Insuring Your

Used Boat

Unlike cars, most states do not require that boats be insured nor do they require that boat operators be licensed. Be sure to check with your state agencies for the local requirements, if any. That said, the decision of whether or not to get insurance may be decided for you if you're financing your boat. Your lender may require insurance and they may also require that they be a named insured. If the choice is yours to make, there are a few things you'll want to consider, such as the age and value of the boat.

Check with Your Carrier

Many insurance companies that provide "watercraft" coverage have guidelines about what they will insure. Some will only insure boats 26-feet and under. Some have provisions for very small boats to be covered under a Homeowners Policy. You may be able to obtain "liability only" coverage for your boat, which will not cover theft or damage but it may offer you protection and indemnity in other matters. Check with your carrier and ask about their unique offerings and rules as they can vary greatly from one carrier to another.

Types of Policies

There are primarily two types of boat insurance policies you will encounter: Actual Cash Value (ACV, the cost of replacing the boat less depreciation) and Agreed Amount Valuation (AAV). Not all companies offer both. If you're buying a mainstream type of used boat, you will probably be drawn to the (typically) lower-priced ACV policy. Keep in mind though that as time goes by, the boat you insured for $10,000 is depreciating each year. It's up to you to revise your coverage limits down periodically if you want to ensure the best rates.

Coverage and Liability

Liability limits are usually between $100,000 - $500,000. If you will be keeping your boat at an upscale marina, you may wish to contact the marina regarding minimum insurance requirements. Many marinas will require at least $300,000 of liability coverage.

The amount of coverage you get should be tempered not only by your budget but by the fact that the great majority of marine claims are not total losses. The less likely your boat is to be stolen, the smarter it is to consider a lower total ACV figure. Use those savings for additional coverages or lower deductibles.

Watercraft insurance underwriters use many of the same criteria for assessing risk that they would use to set the risk premium for an auto policy. Having less than one year of experience, a poor driving record, or routine navigation in a high claim area can all effect the premium you'll pay.

Premiums can sometimes be reduced by attending a boating safety course and by having certain safety equipment on your boat. Ask your insurance company representative for ways you can further reduce your premiums.

Accidents Do Happen

Many insurance carriers offer sample policies so you can see what you're getting. Read through it. Ask questions about exclusions. Ask what the policy covers if you run aground or hit a submerged object. Murphy's Law is no stranger to the water. Accidents do happen and that's why we get insurance.