The ins and outs of insurance for boats and personal watercrafts

Key takeaways:

  • Homeowner’s insurance only offers a small amount of coverage for boats and doesn’t offer liability coverage.
  • Boat insurance policies are meant to cover damage, bodily injury, and liability.
  • Different types of watercraft (boats, yachts, sailboats, PWCs, etc.) require specific types of insurance.
  • Personal watercrafts (PWCs) are not covered under a homeowner’s policy.
  • If you own multiple PWCs each one needs to be insured.
  • You’ll need to choose “actual cash value” or “agreed amount value” coverage.

Owning a boat is a dream for many whether they use it for fishing, sailing, or just enjoying the water with friends and family. You need to make sure you get boat insurance if you buy a boat, though, and understand what it covers. What about other types of PWCs such as Jet Skis or WaveRunners? Do they require insurance? 

This guide will help you understand insurance coverage for different types of sea-going vessels and toys. 

Boat insurance 101

The first question many new boat owners face is whether to buy insurance. Many homeowner’s policies do cover boats but most cap coverage at $1,000 or 10% of your home’s insured value, which may not be enough to pay for boat repairs. Liability coverage is not included at all so if you’re responsible for an injury or property damage, a homeowner’s policy will not pay.

In the end, the need for boat insurance may depend on the size and purpose of your vessel. Boats with only one small engine or an old, inexpensive boat may not need much insurance. 

What does boat insurance cover?

You can buy insurance to cover damage as well as liability. Here’s what it covers:

  • Damage/destruction from a collision, fire, lightning, theft, or vandalism
  • Damage to the boat as well as permanently attached equipment like anchors
  • Bodily injury liability for anyone on your boat
  • Property damage liability
  • Guest passenger liability
  • Medical payments for you and/or your passengers

It’s just as important to understand what boat insurance doesn’t cover. 

  • Wear and tear
  • Defective or damaged machinery
  • Damage from sea creatures or sharks
  • Damage from mold, insects, or mussels

You may also be able to get coverage for your boat trailer and damage caused by uninsured boaters, just like you have for your car. 

Types of boat policies

You’ll find different policies for different types of boats, including:

  • Boat
  • Yacht (vessels that are 27’ or more)
  • Sailboat
  • Dinghy
  • Boat Clubs – Covers all members of a club while they’re operating a boat
  • Boat rental
  • Professionals – Includes anglers, fishing guides, and charters

Actual cash value vs. agreed amount value

It’s important to know what type of coverage you’re buying. This will affect how much your policy will pay for repairs or replacement. There are two basic types: actual cash value and agreed amount value. 

Actual cash value – This means the insurance company will pay based on the market value of the boat when it was damaged, not how much you paid or how much it might cost to buy the same boat now. 

Agreed amount value – With this type of policy, the insurance company will pay a previously agreed-upon amount if your boat is destroyed. The policy will also pay to repair/replace old items, regardless of depreciation. 

PWC insurance101

Whether you already own PWCs or you’re thinking about buying one and taking it on vacation, you’ll need to learn more about insurance and safety. Although PWCs can be fun, they can also be dangerous leading to serious injuries if not handled properly. 

Do you need PWC insurance?

First, understand that PWCs are not usually covered under your homeowner’s policy. Your policy may offer limited coverage but it probably won’t be enough to pay for most repairs or serious injuries. 

PWC insurance covers the following:

  • Damage to another PWC or dock
  • Bodily injury or death of another person 
  • Negligence of another driver using your PWC
  • Anyone being towed behind your PWC such as skiers or wakeboarders
  • Physical damage to the hull, machinery, or equipment
  • Injury caused by an uninsured operator

Some of these are optional so be sure to read the policy carefully and select the coverage you need. 

There is usually a deductible for property damage, theft, and medical payments. You can buy liability coverage but there are limits, which vary by state.

If you own multiple PWCs

Here’s something else most people don’t know. If you own more than one Jet Ski, each one will need to be insured. It may be possible to include PWC coverage under your boat insurance policy, however. 

Covering other people who operate your PWC

If you allow someone else to use your PWC, the policy will cover damage or injuries they cause. However, each case will be evaluated separately so make sure you understand your policy and applicable state/local laws. 

Additional optional coverage

As with boat insurance, you can decide if the policy will pay based on “actual cash value” or “agreed amount value.” You can also buy coverage to replace damaged/lost personal items as well as roadside assistance, coverage for trailers, and raising/removing your PWC if it sinks.

Ensure your boats and PWCs have the right insurance coverage

Owning a boat or PWC can bring hours of pleasure for you and your family. However, you must remember that injuries and property damage do occur. Having the proper boat and PWC coverage will protect you and help pay for repairs, replacement, or medical expenses.

If you have questions about boat or PWC insurance or you’re interested in a quote, contact us today.

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.