Do I Need Boat Insurance?

Boat insurance isn’t required by law in every state, but it’s a good idea wherever you dock. A policy for your boat protects your investment and your passengers, and frees you from potential liabilities.

When boat insurance may be required

In most states, boat insurance is optional. Only Arkansas and Utah have boat insurance requirements, and those are only if the boat's engine is 50 horsepower or higher.

However, that doesn't mean you can (or should) skip boat insurance if your state doesn't require it. For many boat owners, it's still a critical form of protection. There are many situations where you may need a boat insurance policy: 

• You took out a loan: If you financed your new or used boat, the lender will likely require you to purchase insurance that includes coverage for physical damage to the boat. 
• Your boat is stored at a marina: Many marinas require boat owners to maintain liability coverage. 

Even if you pay cash for the boat or store your boat at home, a boat insurance policy can provide protection against potential liabilities, theft and other risks.

What boat insurance typically covers

Boat insurance comes in several types. A basic policy may include only liability insurance, while comprehensive coverage will add protection for physical damage, medical payments and towing costs.

Liability coverage

Liability insurance provides coverage if you're responsible for causing bodily injury or property damage as a result of a boating accident. If you're sued, liability coverage can also help with the costs of your legal defense. 

Physical damage coverage

This insurance type protects you if your boat is in a collision or incurs damages from another covered loss (such as theft or vandalism). Physical damage coverage pays to repair or replace certain components, such as the boat's hull and motors. 

Medical payments coverage

Medical payments coverage pays for the medical expenses or funeral costs for you or anyone else who was injured while on your boat.

Towing and assistance

If your boat is involved in a collision or has a mechanical breakdown, towing and assistance insurance pays for on-water towing to the nearest safe port. 

Optional add-ons

You may want to buy additional coverage for personal property or gear you carry on the boat. With large vessels that may carry hundreds of gallons of fuel, you may also need protection in case that fuel is spilled. 

Some insurance companies offer endorsements you can add to your policy, including fishing equipment riders or fuel-spill liability protection.

How the type of boat affects your boat insurance policy

The type of boat you own, its size and its intended use can affect the coverage you need and your boat insurance premiums. 

• Boat type: In general, sailboats and smaller, low-power vessels tend to be less expensive to insure. But, there are exceptions. Policies tend to be pricier for personal watercraft like Jet Skis, for example, due to their increased risk of injuries and bodily injury liability claims. 
• Boat size and horsepower: Performance boats and those with powerful motors are usually more expensive to insure, due to their higher cost and (again) their elevated risk of accidents or damages. 
• Safety features: Newer boats may come with advanced safety features like GPS tracking or automated fire suppression systems. If your vessel has these features, you may qualify for savings on your boat insurance policy. 

When you buy coverage, you typically choose between actual cash value (ACV) and replacement value coverage. ACV bases your claim reimbursement on your boat's current, depreciated value. With replacement cost coverage, the insurer will pay to replace the boat, or components within it, with the same make and model of vessel or parts, without factoring in depreciation. 

Do homeowners or auto policies cover boats?

Your homeowners insurance may cover damages to your boat up to a certain limit -- usually around $1,500. So you may only be partially reimbursed under your homeowners policy if your boat is damaged and the value of the damages exceeds this specified limit. 

Auto insurance typically doesn't cover your boat, even if you're towing it, so you'll need other coverage. 

A separate boat insurance policy protects your boat, your passengers and you from potential liabilities. And, you can get coverage for towing and your equipment. 

Buying the right boat insurance 

As you shop for coverage, think about the types of boat insurance you need. Like other forms of insurance, the cost of your boat insurance will vary by coverage. Also, opting for a higher deductible, while increasing your financial risk, will give you a more affordable monthly payment. 

Contacting an experienced insurance agent or company representative can help you decide on the parameters of a boat insurance policy, including its coverage limits and any add-ons. An agent can also help call out any policy exclusions you should be aware of so you can make an informed decision. 

Tips for saving on boat insurance

Apart from doing due diligence during shopping for boat insurance, the following tips can help you further save: 

• Complete a boating safety course: Some insurance companies will give you a discount on your policy if you complete an approved boating safety course. 
• Update your safety features: Boats with built-in fire extinguishers or diesel engines may be eligible for equipment or safety feature discounts. 
• Sign up for automatic payments: If you sign up for autopay, you may qualify for an insurance discount.