What Does Boat Insurance Cover?
Boat insurance is just what it sounds like: coverage that kicks in if you get into trouble with your boat. However, there are different types of boat insurance policies, and those policies cover different types of things.
Making sure you have the right type of insurance for the way you intend to use your boat will require individual research and a bit of comparison shopping.
What is the purpose of boat insurance?
Generally speaking, all boaters need an insurance policy that meets the requirements within their state. Usually, that means a policy offering at least $1 million in coverage, as well as state-specific coverage amounts for things like property damage, medical issues, and the like, says Erik Holm, Boatsetter’s head of owner success.
However, actually getting the right policy can take some effort. The insurance market is tight right now. Both the insurance industry and the boating industry have undergone a slew of recent, substantial changes that can make it harder than usual for boaters to find coverage.
The insurance market is dealing with climate change, which means an increased number of storms with greater-than-usual severity and damage, both along the coasts and at inland marinas. Smaller boats—say, those worth less than $200,000—cannot always get out of the way of big, incoming storms the way larger vessels can. Insurance companies know those smaller boats can end up being a total loss. Financial losses from storms in recent years have been so extensive that they caused some insurance providers to leave the marketplace for smaller boats altogether. The upshot is fewer companies offering boat insurance than there used to be.
For more information, be sure to read our guide, How Much Does Boat Insurance Cost?
Why it’s important to secure boat insurance in today’s market
In addition to that changing situation mentioned above, the Covid-19 pandemic led to a 13-year high in new-boat sales, according to the National Marine Manufacturers Association. Some 415,000 first-time boat buyers entered the market in 2020 alone. These buyers were, on average, younger than existing boaters. Many were first-time boat buyers, purchasing new and used boats alike.
That influx of inexperienced boaters into the already constricting insurance marketplace is a combination that made insurers tighten up on approving policies even more. In some cases, boaters can insure their boats in tandem with their homeowner’s policy. In other cases, boaters can purchase separate policies for when they are using their boats, but it can take some calling around to various companies in order to receive reasonable quotes. For a breakdown of some leading companies and what their policies offer, check out this 2022 review by Forbes.
Peer-to-peer boat rental insurance
For times when the boat is being rented through a site like Boatsetter, boaters will need rental-specific insurance, too.
“Right now it’s becoming really challenging to get one of these policies,” Holm says of the rental-specific policies. “That’s where Boatsetter comes in. We offer a policy with GEICO and BoatUS that’s very easy to sign up for. They take a chunk out of the rental so you don’t have to pay for the whole year.”
In other words, the GEICO/BoatUS insurance offered through Boatsetter covers only the period of time when the boat is being rented—separate from times when the owner is out on the water using the boat.
This rental policy includes towing and assistance for on-the-water breakdowns, with policy-holders able to call for assistance from TowBoatUS and simply provide their Boatsetter membership ID number.
Overall, the GEICO/BoatUS policy offered through Boatsetter for rentals includes boating liability coverage for bodily injury and property damage, with a limit of $300,000 per person for each accident up to a total limit of $300,000 per accident. It also covers fuel and other spill liability, medical payments, uninsured boater coverage, and trailer coverage, if the rented boat comes with a trailer and is indicated on the boat listing.
Another option for renting out a boat is to purchase commercial insurance. This is the type of insurance that is made for everything from charter-fishing boats to oil barges and tankers. These types of policies—because they are always in effect, instead of only being in effect during a rental—may come at a higher cost, and can offer different limits and deductibles.
As with all the types of insurance, shopping around for commercial boat insurance is simply part of the process when you’re trying to figure out which insurance policy is best for you, in the state where your boat will be used, depending on how you plan to use the boat.