, you can customize it using our edit and shop options or quickly compare quotes for additional boats.

 

Boat Insurance Discounts

Increasing the deductible is a way for you to save on your insurance premium. Most programs use 1% of the vessel value for minimum hull deductible. A $25,000 boat will have a minimum deductible of $250. Selecting a 2% ($500) deductible may apply up to 15% credit for the hull rate. Insurance companies have a variety of ways to reduce the premium, including discounts for:

  • Boat Ownership Experience
  • Diesel Engines
  • Automatic Firefighting Systems
  • Gasoline Fume Detector
  • Claims Free
  • Safety Courses and Equipment
  • Lay-Up
  • Renewal Discounts

 

Boat Insurance Review
The Essentials


 

The essential is a quick review. In the next section, we provide full details of insurance coverages.

Boat insurance provides physical damage coverage to repair your boat if it's 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.

The policy can provide physical damage coverage on an Actual Cash Value (ACV) or an Agreed Amount Value basis. Both offer important coverages for your boat, but there are significant differences.

Actual Cash Value policies pay for Replacement Cost 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.

With Agreed Amount Value policies, you and the insurance company have agreed on the value of your vessel, and in the event of a total loss, you are paid that amount. Agreed Amount Value policies also replace old items for new in the case of a partial loss without any deduction for depreciation. This "without any deduction for depreciation" is per each company's policy terms and conditions. Most do have some items that are subject to depreciation, such as sails, protective covers, batteries, dinghies, trailers and aged outboard motors, and outdrives.

An example of Actual Cash Value vs. Agreed Amount Value with $10,000 damage to a four-year-old outdrive.


Actual Cash Value Agreed Amount Value
Damage $10,000 Damage $10,000
Less Depreciation $-2,000 Less Depreciation $0
Less Deductible $-500 Less Deductible $-500
ACV Payment $7,500 Agreed Amount Payment $9,500

 

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 will 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 the vessel value (1%, 2%, 3% of the value) or it can be flat amounts of $250 or $500.

Many policies provide protection for personal effects. These are items not intended for the normal operation of your boat, such as fishing equipment, water skis, and scuba equipment.

Boat Liability - (Protection & Indemnity)

The Liability section of the policy provides protection if you are legally responsible for damages to property or injury to someone other than yourself or a family member. Liability provides protection if you are sued as a result of hitting another boat, or if someone is hurt onboard your 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 your boat.

Uninsured Boat Owners Coverage

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

Towing

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

 

Boat Insurance Policy
The Details


 

Hull Coverage

Provides protection against physical damage losses to the boat, machinery, and equipment. This is referred to as Hull Insurance. While the marine insurance industry does not use the terms comprehensive and collision, if you are familiar with these terms for automobile insurance, this would be the equivalent coverage. Each insurance company will have a different definition of Hull Insurance. One of the insurance companies that we represent defines it as “accidental, direct physical loss or damage to the boat and equipment as well as salvage charges.” Hull Insurance is broad and may include spars, sails, machinery, furniture, dinghies/tenders, outboard motors, fittings and other equipment typically required for the operation or maintenance of the vessel.

How you're paid in the event of a loss

When discussing how you are paid, you need to distinguish between a total loss and a partial loss. Most of us are concerned how the policy responds in the event of a total loss. The likelihood of a total loss is much less than a partial loss; therefore it is important to understand how the policy pays for both.

There are three types of policies -- agreed value, actual cash value, and replacement cost. One of these three could be paid in the event of a total loss. For a partial loss, you will need to know if the policy is paying replacement cost or depreciated value.

Partial Loss

When discussing insured value and how a policy will pay, most people think about a total loss. This is important, but the majority of claims are partial losses. Depending on how your policy pays a partial loss could cost you several thousand dollars above your deductible.

There are two different ways to pay in the event of a partial loss. One is to replace the damaged items new for old without deducting for depreciation. The second is to depreciate the damaged items.

Depreciated Value is defined as Replacement Cost less depreciation. Most companies use a non-published depreciation schedule that applies to partial losses. An example may be 7% depreciation per year on a stern drive or 15% depreciation per year on canvas. You will want a policy that pays replacement cost for a partial loss when available.

Each insurance company will apply Replacement Cost and Depreciated Value differently. See comparison chart below for examples of how companies settle partial losses.

Some companies do not provide replacement cost coverage for partial losses. If the boat is insured on this policy form, then no matter the type of loss, the replacement parts are subject to depreciation. If the part costs $2,000 and is subject to 20% depreciation, you would be paid $2,000, less $400 depreciation, less your deductible.

Some companies provide replacement cost for partial losses until the boat reaches a certain age. The age will vary with each insurance company. Once a boat reaches that age, all partial losses are settled on an actual cash value.

Companies that provide replacement cost for partial losses name specific items that are subject to depreciation. These items have a limited lifespan and include canvas, sails, cloth, trailers, and plastics. They also specifically name items to be depreciated based on the item’s age. Outboards, stern drives, and internal machinery are examples of items that change from replacement cost to depreciated value based on their age. Each insurance company has different specifically named items and different ages when items change from replacement cost to actual cash value.

Replacement Cost for a partial loss is what you want when available. A depreciated value can cost you several thousand dollars. Below are examples to help explain how replacement cost vs. depreciated value work.

 

Example 1 is an 8-year-old stern drive boat with a $500 hull deductible that hits a submerged object. The replacement cost of the stern drive is $8000.

Insurance company A provides replacement cost coverage until the stern drive is six years old. They will apply 60% depreciation (7.5% per year) to the $8000 replacement drive and then apply the $500 deductible. Insurance company A will pay $2700 ($8,000 less $4,800 depreciation, less $500 hull deductible).

Insurance company B provides replacement cost coverage until the stern drive is 10 years of age. They will pay $7500 ($8000 less the $500 hull deductible).

Example 2 is a boat with a $500 hull deductible that suffers wind damage to the flybridge enclosure. The fly bridge enclosure is 2 years old, and the replacement cost is $5000.

Insurance company A provides replacement cost until the fly bridge enclosure is three years old. They will pay $4,500 ($5,000 less the $500 hull deductible).

Insurance company B provides replacement cost but specifically names canvas as a depreciated item. Insurance company B will apply 20 percent depreciation to the replacement cost. They will pay $3,500 ($5000 replacement cost, less $1,000 depreciation, less the $500 hull deductible).

 

There are other items to consider. For example, if the stern drive has to be replaced, most companies will apply a reduced depreciation if you agree to a remanufactured stern drive. This can save thousands of dollars in depreciation. Depreciation is only applied to parts (real property). Depreciation is not applied to labor or storage charges.

Total Loss

In the event of a total loss, your policy may pay you based on the Agreed Value, Actual Cash Value or the Replacement Cost Value. In explaining how these three policy forms are different, I will use a three-year-old boat, insured for $40,000 which was destroyed by fire.

Agreed Value

Agreed Value is easy. You and the insurance company agree on the value of the boat before the loss. Using our example, you would be paid $40,000. If the current value of the boat at the time of the loss is $20,000 or $55,000, you would be paid $40,000, the Agreed Value of the boat.

Market Value - Actual Cash Value

The insurance company will pay the insured value or the current Market Value of the boat at the time of the loss, whichever is lower. In our example, if the Market Value is $25,000, this is the most you will be paid. If the Market Value is $55,000, then you would be paid the insured value of $40,000. The Market Value is determined by the insurance company from sources such as a used boat price guide and other boats listed for sale.

Replacement Cost

The newest option is Replacement Cost. A Replacement Cost policy agrees to replace the boat with a new boat. You are required to purchase this coverage when the vessel is new and the coverage is only available until the vessel is two or three years old. Our $40,000 three-year-old boat has a Replacement Cost new today of $45,000. The Replacement Cost policy would pay $45,000 for a new boat. Some policies may specifically state they will pay a percentage over the amount the vessel is insured for, 20% for example. Once the boat reaches the age where replacement cost is no longer available, the policy form will be changed to Agreed Value.

What's Covered

Policies are written using an "all risk" policy form. “All Risk” means that all damage to the boat is covered unless specifically excluded. When you have an "all risk" policy, you need to review the policy exclusions to see what is covered. If it is not excluded, then it is covered.

Not common in the industry but a policy could be written using a “named peril” policy form. A “named peril” policy only covers what is specifically stated or named in the policy. Fire, lightning, wind and theft would be common named perils. There is no way a “named peril” policy can name all the unexpected, odd situations that can happen to a boat owner.

What's Excluded

All policies have exclusions. The excluded items vary from company to company but they all include loss caused by wear and tear, gradual deterioration, weathering, insects, mold, animals and marine life. Some companies include coverage for damage caused by zebra mussels; others do not. Additionally excluded items may include marring, scratching or denting, osmosis or blistering, latent defects, manufacturer's defects, defect in designs, and corrosion. Some policies have machinery damage exclusions while others do not.

Stern Drive - Outboard and Internal Machinery

Each insurance company will vary on how your motor is covered. Due to the high probability of loss, damage to stern drives and outboards is one of the most difficult items faced by you and us as your insurance agent. If you have not already reviewed the partial loss section, we recommend you review the items in this section that explain Replacement Cost and Depreciated Value.

Engines can be insured on replacement cost or depreciated value. If the policy is written on actual cash value, then the engine will always be depreciated in the event of a loss. If the policy is written on agreed value, replacement new for old without a deduction for depreciation, but only until the engine reaches a certain age.

Companies that use agreed value may repair or replace a newer engine without deduction for depreciation. As the engine ages, the replacement cost may change to depreciated value. The age that a company will apply depreciated value varies. Some will apply depreciated value on all outboards or stern drives regardless of age. Others change to depreciated value at age two, five, seven or ten. The age when depreciated value is applied can be different for outboards, stern drives, and inboards.

Example: An 8-year-old stern drive boat with a $500 hull deductible that hits a submerged object. The replacement cost of the stern drive is $8000.

Insurance company A provides replacement cost coverage until the stern drive is six years old. They will apply 60% depreciation (7.5% per year) to the $8000 replacement drive and then apply the $500 deductible. Insurance company A will pay $2700 ($8,000 less $4,800 depreciation, less $500 hull deductible).

Insurance company B provides replacement cost coverage until the stern drive is ten years old. They will pay $7500 ($8000 less the $500 hull deductible).

If the stern drive has to be replaced, most companies will apply a reduced depreciation if you agree to a remanufactured stern drive.

Tender Coverage

A Tender or Dinghy is a small boat used to service the larger boat. Some policies automatically include a Tender as a covered item in the hull (boat, machinery, and equipment) definition. If automatically covered, it may have the same deductible as the boat. Most insurance companies will allow you to schedule the Tender to obtain a lower deductible for an additional premium. Companies provide coverage on agreed value or actual cash value.

Some companies do not provide coverage automatically, and you have to provide us with the details of the tender for coverage. Many companies provide specific requirements regarding size or horsepower to qualify as a tender; others just say small boat. A Personal Watercraft is specifically excluded and not considered a tender.

If you have a second boat that you use to go out on a regular basis that it not being used to service the larger vessel, you need to have this boat insured separately.

Trailer Coverage

Most policies can provide coverage for a trailer if requested. This coverage is usually insured on an actual cash value basis.

The main note of interest regarding the trailer is that there is no liability coverage for the trailer or the boat when connected to a vehicle. The liability on the vehicle is the liability on the boat and the trailer. If the boat or the trailer is on the road and comes loose and causes bodily injury or property damage to a third party, the liability coverage on the vehicle is responsible.

If the boat or trailer suffers physical damage while being trailered, the damage is always covered by the boat policy.

Some states require proof of liability insurance on the trailer. This proof is provided by the automobile insurance policy.

Towing and Emergency Service

Most policies provide coverage for towing and emergency services. Some policies automatically include the coverage while on others it may be optional.

Some companies only provide coverage while on the water or have two separate limits and premium for water vs land. Others provide coverage for both water or land towing.

Towing provides coverage to the nearest place where necessary repairs can be made. This may not be to your repair facility.

Emergency services include such items as delivery of fuel, oil, parts, battery and emergency labor while away from safe harbor. The cost of parts, batteries, fuel or oil is not included.

The amount of towing and emergency services coverage varies by company. It may be $0 to $10,000. The amount of coverage for most companies is per occurrence, but we have seen companies that use an aggregate limit.

Boat Deductible

The hull deductible is the amount you will pay in the event of a loss to the hull, machinery, and equipment. Some insurance companies will use flat deductible amounts like $250, $500, $750 or $1000. Others will use a percentage of the boat value. 1% of the boat value or $250 is the minimum deductible available.

Insurance companies give a discount in premium if you agree to a deductible higher than the minimum. The savings in premium varies per company. The largest percentage of savings comes between the $250 and $500 (1% and 2%) deductibles. So if you have a $40,000 boat and the minimum hull deductible is 1%, your deductible would be $400. Most insurance companies will require a higher minimum deductible as the boat ages. The minimum hull deductible may go from $250 to $500 or 1% to 2%.

Trailers, tenders and personal effects are not included in the hull deductible. These items have deductible amounts of $100, $250 or $500 and generally can not be changed.

Note of interest. Most policies do not apply the hull deductible in the event of a total loss.

Electronics Deductible

Some insurance companies have a separate electronics deductible. This deductible is lower than the hull deductible. If you have a $40,000 boat with a 1% ($400) hull deductible, this $400 would apply to electronics unless you have an electronics deductible.

The electronics deductible is a flat amount of $250, $500 or other specific amounts. Some programs will automatically include a lower electronics deductible while others add it by endorsement for free or for an additional premium. Some companies do not offer a lower electronics deductible.

Named Storm Deductible

Hurricane, Tropical Storm, Tropical Depression

A Named Storm Deductible (NSD) is common today for vessels in areas subject to hurricanes, tropical storms, and tropical depressions. The NSD is higher than the normal hull deductible and will be applied if the boat is damaged due to a named storm.

The NSD varies with each company. Some do not have a NSD; others will have 2%, 5% or 10% of the boat value or 2 times the hull deductible. The most common are 5% of the hull value with 10% in high storm areas such as Florida and the remainder of the Gulf Coast.

In addition to the deductible being higher, the NSD also applies in the event of a total loss.

Use of Boat

Most insurance companies provide coverage for private pleasure use only. If you carry passengers for a fee or collect any fee for the use of your vessel, you would be in violation of the use clause.

Some markets that provide coverage for pleasure use have an endorsement that will allow occasional charter coverage. If you use your boat as a full-time charter boat, you will need to get a charter boat policy.

Using your boat to entertain clients does not violate the pleasure use. Most companies also do not consider the collecting of a prize from a fishing tournament to violate the pleasure use, but there are some companies do not allow the collection of prizes.

Pollution - Fuel Spill

Pollution has always been covered under the liability section of policies. In recent years we have seen companies providing a separate limit for Pollution/Fuel Spill coverage. Most companies do not make pollution/fuel spill coverage dependent on a covered loss, but some do.

We have one market that provides a separate limit of $939,800 and does not make it a requirement to be a covered claim.

We have one market that does not provide a separate limit. They provide coverage within the liability limit and will increase the pollution/fuel spill to the legal limit of $939,800 if your liability limit is lower. This is not the same as having a separate limit, having a separate limit is best. This market does not make it required that it be a covered loss.

We have a market that includes pollution in the liability limit, and they do make it a requirement that it be a covered loss.

Another interesting point regarding fuel spill coverage is that most insurance companies do not pay fines or penalties.

Hurricane Haul-Out

Hurricane Haul-out coverage reimburses some or all of the expense of having the boat hauled in the event of a hurricane, tropical storm or tropical depression.

Some insurance companies automatically include the coverage; some add the coverage by endorsement for an additional premium, and others do not provide the coverage.

The coverage states that if a named storm is predicted to hit your area within a specific time period, the insurance company will reimburse you to have the vessel hauled out of the water.

This coverage usually can not exceed a specific dollar amount, and some companies will share in the cost versus paying the total cost.

Salvage Charges

Salvage charges are amounts paid to protect the vessel against additional loss. This could be as simple as adding a barrier to a broken window or as complicated as a salvage company protecting the vessel if grounded.

Most marine insurance companies provide salvage charges as part of the normal conditions. Other companies will insure your boat for physical damage but do not provide coverage for salvage charges. You should be aware if your policy provides this protection.

Wreck Removal

Another important coverage is wreck removal. If your boat sinks, normally it will be required that the boat is raised. Wreck removal is part of the liability section of the policy.

Lay-Up

Lay-up is the time period the vessel is not used. Normally lay-up is for boats in northern climates that are not used in the winter months. Discounts are applied for boats that are laid-up.

The boat can be laid-up ashore or afloat. The boat is fully covered during the lay-up period subject to general conditions. These conditions can include that the vessel is not navigated, it is not ready for immediate use, and it is not used to liveaboard. Not ready for immediate use means the vessel must be winterized. The use of heat to keep the engine or system from freezing does not qualify for “not ready for immediate use.” Most companies will allow 1 night or 3 or 5 consecutive nights that you can stay aboard without violating the liveaboard requirement.

Most insurance companies do not offer a lay-up for boats less than 27’. They are written with 12 months navigation, and the rate is based on the state where the vessel is normally stored.

Personal Effects

Personal Effects are automatically available with most policies. By design the coverage is narrow; most items on the boat are considered part of the boat and are, therefore, covered under hull insurance.

Personal Effects can include items like clothing, fishing rods and reels and scuba equipment. To understand Personal Effects, you have to review the definition of what is covered as the Hull (boat, machinery, and equipment). A typical definition of Hull may include spars, sails, machinery, furniture, dinghies/tenders, outboard motors, fittings and other equipment normally required for the operation or maintenance of the vessel.

Items such as electronics, safety equipment (life jackets), furniture and a ship to shore cord would all be considered to be part of the boat and not covered by personal effects coverage.

Commercial Hauler

If you are transporting your boat over land on a trailer that you own, most insurance policies do not have any restrictions or exclusions. If you are using a commercial hauler to transport your boat, many companies will exclude coverage while the vessel is being transported. In many cases, the companies will allow you to buy the coverage back.

Some companies may exclude coverage anytime the vessel is being transported commercially, and others will have a limitation such as if more than 200 or 300 miles radius from your home port.

One company we represent does not make it a condition of a commercial hauler. They say coverage is limited to a 250-mile radius of your home port if transportation is by other than a trailer you own. In this case, it is not only a commercial hauler but any trailer you do not own.

We also represent two programs that say land transit is limited to a 250-mile radius of the home port. This applies to a trailer you own or to a commercial hauler.