Boat Policies Ensure Fun on the Water

In the summer, boating is one of the ultimate leisure activities. According to the U.S. Coast Guard, there are more than 12.5 million boats registered for recreational use.¹

Unfortunately, thousands of recreational boating accidents are reported every year. Nearly 4,800 boating accidents were reported in 2008, resulting in more than 3,300 injuries that required medical treatment and about $54 million in property damage.² The most common claims involved hitting submerged objects, collisions with other vessels, theft, storm damage, and flooding or sinking while tethered to a dock or anchor.

Here are some points to know about boating insurance if you currently own or hope to buy watercraft in the near future.

Covered from Bow to Stern

Your boat policy can be tailored for any type of watercraft you own, including yachts, sailboats, fishing boats, power boats, jet skis, and pontoons. Coverage may or may not be required in your state — unless you have a loan on your watercraft — but it’s a good idea to consider the following types of coverage.

• Bodily injury liability typically covers expenses and legal fees related to injuries to people caused by your boat or its captain.
• Property damage liability typically covers damage to other vessels, docks, or structures.
• Physical damage typically covers damage to your own boat or trailer if you hit something in or out of the water. Potential exclusions include normal wear and tear; damage from insects, animals, mold, or defective machinery.
• Medical payments typically covers injuries to the boat owner and any other passengers.

The amount of available coverage will be tied to the current market value of your watercraft, the full replacement cost, or a specific amount agreed upon when the policy is opened. Your premium will reflect the specific amount of coverage based on factors such as size, type, and value of your watercraft, as well as where you will be using it. Full replacement cost may only be available for newer boats. Any payments will only be up to your policy limits.

More comprehensive policies may be available, which add optional coverage for a range of hazards, including theft, fire, flood, vandalism, uninsured/underinsured boaters, and the replacement of personal property stored on the boat, such as fishing gear, wakeboards, and other items. Your boat is probably not covered by your homeowners policy, even if it is kept in the garage.

Many insurers require that your boat be kept in excellent condition, so it’s important to maintain good records and stay on top of repairs. Your insurer may reserve the right to exclude any accidents it determines could have been avoided with diligent maintenance. Also keep in mind that your coverage can be limited to a certain geographical range, so read your policy carefully and check with your agent if you plan to take your boat on a longer trip.

If you are planning to shop for a particular type of boat, you might consider talking to an agent and getting a quote for coverage. It’s best to have a realistic idea of the true cost of owning a particular vessel prior to completing your purchase.

1–2) United States Coast Guard, 2009

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.