Boat Loss: Insurance Fraud

While it is rare for people to lose their boats due to insurance, it is a possibility. Boat insurance is not a legal requirement in most states, but it is still generally a good idea to have it. This is because, in the event of theft, damage, or injury, boat insurance can provide financial protection. If you lease or finance your boat, your bank will likely require you to have insurance. Similarly, if you rent a dock or boat slip, your marina may also require you to have insurance.

Why do people lose their boats for insurance?

Boat insurance is not a legal requirement in most US states. However, there are several reasons why people may choose to insure their boats, or be required to do so by a third party.

Firstly, insurance can protect your watercraft and provide financial safeguards if you are liable for injuries or damages caused to others while boating. Boat policies can also cover your trailer if it gets stolen or damaged. You can also select and purchase additional coverages, such as on-water towing or mechanical breakdown coverage, to give you more protection on the water.

Secondly, even if your state doesn't require boat insurance, it may be mandated by the marina where you dock your boat or by the bank or lending institution that financed your boat. Marinas typically require insurance if you are docking at their facility. Similarly, lenders will usually require boat insurance if you are financing your boat.

Thirdly, boat insurance can protect your investment. Boats are often significant investments and can be costly in the event of an unexpected repair or accident. A good insurance policy can also protect you if someone gets injured while riding in or operating your boat.

Finally, boat insurance can provide peace of mind and help you manage risk. As with any potentially hazardous activity, having an insurance policy can help offset the risks of operating a boat on the water. While boat insurance may not be required by law in most states, it is generally recommended to have some form of coverage to protect yourself and your property.

Is it a legal requirement to insure your boat?

In most states, boat insurance is not a legal requirement. However, there are a few exceptions. Arkansas, Hawaii, and Utah are the only states that require boat insurance. In Arkansas, all motorboats with engines of over 50 horsepower and all PWCs (personal watercraft) must be covered by a liability insurance policy, with at least $50,000 of liability coverage. In Utah, the same rule applies, but the minimum coverage limits are lower. In Utah, the minimum coverage per occurrence is $25,000 for bodily injury per person, $50,000 for total bodily injury, and $15,000 for property damage. In Hawaii, all vessels moored at the Hawaii Division of Boats and Ocean Recreation facilities must carry at least $500,000 in liability insurance.

Even if your state doesn't require boat insurance, it's still a good idea to get one. Boat insurance can protect you and your boat from risks like theft, collision, or storm damage. It also covers your boat whether it's in the water or on land. Additionally, your bank will require insurance if you are financing the purchase of a boat. Most marinas also require some form of insurance if you wish to use their facilities.

What does boat insurance cover?

Boat insurance is designed to cover you and your boat or personal watercraft in the event of an accident, theft, or damage. It can also cover injuries to yourself or others, and damage to property. The level of coverage will depend on the type of policy you choose and the add-ons you select.

Types of Boat Insurance

There are two basic types of boat insurance: "agreed value" and "actual cash value". The key difference is how depreciation is handled. An "agreed value" policy covers the boat based on its value when the policy was written, whereas an "actual cash value" policy factors in depreciation.

Boat insurance can cover:

• Property damage liability: Covers the cost of damages to someone else's property if you cause an accident.
• Collision damage: Pays for the cost of repairing or replacing your boat after an accident, minus the deductible.
• Bodily injury liability: Covers the costs associated with injuries to other people if you are found legally responsible for a boating accident.
• Hull coverage: Covers any physical damage to your boat, including trailers, equipment, motors, and accessories. This typically includes damage from fire and windstorms.
• Fuel spill liability: Covers any fines from an accident involving a fuel spill.
• Salvage coverage: Pays to remove your boat due to damage, from substantial to minor.
• Medical payments: Covers medical expenses caused by an accident incurred while on, boarding, leaving, or being towed behind an insured watercraft, regardless of who is at fault.
• Uninsured/underinsured boaters bodily injury: Covers medical expenses, loss of income, and other damages owed to you by an uninsured or underinsured boater.
• Uninsured/underinsured boaters property damage: Covers damages to your watercraft caused by an uninsured or underinsured boater.
• Comprehensive coverage: Helps pay for damage to your boat from vandalism, theft, weather events, and accidents involving animals.
• Personal effects coverage: Provides coverage for the loss of, or damage to, personal property while on board your watercraft, or while being carried on or off.
• Fishing equipment coverage: Protects fishing gear and equipment used in the legal sport of fishing, including rods, reels, lures, tackle boxes, and electronic gear.
• Roadside assistance: Provides towing to a qualified repair facility and necessary labour at the time and place of disablement.

Optional Coverage

In addition to the standard coverages, you may also be able to add extra coverage for:

• Medical payments
• Personal effects
• Uninsured boaters liability
• Towing and assistance
• Specialized coverage for specific items on your boat, such as expensive props or navigation equipment
• Consequential damage, covering losses due to wear and tear rather than an accident (e.g. rot, mould, corrosion)
• Cruising extension, providing temporary additional coverage if you plan to leave the USA

What are the risks of not having boat insurance?

While boat insurance is not a legal requirement in most states, there are several risks associated with not having it. Here are some of the risks you should be aware of:

Financial Risk:

Boats are typically a significant investment, and repairs or replacements due to unexpected accidents or damage can be costly. Without insurance, you will be solely responsible for covering these expenses, which could result in a substantial financial burden.

Liability Risk:

If you are found legally liable for an accident that causes injuries to others or damage to their property, you may face substantial medical or repair costs. Without insurance, your personal assets and savings could be at risk to cover these expenses.

Risk of Loss:

In the event of a total loss or theft of your boat, you will bear the full financial burden of replacing it if you do not have insurance. This could result in a significant financial loss, especially if your boat is your primary residence or a valuable asset.

Risk of Damage:

Boats are susceptible to various types of damage, such as vandalism, theft, fires, weather events, and accidents involving animals or collisions. Without insurance, you will have to cover the costs of repairs or replacements, which can be expensive.

Risk of Injury:

Boating involves inherent risks, and if someone is injured while riding in or operating your boat, you may be held liable for their medical expenses. Without insurance, you will be responsible for covering these costs out of pocket.

Compliance Risk:

While your state may not require boat insurance, your bank, lending institution, or marina might. If you lease, finance your boat, or rent a dock, they may require you to maintain boat insurance. Failure to comply with their requirements could result in penalties or loss of privileges.

It is important to note that even if boat insurance is not mandatory in your state, it is generally recommended to have it. Boat insurance provides financial protection and peace of mind, allowing you to enjoy your boating experiences with reduced worry about the potential risks involved.

How much does boat insurance cost?

The average cost of boat insurance is between $200 and $500 per year, but rates can vary widely depending on factors like coverage, vessel type, location, and age. Some sources state that the average annual cost of a boat insurance policy can be as low as $255 or as high as $753.

Boat insurance rates are generally more affordable in states with no coastline, as coastal states tend to have bigger and more expensive boats used in the oceans. The Great Lakes states tend to fall in the low-cost category because boat lengths are smaller, and boaters take advantage of inland lakes and rivers. The length of the boating season also impacts the cost of insurance, with northern states having shorter boating seasons and lower policy costs than southern states.

The type of watercraft is another factor that affects the cost of insurance. Fishing boats, pontoon boats, sailboats, and personal watercraft all have unique features that can influence the price of a policy. Boats with stronger engines, like powerboats, often have higher rates.

The condition of the boat also plays a role in determining insurance costs. Boats in better condition are generally more valuable, and boats in poor condition are more likely to suffer damage. The age of the boat is another factor, with newer boats typically being more expensive to insure than older boats.

The boating history of the owner can also impact the insurance rate. More experienced boaters may receive lower rates than newer boaters with less time on the water. Additionally, some insurers offer lower rates to older boat owners and those between 25 and 60 years old, as they are considered more responsible.

The cost of boat insurance can also depend on safety measures and safety education. Completing a boating safety course may result in lower insurance rates, and having safety equipment on board, such as ship-to-shore radios and Coast Guard-approved fire extinguishers, can lead to discounts.

When it comes to coverage, there are two basic types of boat insurance: "agreed value" and "actual cash value." "Agreed value" policies cover the boat based on its value when the policy was written, while "actual cash value" policies factor in depreciation and pay up to the boat's actual cash value at the time of a total or partial loss.

Overall, the cost of boat insurance can vary significantly depending on various factors, and it is recommended to get a quote to determine the specific cost for an individual's situation.

Frequently asked questions