How to Find the Right Boat Insurance Policy

You have insurance for your home and your car, so why wouldn’t you insure your boat as well? For most people, owning a yacht or even a mid-sized boat is a significant investment that should be protected. Hopefully, you’ll never be involved in a boating accident or break down and require a tow, but it’s always best to be prepared for every eventuality.

boat insurance policy

Not only is boat insurance a great way to protect your investment, but it’s also mandatory in many areas. If your engine is powerful enough to bring your speed up to 25 miles/hour, you’ll need to purchase insurance for your jetboat, sailboat, or yacht. Small boats may not need insurance. Most boat owners will choose hull insurance and third-party insurance to limit their financial burden when incidents happen.

Understanding Different Types of Boat Insurance Policies

All boat insurance isn’t made equal. Know the different types of policies available so you can choose the best one for your needs.

Comprehensive Boat Insurance

Comprehensive insurance combines hull insurance and third-party liability that you or your boat may cause to others. This insurance can protect you if your boat is damaged due to an accident, your equipment is damaged, a passenger on your boat is injured, or you or someone else damages another person’s property when driving your boat.

Third-Party Liability Insurance

Just like with your auto insurance, third-party liability insurance protects you from having to shoulder the costs of damages to other people’s property with your boat. It covers crashes, scratches and scrapes, and damage to marinas as well. 

liability yacht insurance

Additional Coverage Options

While many policies seem to be comprehensive, they may simply focus on the boat itself and not on related losses that could be incurred. Theft or loss of your equipment or personal property may need to be added to your policy. Towing and salvage may also be extras, though these are normally required by nearly all marinas. Damage from mold, insects, or sea life (mussels, large mammals) isn’t normally covered so be sure to read your policy carefully and find out if you can make additions for risks you may foresee. 

Factors that Affect the Price of Your Boat Insurance Policy

When you buy a yacht or a fishing boat, different factors will determine the price of your insurance policy and whether providers will even insure your craft at all.

Type and Value of Your Boat

The type and quality of your boat influence the insurance cost and coverage. In general, policies will be more expensive for larger and more luxurious crafts. Conversely, if your boat is very old or in poor condition, you may not find a provider that will insure it for you. 

Usage and Navigation Area

The more you use your boat, the higher the likelihood that something could happen to it. Insurance companies take your usage into account and charge higher premiums for more frequently used crafts. The area where you sail will also influence the price of your policy. Inland uses (lakes, rivers) are generally considered less risky than coastal or ocean uses. If you intend to travel into international waters and want to be insured in other countries, you’ll also need to pay more for international protection.

Boat Dealers and Buying New vs. Used

Insurance providers will take into account the state of your boat, whether you’ve bought it new or used,  and whether you’ve bought it from a reputable boat dealer. New boats are considered less risky by insurance companies as long as they’re produced by well-known and reliable builders. Older boats can have more issues, especially with their hulls and motors. A guarantee from a reputable dealer can go a long way to dropping your insurance rates. 

Driving Record

Insurance companies will consider your driving record when pricing your boat insurance policy. If your car driving record is clean, they assume you’ll be a more attentive and accident-free boat operator as well.

Other Factors

If you want lower insurance rates, these factors can help:

  • Automatic fire safety system
  • Other safety equipment on board
  • Boat safety course
  • Record of previous accident-free boat ownership
  • Older age

Financing and Insuring Your Boat

The Role of Boat Financing in Insurance Decisions

If you’re looking to secure boat financing, insurance is a must. Most lenders will require you to hold insurance to safeguard their investments. Lenders will also offer lower interest rates or higher loan amounts if they feel your boat is well-insured. They will nearly always require third-party insurance, but comprehensive insurance makes their loan even less risky.

Owning a Yacht: Specific Insurance Needs

As large, luxurious vessels, insurance for yachts is more expensive than for smaller, more basic crafts. However, many risks are normally excluded from yacht insurance policies and may have to be added as extras. These include:

  • Storms
  • Pests and vermin
  • Situations of violence
  • Large marine life (sharks, whales)
  • Racing
  • Criminal activities

Finding the Best Boat Insurance for Your Needs

There are different types of boat insurance to be familiar with and many factors that can affect the price of your policy. It’s, therefore, critical to compare quotes and work with a knowledgeable insurance broker to find the best deal. You’ll also need to make sure that you have all the right coverage included to protect your investment and put your mind at ease.

FAQs

What should I look for in a boat insurance policy?

Look at the type of insurance (comprehensive, third-party liability) and make sure you’re covered for all eventualities. If anything important isn’t included, find out if you can add it on. Also, look for a policy with affordable premiums and a lower deductible if possible. 

Do I need specific insurance for owning a yacht?

No, there’s no clear difference between a yacht and another boat for insurance providers. However, as a yacht is usually a large, more valuable vessel, the premiums to cover a yacht will be higher than for smaller boats.

How does boat insurance affect my financing options?

Lenders will typically require you to have insurance to protect your boat and third-person liability. This also protects their investment and lowers their risk, so the better your coverage, the more sources of financing you should have access to.

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