Unlike automobile and homeowners insurance, boat insurance is not much the same among carriers. Insurers offer coverage prices that can vary dramatically depending on their experience levels, market niches, and the boater types they wish to attract. The two basic coverages are for physical damage and for liability.
Physical damage coverage is for accidental loss or damage to the boat hull, motor(s), and any other operational equipment. Liability or property and indemnity (P&I) coverage is for legal obligations to third parties from personal injury, wrongful death, or property damage as the proximate result of the operation of a boat. P&I also may cover legal defense fees and costs in lawsuits.
Typical covered losses or damages are by fire, by theft or vandalism, collisions, and by weather-related causes from wind, rain, hail, lightning, or waves. It is provident to have a boat insurance policy that covers the boat while stored on land or transported by trailer. The best policies cover all risks, meaning all causes of damage or loss not expressly excluded.
All boat insurance policies have exclusions for normal wear and tear. Most if not all exclude insects, mold, animals, and other marine life. There are some variations in physical damage exclusions among insurers, so it may be worthwhile to compare specific provisions to prevent unpleasant surprises.
Boat Insurance Policy Types
There are three types of boat insurance policies: (1) Agreed Value, (2) Actual Cash Value, and (3) Total Replacement Cost, and all go into effect in a total loss, but each deals with partial losses differently.
Agreed value boat insurance policies normally pay the amount of the policy limit if the boat is a total loss. Damage from a partial loss is usually the replacement cost minus any deductible with physical depreciation not factored into the value of the loss or damage. However, some items normally subject to high wear and tear may be depreciable.
Actual Cash Value
An actual cash value policy covers less but costs less. Coverage is up to current market value in a total loss. Payments for partial losses are based upon physical depreciation of the lost or damaged items, and policy deductibles apply. Although an agreed value boat insurance policy typically costs and covers more, an actual cash value policy may be a suitably economical alternative.
Total Replacement Cost
Total Replacement Cost, the most recent type of boat insurance policy, replaces the vessel with a new one of similar make and model. This boat insurance coverage is available only on new boats until they are two or three years old. Under a Total Replacement Cost policy, a boat two years old worth $70,000 but $85,000 when new is worth $85,000 in a total loss. When it reaches the age where total replacement cost is no longer available, the policy changes to one of Agreed Value or Actual Cash Value according to the terms of the original policy.
Medical Liability Insurance
Medical liability coverage pays for first-aid treatment, ambulance, hospital, and other costs of injuries on a boat even if the owner is not legally liable. It is important to know whether coverage applies while passengers board or leave the boat and while water skiing behind it. Whether coverage per person or per accident may be preferable can be an important question.
Personal Property and Towing Assistance
Personal property boat insurance covers personal gear, clothing, and equipment while being packed on or off the boat and while aboard. Like physical damage coverage, each insurer handles personal property differently, so familiarity with policy provisions is important. Boat towing and assistance coverage reimburses costs incurred for emergency assistance. Some examples may be towing to where repairs can be done or deliveries of fuel, oil, or parts.
Boats and Yachts
Yachts are vessels 27 feet or more in length, boats 26 feet or less. No matter the type of vessel, Agreed Value is the type of boat insurance policy to consider first. Agreed Value policies cover damage to all equipment except sails, outboard motors, canvas covers, or other specified items. They do not reflect depreciation or market value, so claimants get greater settlement amounts. Other policies may be cheaper, but they also pay much less.
Uninsured Boater Coverage
Boat liability insurance is not mandatory, so many boaters do without it. Uninsured boater coverage compensates for injuries caused by another boat with no liability insurance. If the uninsured boater is liable or if a hit-and-run boater cannot be found, this coverage eases the financial pain of the injuries.
Texas Boat Insurance
Nothing beats boating in Texas on one of many lakes and rivers or along the Gulf Coast. Texas is a unique state exposed to many hazards of hurricanes, hailstorms, and submerged objects. Here are some Texas boat insurance features to consider:
- Hail damage in all seasons is a constant concern in Texas. Boat insurance should cover damage from hailstorms.
- Boat insurance should cover damage to electronic equipment from lightning.
- Most boat insurance carriers apply a separate windstorm deductible for boats damaged during National Oceanic and Atmospheric Administration-named windstorms.
- Navigation limits might exclude boat insurance coverage of vessels in the Gulf of Mexico.
- Tornados are not uncommon in Texas. Is the boat covered for tornado damage?
- Some insurers require owners to be full-time Texas residents. They want no absentee owners but owners close to their boats at all times to safeguard them from hurricane damage, vandalism, and theft and so help keep claim number levels down.
- Bass boats should have custom boat insurance coverages for their valuable fishing, chartering, navigation, and speed equipment.
- Because high-speed boats present high risks of damage, insurers subject them to a special set of boat insurance underwriting guidelines.
- Insurers may require hurricane haul-out agreements, which cost boaters money but not as much as might a damaged boat, and owners get premium discounts on their policies.
Boating in Texas is uniquely rewarding in fresh or salt water. Nothing is so exhilarating as the feel and the sound of the wake against the hull, the snap of the mainsail, and the buzz of the cast of a fishing line. The only thing that makes the whole experience more enjoyable is the knowledge that sufficient insurance protects the boaters from financial harm.