Do I need Boat Insurance?

Congratulations! You are now a boat owner.

Whether you bought the boat to cruise with friends, tube or water ski with the kids or watch a sunset from the middle of the lake with your family, being a boat owner comes with another layer of responsibility and another insurance policy you need to get and understand.

So Yes, you do need boat insurance. Maybe not legally but it is the smart thing to do to protect yourself and your investment.

Boat insurance can be very inexpensive, but you need to know the different types of coverage so that you don’t get stuck in a bad situation. Every boat is different and so is every boat insurance policy.

Let’s start with the basic coverage of a boat insurance policy.


Liability coverage protects against bodily injury or property damage of others you cause with your boat. Whether this is an accident with another watercraft or a fixed object. It will pay for the damages you cause and protect you in the event of a lawsuit.

Unfortunately, it seems like every year we year of at least one large boat accident with serious injuries. This is the protection to protect yourself and your assets.

If you have a personal umbrella policy the minimum liability coverage you can carry on a boat is $300,000.

Physical Damage

Physical damage coverage is going to protect the damage to your boat. This will cover to cost of repair or help replace your boat in the event of an accident. This coverage is important while it is in the water in use and also while it is stored away for the winter months.

Depending on the type of boat you have, this will also cover against damage to your motor (if outboard) and your trailer (if you have one)

Here is where the differences in insurance policies get a little trickier.

Physical damage is paid either on an Actual Cash Value or an Agreed Value basis. Knowing what type of coverage you have is very important.

Actual Cash Value vs. Agreed Value

Now you have your boat, you have your boat insurance policy, but what type of coverage do you have and what does it mean.

Actual Cash Value

An actual cash value policy will cover your boat the same it does a car on your car insurance. At the time of a claim, the insurance company will pay you the current value of the boat. They will do this up to a max of the policy limit you chose.

An actual cash value policy is less expensive than an agreed value one but not by much.

Here is an example: You buy a brand-new boat for $50,000. You insure the boat for the purchase price and 5 years later you wreck it. The actual cash value of that boat is now $32,000. The insurance company will pay you $32,000, even if you still have it insured for $50,000.

Agreed Value

Agreed Value coverage is a type of coverage that is set an agreed value that you as the owner will get in the time of a total loss.

The coverage will not depreciate over time potentially allowing you enough money at the time of a loss to replace the boat you have.

Agreed value coverage does have a higher premium then Actual cash value does but it is significantly better coverage.

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What is best boat insurance coverage?

Again, not all situations are the same, but our recommendation has always been to insure your boat on an agreed value basis.

There are a lot of determining factors that will make up insurance premiums for boats and whether or not it makes sense to purchase the agreed value policy.

These factors include but are not limited to:

Age of the boat

Type of boat

Size & total horsepower


Years of boating experience

Potential Gaps in coverage

As we mentioned earlier, not all boat insurance policies are created equally. Some policies are like a buffet and everything is included, others are ala cart and you need to add specific pieces for it to be covered.

Some of the most common gaps we see are:

Mechanical Breakdown

Mechanical breakdown coverage applies to sudden and accidental damage to a boat’s machinery from an internal cause of loss. Damage to a boat’s engine from an external cause of loss, such as striking a rock is generally covered by most policies.

The breakdown from an internal cause of loss is typically not covered by a basic boat insurance policy.

Salvage Coverage

This coverage applies to the cost of a rescue a watercraft in imminent danger. This would include the rescue of a vessel taking on water and in peril of sinking.

Wreck Removal

Provides coverage for the cost when legally required to raise and remove a boat after sinking.

If you are not careful, both of these insurance coverage’s may be included but with limitations.

How much is Boat Insurance

Boat insurance can be very inexpensive. What will be more expensive is not having the coverage in the event of a claim.

We typically see boat insurance policies run from $175-$500 a year depending on the type of boat. Higher Performance boats will cost significantly more.

How do I get boat insurance

We want to make it extremely easy for you to get a boat insurance quote. Feel free to fill out the form here:   and one of our team members will put together the best option with the best package of coverage.


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