Watercraft insurance is an umbrella term that encompasses three types of coverage: boat insurance, yacht insurance, and personal watercraft insurance. This valuable protection is essential for vessels powered by motors with at least 25 miles per hour (mph) horsepower. Watercraft insurance typically includes coverage for physical loss or damage, theft, and even towing costs.
Key Takeaways
- Watercraft insurance includes boat, yacht, and personal watercraft insurance.
- Coverage type depends on the size of the vessel.
- Although not mandatory in many states, purchasing insurance is highly recommended.
- Some marinas and boat-loan providers may require watercraft insurance.
How Watercraft Insurance Works
Watercraft insurance operates similarly to other insurance products: the policyholder pays premiums in exchange for protection against potentially costly risks. Premium costs vary based on the vessel’s size, age, intended use, and the policyholder’s claim history.
Types of Watercraft Insurance
Boat Insurance
Any vessel under 197 feet long is considered a boat, whereas ships are 197 feet or longer. The distinction between boat and yacht can vary. Many sources define a yacht as at least 30 feet long, while others, like the National Boat Owners Association, use 27 feet as a marker.
Small craft, such as canoes, rowboats, small sailboats, and low-power boats, may be covered under a homeowners or renter’s insurance policy, but these typically exclude liability coverage. Comprehensive boat insurance covers theft, collision damage, property loss due to vandalism or weather, and medical payments for passengers and the owner. Coverage types often demand different deductibles and may provide better liability coverage than homeowners insurance, but additional liability insurance is generally advisable.
Considerations for boat insurance include:
- Lay-up Period: Coverage during the off-season.
- Navigational Territory: Specifying permissible boating areas.
- Property Damage: Coverage for damage inflicted on others’ property.
- Hurricane Haul-Out Provisions: Costs for relocating the boat before storms.
- On-Water Towing and Assistance: Protection against breakdowns.
- Fuel Spill Liability Protection: Covering accidental fuel clean-ups.
- Personal Effects Coverage: Protecting personal equipment on the boat.
- Ice and Freeze Coverage: Damages from cold weather to engines and systems.
Yacht Insurance
Yacht insurance offers more extensive and specialized coverage than boat insurance due to larger vessels’ broader range and greater risks. Premiums are generally higher, determined as a percentage of the yacht’s insured value. Coverage typically excludes wear and tear, gradual deterioration, and other specific exclusions. Yacht insurance primarily consists of two parts: hull insurance and protection and indemnity (P&I) insurance. Hull insurance covers physical damage and total replacement costs, while P&I insurance offers liability coverage and legal protections under maritime law.
Personal Watercraft Insurance
Personal watercraft insurance covers recreational watercraft such as Jet Skis, Sea-Doos, and Wave Runners, which are usually not covered under homeowners insurance. This insurance offers protections including bodily injury, liability for legal costs, collision damage, theft, and towing.
Coverage specifications may limit geographic operation areas and are subject to deductibles and varying liability limits.
Do I Need Watercraft Insurance?
Although few states mandate boat owners to have watercraft insurance, many opt for it to safeguard against potential financial and legal repercussions. Marinas may require insurance for rental agreements, and insurance is often necessary to secure a boat loan.
Even for modestly priced boats, insurance offers protection against the high costs associated with potential injuries, collisions, or legal defenses, providing much-needed peace of mind. Always compare policies from multiple insurers to find the best fit.
Related Terms: Homeowners Insurance, Liability Insurance, Boat Loan, Yacht Coverage, Personal Watercraft.
References
- Insurance Information Institute. “I.I.I.: Know Your Boat’s Insurance Coverage from Stem to Stern”.
- Westlawn Institute of Marine Technology. “Definitions of: Boat, Yacht, Small Craft, and Related Terms”.
- National Boat Owners Association (NBOA). “The Best Yacht Insurance Rates”.
- DiscoverBoating.com. “Boat Insurance Guide: Boat Insurance Coverage FAQs: What is a normal deductible?”
- National Marine Lenders Association. “Insurance: Large Boats: What’s Not Covered?”
- DiscoverBoating.com. “Boat Insurance Guide”.
- Boat Owners Association of the United States (BoatUS). “Do I Need Boat Insurance?”
