Watercraft Insurance

What is 'Watercraft Insurance'

Watercraft insurance is an insurance policy that provides coverage for boats and personal watercraft. Watercraft insurance, also known as boat and personal watercraft insurance, often includes towing and wreckage removal, as well as fuel spill indemnification. This type of insurance may be purchased for sailboats, house boats, and pontoon boats, as well as other watercraft up to a certain size and value.

BREAKING DOWN 'Watercraft Insurance'

Watercraft insurance coverage and the types of coverage available usually vary according to the type of watercraft being insured. This is because different types of watercrafts carry different risks. For example, a sailboat and a pontoon boat are characteristically different types of watercraft. Watercraft insurance does not provide liability coverage for injuries caused by the operation of the boat or watercraft.

In some cases, an individual’s homeowners policy may provide coverage for personal watercraft. If the watercraft is too expensive it may exceed the limits of the homeowners’ policy, but may fall under the limits of a watercraft insurance policy. These policies will still limit coverage to certain types of vehicles, often based on the length of the boat and the boat’s value.

Watercraft insurance policies may limit the areas that the boat or watercraft can be operated in while maintaining coverage. The geographic areas permitted are outlined in the policy language, but often include inland waterways, rivers and lakes, as well as ocean waters within a certain number of miles from shore.

The Role of Depreciation in Watercraft Insurance

The amount of damage to a watercraft that is covered under the policy is also dependent on how the policy treats depreciation. In some cases, the boat or watercraft will have its value depreciated according to a set schedule, and the insurance policy will only pay up to the value that the boat is still worth. The policyholder may purchase additional coverage that provides for a replacement boat if the boat is within a certain number of years old.

Is Watercraft Insurance a Requirement?

Watercraft insurance covers most watercraft with motors, including fishing boats, sailboats, pontoon boats, paddle boats, leisure crafts and yachts. Most states do not legally mandate that watercraft must be insured. To find out, go online to check your state’s watercraft titling and registration requirements. But even if your state doesn’t require insurance, your bank won’t give you a boat loan without it, and most marinas also require you to have watercraft insurance before they’ll rent you a slip or mooring.

Watercraft insurance usually does not cover canoes, kayaks, row boats or personal watercrafts such as jet skis. Personal watercrafts are generally defined as motorboats less than 16 feet in length that are powered by jet pumps, not propellers, where the persons stand, kneel, or sit on, rather than inside the boat.