Boat Insurance Guide 2023

one cartoon man is jumping from his boat into the paper folded boat of another cartoon man, boat insurance guide 2023

Purchasing a boat or yacht is an exciting time in one’s life. The freedom your newly purchased vessel will offer you is second to none. However, it’s important to be aware of the legalities and boat insurance requirements based on the size of the boat you buy, and where you plan to cruise. Let’s explore the insurance options below.

Boat Insurance Basics 

What is boat insurance? 

Boat insurance is similar to your car or home insurance — it protects you, your vessel and (if you opt for third-party coverage), any other vessels you cause damage to.

Do I need boat insurance? 

Not every city or state will require you to have insurance for boat before you head out on the water. Even those states that don’t legally require insurance for a boat, it’s highly recommended to have some coverage for your boat or yacht. When you consider the costs of purchasing your boat in the first place, and the lives of your friends and family who may be onboard, it’s always a good idea to have some insurance coverage in place so you are protected. You’d hate to see your life savings go down the drain if there is an accident on the water and your beloved yacht suffers extensive damage you will now have to pay out of pocket to fix. 

Do I need insurance when I rent a boat? 

When you rent a boat, the insurance will usually be included from the boat rental company and extend to the users who rent the boat. Some rental companies will, however, require a boating safety card or certificate to prove you are capable of handling the boat for the duration of your rental.  

Do you need a boat survey for insurance? 

If you’re purchasing a brand-new boat, insurance companies won’t usually require a survey for coverage.

However, if you are buying a used boat, most insurance companies will require a recent survey to ensure they are aware of any issues or red flags before offering comprehensive coverage.

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Boat Insurance Cost 

How much is boat insurance? 

To determine the cost of insurance for boat, your broker will take a few things into consideration: 

  • Age 
  • Length 
  • Make 
  • Model 
  • Type (sailing, motor, etc.) 
  • Cruising Grounds 
  • Engine 
  • Condition 
  • Time of Use (are you living onboard full time for example) 

On average, your insurance for your boat will cost around 1.5% of the purchase price of the boat. So, if you buy a boat for $50,000, you can expect to pay around $750 every year for boat insurance. 

How much is insurance for boat per month? 

You can opt to pay for your boat insurance annually or monthly. If we use the above example, your annual premium of $750 would cost $62.50 a month. Some will charge a slightly higher premium for monthly rates and offer a slight discount if you pay annually up front. 

How much is insurance for boat a year? 

Given the factors above, the cost of boat insurance every year will fluctuate based on factors like the age of the boat, the condition it is in and the type of boat you plan to buy. But you should expect to pay around 1.5% of the purchase price of the boat on insurance every year.

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Boat Insurance Coverage

What does boat insurance cover?  

Boat insurance will have a few options for coverage. Some of the main options include: 

  • Your boat – the hull, sails if necessary, and complete coverage of the boat itself 
  • Liability – For damages or injuries to others 
  • Environmental and weather damages 
  • Medical payments 
  • Complete hull damage and loss when needed 
  • Extended coverage to dinghies or tenders 
  • Electronics 
  • Uninsured boaters 
  • Personal property onboard if stolen or lost 
  • Emergency towing and salvage 
  • Optional extension to trailer coverage during tow. 

What does boat insurance not cover? 

There are a number of exclusions you may come across when reviewing insurance policies. Some of the main ones include: 

  • Extended cruising cover – If you want to take your boat across the Atlantic, or from Florida to the Bahamas, you will need to opt into extended coverage before doing so. 
  • Ice or freezing – Unless you know you plan to keep your boat in the water in the winter (where this is feasible), you will need to show that you properly winterized the vessel and still sustained damage. Again, you need to add this coverage before the cold winter months, to ensure you are protected. 
  • Storage – If your boat is going to be laid up for an extended period, you’ll want to discuss options with your insurance broker to make sure additional coverage is added here. 
  • Animal damage – For example, if you sustain damage from vermin while laid up, this might not be covered by your policy so consider all scenarios when storing your boat for the season. 

Does insurance for boat cover hurricane damage? 

Yes, boat insurance covers hurricane damage. However, this isn’t always part of a standard insurance policy, so if you know you will be based in or cruising through hurricane zones, you’ll want to opt-in to this coverage before starting your trip.  

Does insurance for boat cover sinking? 

If you have comprehensive boat insurance, it should cover sinking and salvage if needed. Usually, it is only covered if the sinking was a result of an item already covered (ex. fire, storm, theft, etc.) that directly caused the sinking. 

Does insurance for boat cover engine damage? 

Yes, your boat insurance will usually cover engine damage or failure if these are a direct result of other items covered in your policy – for example, fire, theft, storm damage, collision, etc. When it is NOT covered, is when it is due to negligence and improper upkeep and maintenance of the engine. 

Does insurance for boat cover hitting a rock? 

If you have fully comprehensive coverage, your insurance will provide cover for hitting a rock. However, if you only opt for liability coverage (which protects other people or property hit by your boat or injured while onboard), you will not be covered as you don’t have coverage for your own boat. 

Does insurance for boat cover lower unit?  

The lower unit is (you guessed it) the lower part of the outboard motor that takes the power and rotation from the engine and transfers that power on to the propeller and prop shaft. Similar to engine coverage, as long as you have full coverage for your boat, your engine, and the lower unit will be covered, so long as the damage isn’t due to negligence.  

Does insurance for boat cover storm damage?  

Similar to hurricane cover, most insurance policies will cover storm damage, however you want to make sure you have opted into the right amount of coverage to ensure you are protected should any storm damage occur

Does insurance for boat cover theft? 

Yes, boat insurance will offer theft protection if you have comprehensive coverage. Basic insurance policies won’t always include theft coverage and it may depend on where your boat is stolen from. If it has been stolen from the storage facility where you are storing it, the owner of the storage facility’s insurance should cover this. Either way, it’s a great idea to have comprehensive insurance coverage in place so you know you are covered for any and all scenarios. 

Does my car insurance cover towing a boat? 

Normally, your car insurance will not extend cover to towing a boat. This is something you’ll opt into for your boat insurance – towing and trailer will need to be added to your policy so the boat and trailer are covered while in transit. 

Is my boat dock covered by insurance?  

If you have a home dock where you keep your boat, your homeowner’s insurance should extend to this, so it will not be something you have covered by boat insurance. If you’re unsure, contact your insurance broker to confirm that your home insurance includes coverage for your dock on your property. If you are wondering if the boat dock at your marina is covered by your insurance, you don’t have to worry as the docks will be covered by the marina itself under a commercial policy. 

Do I need insurance on my boat trailer? 

It depends where you are in the world, if boat trailer insurance is a legal requirement. However, it’s highly recommended (even if it is not the law), to have insurance on your boat trailer. This coverage will be added to your auto insurance policy (although some boat policies may offer it for when the boat is in transit) and since the trailer is often left unattended when not in use, it can be a prime target for vandalism or theft. Not to mention, if any damages occur to the trailer, you can avoid replacing this pricey item out of pocket. 

sunken boat on the beach

Boat Insurance Questions Broken Down By State 

Is boat insurance required in California?  

Legally, you do not require boat insurance in California, however, it is highly encouraged to do so. Without insurance, you will have to pay out of pocket for any damage or risk a total loss of your boat too if the worst happens. 

Do I need boat insurance in Florida?  

Similarly, boat insurance is not a legal requirement to use your boat in Florida’s waters. However, if you needed a loan to purchase your boat, your lender may require insurance as a safety net. Again, it’s always wise to have a policy in place so you and your boat are protected should something go wrong. 

Do you need boat insurance in Michigan?  

Michigan law may not require boat insurance; however, the same rule applies to lenders likely requiring insurance if you used a loan to purchase your boat. In addition, if you plan to dock at public docks in Michigan, the marinas may require proof of insurance before they allow you to do so.  

Do you need boat insurance in NY?  

Like Michigan state, you may not legally require boat insurance to operate your vessel, however, marinas may require proof of insurance to dock your boat with them, and a lender may require proof of insurance if acquiring a loan to purchase your boat. 

Do you need boat insurance in PA? 

As we’ve seen with other states, Pennsylvania law doesn’t require you to have boat insurance before taking your boat out on the water. However, lenders and marinas or yacht clubs may require proof of insurance to secure a loan or dock your boat at their facilities. 

Is boat insurance required in Washington State? 

Washington State is a boater’s dream – a multitude of waterways to enjoy from the bow of your own boat. Even so, there is no legal requirement to have boat insurance before heading out on the water in Washington State. It is, however, highly recommended, to purchase boat insurance to protect yourself, your boat, and others on the water. 

How much is boat insurance in Texas? 

The exact cost of boat insurance in Texas will depend on the size of the boat, the year it was built, the condition it is in, the engines on board, and the value of the boat, just to name a few determining factors. Most people will have a policy of around $250 – $1,000 for the year. 

business man writing notes in a note book, laptop open next to him

While insurance may not be a legal requirement in a number of states, it’s strongly encouraged to take out a policy on your boat. You’ve worked hard to save up and purchase a boat, don’t let anything affect your time on the water by not being prepared if the worst should happen. From theft and engine failure to storm damage and total loss and salvage, comprehensive insurance coverage will protect your boat (and your dreams) for years to come.

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