What Is Boat Owners' Insurance?

As its name suggests, boat owners’ insurance is a type of insurance that protects owners of boats. It is similar to automobile insurance in that it protects the owner from claims relating to the physical damage of their vehicle, or to injuries or death caused in the operation of that vehicle.

Prospective insurance buyers should carefully consider the terms of their boat owners’ insurance policy, because the coverage and costs can vary substantially depending on the insurer and the type of boat being insured.

Key Takeaways

  • Boat owners’ insurance is a type of insurance policy protecting boat owners.
  • It covers theft, damage, or loss of the items stored on a boat, as well as physical damage to the boat itself.
  • Boat owners’ insurance fails to cover certain items, however, such as the cost of towing a boat if it becomes damaged while on the water.

How Boat Owners' Insurance Works

Fundamentally, boat owners’ insurance functions based on the same basic principles as other more familiar types of insurance. In exchange for a series of monthly insurance premiums, the insurer agrees to assume the liability for a range of potential risks associated with owning or operating a boat. In the case of boat owners’ insurance, these could include risks such as physical damage to the boat, the loss or theft of items stored on the boat, or the injury or death of its passengers or third parties.

Boat owners can purchase boat owners’ insurance for many different types of boats, such as yachts, sailboats, and even houseboats. The coverage provided in the policy will be tailored to the boat’s value and likely usage. For instance, a houseboat owner might wish to insure against their home being damaged or destroyed, but may not need to insure against accidents while operating the boat if the houseboat is permanently kept stationary. A yacht owner, on the other hand, would likely want to ensure against both types of risk while also protecting against third-party liability.

Boat owners’ insurance can also cover the items needed to operate the boat safely, such as life vests, oars, and anchors. Additional coverage could also extend to electronic equipment, such as televisions, global positioning systems (GPS), and radio equipment. Any personal items kept in the boat could also be covered under a general category for theft or loss of personal property, similar to those found in a standard home insurance policy.

Real-World Example of Boat Owners' Insurance

When shopping for boat owners’ insurance, it is important to closely consider what types of expenses will be covered under the policy. For instance, many policies will not pay for the cost of transporting a boat if it has been damaged or destroyed. In other words, the policy would cover the cost of replacing the boat, but not the cost of towing or salvaging the debris. In the past, the Coast Guard would offer assistance with towing, but this has since been restricted to situations where passengers may be at risk. Commercial marine towing companies can charge $150 per hour or more for towing services, so this cost must be planned for if it is not covered under a boat owners’ insurance policy.

Another factor worth considering is personal liability. In 2018, for instance, a boating accident in Minnesota brought this issue to national attention when a boat passenger was maimed in an accident only to discover that she was not covered by the boat owner’s insurance policy. Unlike automobile liability insurance, where everyone in the vehicle is covered, boating insurance does not necessarily cover the passengers. Boat owners can remedy this by purchasing medical riders, which are a form of supplemental insurance that can be purchased for passengers. However, these policies can be expensive and tend to have relatively low coverage limits, such as $10,000 per claim.