What Is Watercraft Insurance?

Watercraft insurance is a general term for boat insurance, yacht insurance, and personal watercraft insurance. It protects boats with a motor that has a horsepower of at least 25 miles per hour from damage (mph). Costs that are covered by watercraft insurance include physical damage or loss of the boat, theft of the boat, and having the boat towed.

How Insurance for Boat Works

Depending on the policy, there may also be watercraft liability coverage for injuries to people other than the boat’s owner and their family, guest passengers who use the boat on their own, and medical payments for injuries to the boat’s owner and their family. Some policies, on the other hand, need you to buy extra liability coverage as an add-on. The size of your vessel will tell you what kind of insurance to buy.

Insurance for boats is similar to other kinds of insurance. In exchange for paying a series of insurance premiums, the policyholder is protected from some rare but potentially expensive risks. Depending on things like the size of the boat, how old it is, and what it will be used for, the premium can be anywhere from cheap to expensive. When deciding whether or not to give a policy, an insurance company will also look at how many claims the policyholder has made in the past.

Boat Insurance

A boat is any vessel that is less than 197 feet long. A ship is any vessel that is 197 feet or longer. The line between a boat and a yacht is not as clear. Some sources say that the length of a yacht must be at least 30 feet. A pleasure boat is shorter. The National Boat Owners Association puts a line at 27 feet to help with insurance.

A standard policy for homeowners or renters may cover small boats like canoes, rowboats, small sailboats, and powerboats with less than 25 miles per hour of horsepower. But liability insurance is not likely to be part of this kind of coverage. Most boat insurance covers theft, damage to the boat itself from a collision or hitting something underwater, damage to the boat’s property from vandalism, a windstorm, or lightning, and medical payments for injured passengers, the owner, and their family. The amount you have to pay out of pocket before your insurance kicks in will be different for each coverage. Most of the time, boat insurance gives you better liability coverage than a homeowners policy, but it’s usually a good idea to buy extra liability coverage as an add-on.

In the event of a total loss, it’s important to know whether your policy pays actual cash value (ACV) or agreed value (AV). ACV is less expensive because it only pays out what the boat was worth when it was lost, taking into account depreciation and wear and tear. AV pays you a price that you and your insurance company agree on ahead of time. This price is probably close to what you paid for the boat when it was new.

Other things to think about when getting boat insurance are:

Lay-up period:

This covers damage to your boat’s property when it’s not in the water.

Navigational territory

In most cases, your boat insurance will tell you where you can go and still be covered.

Property damage

This is for when your boat causes damage to someone else’s property.

Hurricane haul-out provisions

This covers the cost of getting the boat out of harm’s way before a windstorm.

On-water towing and help

This is for when your boat breaks down unexpectedly or runs aground.

Fuel spill liability protection

If your boat spills fuel by accident, this will cover the cost of cleaning it up.

Personal effects coverage

This will protect any expensive gear you have on your boat, like fishing gear.

Ice and freeze coverage: If your boat’s engine and water systems are damaged by cold weather, this will pay the bill.

Insurance for yachts

Most yacht coverage is broader and more specialized than coverage for pleasure boats because yachts are bigger and travel farther and face more risks. It usually costs more, too, because yachts are more expensive. Most of the time, a deductible is calculated as a percentage of the value that is insured. A boat insured for $175,000 would have a $1,750 deductible if the deductible was 1%. Most lenders will let you pay up to 2% of the insured value as a deductible.

In general, yacht insurance does not cover normal wear and tear gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, design defects, ice, and freezing.

A yacht insurance policy has two main parts: hull insurance and protection and indemnity (P&I). The first is an all-risk, direct damage coverage that includes an AV for hull coverage and pays out in full in the event of a total loss. There is also coverage for partial losses at the cost of replacement. But sails, canvas, batteries, outboards, and sometimes outdrives are usually subject to depreciation.

P&I insurance is the most comprehensive type of liability coverage. Because maritime law is so specific, you will need coverages that are made for those risks. These are important because your losses in these areas could reach six figures. P&I will pay for your defense in admiralty courts and cover any judgments against you.

Insurance for personal watercraft

Personal watercraft insurance is for boats like Jet Skis, Sea-Doos, and Yamaha Wave Runners that are used for fun. The horsepower of the engines in these boats that just skim the surface can range from 60 mph to 310 mph. Most homeowners insurance doesn’t cover them, and even when it does, the limits of coverage are low.

Personal watercraft insurance protects the owner and anyone else they let use the boat against risks like:

Injury to someone else’s body

if you get hurt on a boat whose driver doesn’t have insurance,

If someone sues you because of an accident, you are responsible for paying their legal fees (which can include water sports liability for things such as waterskiing risks)

Damage to a dock or another boat or watercraft.


After an accident, getting towed

Depending on the policy and the company that sells it, the deductible and the maximum amount of liability will be different. You can buy extra coverage for trailers and accessories, and if you have more than one craft, you may be able to bundle your insurance policies to save money. Personal watercraft insurance is a good idea because these vehicles are easy to use but can also be dangerous. Every year, they cause thousands of injuries, so it’s a good idea to get it.

Do I need insurance for my boat?

Only in a few states is watercraft insurance required for boat owners. But many boat owners will buy it anyway, in part because they need to get a loan for their boat. Marinas may also require owners to have insurance for their boats as a condition of renting from them.

Even if your craft isn’t worth much, it’s still a good idea to get watercraft insurance because you could get hurt on the water, especially in a crash. Even if you weren’t at fault, defending yourself in court could cost a lot of money—much more than your insurance premiums. If you decide to buy this insurance, compare policies from different companies before deciding which one is best for you. As with any insurance, the question is how much peace of mind is worth to you.

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