Are you planning on buying a boat? If you love living in the water and can’t wait to go fishing on weekends or whenever you have spare time, investing money in a small vessel makes sense. But take steps to cover all your bases. Your budget for a small boat can run high, as these investments can be as costly as a house or a small car—even more expensive in some cases. That’s why it pays to get coverage.
When you own and operate a small vessel, you’re subject to financial liabilities. One way to prevent those losses and liabilities is to get boat insurance. Several things should go on your must-know list to pull that off.
Know the Type You Need
There is no single boat insurance policy that caters to all boats and owners. It will depend on the type of boat being insured. Do you have a powerboat or sailing boats and dingles? What about personal watercraft, houseboats, and narrowboats? Or it’s a yacht?
Understand the Real Value
There are two general types of boat insurance that might apply in your case: the agreed value and actual cash value. Most boating community members also refer to the second one as market value.
- Agreed value. You and the insurer are on the same page regarding the boat’s value. You have a signed contract to prove this. If your vessel is damaged or stolen, the insurance company will pay you the amount you agreed on.
- Actual cash value. If your boat sustains any damage, you will get paid the current worth of the boat on the market. That means if you have a 2019 vessel damaged in 2024, the insurer will use its market value in 2024 as a reference. That means you’ll get paid less if you get the second type of policy. The first one is a better insurance policy. But the second option is better than not having one at all.
Reduce Your Premium Costs
Trim down your expenses by following these tips:
- Attend a boating safety class or course. That will make you eligible for discounts. Some insurance packages offer those discounts, so check if that’s true for your state.
- Bundle your policies. Another way to save on costs is to buy multiple policies to take advantage of the discounts. Combine your auto policy with your boat policy. Use the same company. Some give you a discount that you can use to reduce your insurance expenses.
- Stick to your area. When you read most insurance policies, you’ll know that the coverage is often limited to a location. So, if you’re covered while you’re on the waters from Vancouver to the Pacific, straying from that area means risking damage that won’t be covered. So, don’t take any of those chances. Stick to the area where you know you have coverage. That’s better for your boat and wallet.
- Update hull value. Cars depreciate over time. So, the value of your hull when you first got it and had it insured will be lower today. Find out what it’s currently worth to prepare you if there’s any damage. Knowing the values you’re working on puts things in perspective, budget-wise.
- Pay more deductibles. Start increasing your deductible. That helps lower the cost of your premium. You’re taking on more of the risk. But you will also get more out-of-pocket expenses if you happen to make a claim. That sounds like a fair tradeoff.
- Inform your insurer. If you will be on land for months or even a year—or longer—it pays to look into Port Risk. You might qualify for it, which is insurance meant for boats that aren’t in use. Research so you’ll know if you can switch to this policy while your boat is anchored or stored.
- Focus on liability. Sometimes, investing in a policy that only cares about liability is better. If something happens, you still have your boat’s coverage. The policy still protects you from sizable financial dents and losses.
- Look into salvage coverage. Too many boat owners make the mistake of thinking all boat insurance policies are identical. That is, they all contain salvage coverage. You’d be surprised at how far that is from the truth. If your policy doesn’t cover salvage, you won’t get paid if your boat sinks. That’s not to mention the amount of money it will take to haul the boat from the waters and dispose of what remains of the vessel.
- Keep a clean record. It’s like car insurance. Insurers give you an excellent rate if you have a clean driving record. You’ll want to apply those same driving skills when you’re behind the wheel of your boat. Avoid accidents and ensure you don’t have any violations when you’re on the water. That will give you lower rates. Some companies may even offer policy discounts.
Invest in safety features. Add safety features to your boat that improve your security and water navigation. Insurers will look at those features favorably, giving you better rates.
