Unless you have a really small boat, you need to buy boat insurance to be properly protected. Many people believe their homeowner’s insurance policy covers their boat, but unless it’s very small with no engine or a small one, this isn’t the case. Boat insurance covers the boat itself as well as a liability should you run into something or someone else. Many states don’t require boat insurance like they do auto insurance, but that doesn’t mean you don’t need it.
Boat insurance can be thought of as a mix of homeowner and auto insurance policies. Similar to car insurance, it covers both the property and bodily injury you cause while operating your boat, such as ramming into a dock. It covers the damage you cause to your boat as well, minus the deductible, like collision coverage on a car insurance policy.
You can include property in your boat on your boat insurance policy, similar to how a homeowner insurance policy covers your contents. Unlike homeowners and auto insurance policies, you can put your boat policy on “lay up” during stretches of time when you aren’t using it. This is important to keep track of because if you use your boat during the “lay up” time any accident you cause won’t be covered.
There are two ways to assign a value to your boat, agreed value and market value. Boats are like cars in that as soon as you drive it off the lot it’s lost value. On an agreed value policy, both you and the insurance company agree on what it’s worth when the policy starts. On a market value policy, you will only get the depreciated value based on how much it is worth at the time should it be destroyed, such as by fire.
Boat insurance policies include the boat itself, the engine, and the trailer used to move it. If you back into somebody while driving around with it, your auto insurance policy will cover the damage, not the boat policy. Most people have smaller points less than 26 feet in length. These are covered in the coastal waters of both the United States and Canada.