When you think about boating, you think about the wind in your hair, leaving a wake behind as your boat glides through the open water.
It’s easy to see why people love boating so much but did you ever think about boat insurance as part of your boating daydream?
The answer is probably not, but insurance is a necessity if something should ever happen to you, your family, or your boat.
The question remains, how do you know what to do when it comes to buying boat insurance?
Do You Really Need Boat Insurance?
Many people ask if boat insurance is necessary. They do ask with good reason because some homeowner’s policies include small boats as part of their coverage.
Unfortunately, if you’re going to have a larger boat like a sailboat or a trawler, you’re going to want to purchase a separate insurance policy just for your boat.
It makes sense when you think about it because a boat is as unique of a craft as your car or motorcycle might be, and each of them require their own policies.
That doesn’t mean you can’t save money on your policy because you might be able to bundle a boat policy with your current coverage depending on your insurance carrier.
What Makes Boat Insurance Different?
Boat insurance takes into account much of the same type of coverage that auto or home insurance offer, but they offer it on a different scale.
Boat policies will cover liability should someone get hurt on your boat. If something happens to your insured boat, you’ll also have the option of replacing or requesting a cash value option instead of replacement.
Boat insurance policies also protect against property damage that your boat causes as well as any physical damage that could happen as a result of hitting a hidden rock.
There are also additional coverage options that include protection against theft, flooding, fishing gear, and a myriad of other choices.
How Do You Know the Value for Your Policy?
There are two different types of value that are assigned to your boat. They are the agreed value and the market value.
The simplest way to explain the difference is that the agreed value is similar to the price tag that Carmax would put on a car. There is no haggling and no bargaining. It is just the agreed cost of the car you want to purchase. That is essentially the agreed value regarding boating when applied to a boating insurance policy.
In other words, if you buy a boat and sign an agreed value policy, then you and the insurance carrier arrive at an agreed amount. Should that boat get destroyed, you will be compensated for up to the agreed-upon value at signing.
The market value is the value the insurance company assigns your boat that includes depreciation over time after the boat has been removed from the lot.
As an example, if you bought a new boat in 2010 and then it was destroyed ten years later, under a market value policy, you’re going to get enough to replace the boat at its current 2010 value, not the value of a brand new boat of the current year.
Where Does My Boat Coverage Apply?
If your boat is not in the water, but it is attached to your vehicle, it is covered by your auto policy. Standard insurance coverage by most companies indicates that if you are pulling something with your vehicle, your auto policy overrides other policies.
The positive side of this is that your boat will be covered. The negative side is that coverage is only as far as your auto policy will go.
That means that if you’re pulling an expensive yacht that is worth more than what is covered under your auto policy and something were to happen, you’re out of luck.
Because of these caveats, you may want to consider purchasing what is known as an umbrella policy because it would give you extra wiggle room if something were to happen to your boat outside of the water.
When your boat is in water, you also need to concern yourself with knowing the range where your boat coverage applies.
Certain policies have coverage specific to certain geographical areas like flatwater lakes or coastal shorelines. You’ll have to know where you plan to use your boat so that you can purchase the right policy.
Saving Money on Your Insurance
Boat insurance policies work the same way as homeowner, or auto policies work in terms of ways to save money.
There are classes you can take to help lower your insurance premiums, or you can designate days that you actually will be using your boat. If you can’t use your boat year-round, there’s no sense in having the same coverage when your boat is being stored.
The bottom line is you need to be smart about your insurance policy, be specific, and compare costs between carriers to find the coverage that fits your needs.