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What Does Boat Insurance Cover and How Does It Work?

What is boat insurance?

Boat insurance is like any other type of insurance policy. It is to safeguard the boat and its owner from any type of expenses that inevitably come with an accident. A good boat insurance policy should cover both the owner of the boat as well as anyone else involved in an accident. Even if the boat is only used once in a while, it is always good to have at least basic insurance.

How does boat insurance work?

Boat insurance works the same way as automobile insurance. However, there is a major difference and that is, all people who have driver's licenses, are expected to have insurance. With boat insurance, only the owner of the boat is expected to have insurance. Most car insurance providers will also offer boat insurance. In fact, many auto insurers who give boat insurance will give all in one package deals with boat as well as auto insurance.

What does boat insurance cover?

Strictly speaking boat insurance should cover the boat, engine and the trailer which is used for transportation. This means the actual cash value will translate to any type of replacement costs of these objects. If a boat gets damaged beyond repair, then the insurance company will look up the second hand value of the boat, before handing out compensation. As far as partial damages are concerned, it will be calculated based on the cost of full restoration, minus the deductible.

A good

boat insurance policy will be done by the owner and the insurance company agreeing on the value of the boat beforehand. There are several factors that go into this. This would be the type of boat and the age of the boat. As far as type of boat is concerned there will be a clear distinction between a speed boat and a fishing boat. An expensive high-speed boat will require higher premium payments to get insured. The reason for this is very simple. A speed boat will be seen as a riskier proposition compared to grandpa’s motorized canoe.

The next factor is the age of the boat. Obviously an older boat will be riskier for the insurance company compared to a brand new one. Older the boat is, the higher the perceived risk it comes with. As with cars, it is possible to get full coverage or just liability coverage. Full coverage will obviously be the most expensive of the two and it will cover, theft, fire related damage, accidents while using the boat and so on. This type of insurance is usually mandatory for those who are still making payments on the boat. However, there are laws regarding the liability the insurance companies have to pay, so look carefully and read all the fine print before getting full coverage. If you cannot afford full coverage then the next obvious choice would be liability only. In most places, boat owners are expected to have at least liability insurance.

Category: Insurance

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