There are two basic types of boat insurance—“agreed value” and “actual cash value.”

An “agreed value” policy covers the boat based on its value when the policy was written.

While it can cost more up front, there is no depreciation for a total loss of the boat (some partial losses may be depreciated).

“Actual cash value” policies cost less up front, but factor in depreciation. In other words, the policy will only pay up to the actual cash value of the boat at the time it is declared a total or partial loss. Eventually, as your boat ages, your insurer will likely insist on an actual cash value policy—and if often gives a substantial savings.

Why It Matters

Marine insurance covers a wide array of watercraft. You may be surprised to find what can be insured. Marine insurance policies include:

• Boat
• Personal Watercraft
• Yacht- generally, vessels 26′ and smaller are called “boats,” and “yachts” are 27′ and larger. Yacht coverage tends to be broader and more specialized because larger boats travel farther and have more unique exposures.
• Sailboat
• Dinghy
• Boat & PWC Rental – Although this is generally not required, rental insurance will help cover any damage the vessel, as well as the operator and passengers.
• Boat Clubs – covers all members of club while operating a boat.

An “all risk” policy will offer the best protection. However, an “all risk” policy does not cover every type of loss. In insurance terms “all risk” just means that any risk not specifically omitted in the policy is covered. Typical exclusions include wear and tear, marring, denting, animal damage, manufacturers’ defects, design defects, ice and freezing.

You may also be able to add extra coverage. Available options may include: medical payments, personal effects, uninsured boaters liability, and towing and assistance. Most policies will cover permanently attached equipment, as well as items like anchors, oars, trolling motors, tools, seat cushions, and life jackets. Be sure to discuss these options with your agent.

Types of Boat Insurance Coverage

This will depend on the type of policy, but common coverage add-ons (in addition to basic ones above) include:

• Specialized Coverage: Coverage for something specific on your boat like an expensive prop or navigation equipment.
• Salvage: Coverage that pays to remove your boat due to damage, from substantial to minor.
• Consequential Damage: Covers a loss that was the result wear and tear rather than an accident (rot, mold, corrosion).
• Towing: Towing your boat across a body of water to safety can cost $400 per hour.
• Cruising Extension: You can get temporary, additional coverage if you plan on leaving the USA (typically to Mexico or the Bahamas).

With the storm season coming to a peak, check your boat insurance coverage now before you need it.