Boat Insurance: Is It Mandatory?

In most states, boat insurance is not a legal requirement. However, there are several reasons why you may want to consider it. For instance, banks and marinas often require insurance for boats, and it can also protect you financially in the event of damage or injury.

Boat insurance requirements by state

Most states in the US don't require boaters to purchase insurance for their boats. However, some states, marinas, and banks may have specific requirements for insurance.

States with Boat Insurance Requirements

Arkansas, Hawaii, and Utah are the only states that require boaters to have insurance. Arkansas mandates liability insurance for all motorboats with engines exceeding 50 horsepower and all personal watercraft (PWCs). The policy must provide a minimum of $50,000 in liability coverage, and operating such a boat without insurance is illegal.

Similarly, Utah requires all motorboats and PWCs to have liability insurance when operated within the state. However, motorboats with engines below 50 horsepower and airboats are exempt from this rule. Operating a PWC without insurance in Utah is also illegal. The state's insurance policy has minimum coverage requirements, including $25,000 for bodily injury per person, $50,000 for total bodily injuries, and $15,000 for property damage.

Some states, like Hawaii, may require insurance for boats kept in state-operated marinas or used in state parks. For example, the Hawaii Division of Boats and Ocean Recreation mandates a minimum of $500,000 in liability insurance for vessels moored at its facilities.

Marina and Bank Requirements

Even if your state doesn't require boat insurance, your bank will likely require it if you have a loan on the boat. They will ask for proof of insurance that covers the full value of the boat in case of loss and will be listed as a lienholder on the policy.

Additionally, most marinas require proof of insurance before allowing boats to use their facilities. For instance, the Port of Bellingham in Washington demands a policy with a minimum of $300,000 in general, legal, and pollution liability insurance for a term of at least one year. Some marinas may also request to be listed as an "'additional insured' or 'additional interest' on the policy".

When is boat insurance necessary?

In most states, boat insurance is not a legal requirement. However, there are several scenarios in which you may need to purchase boat insurance.

Firstly, if you are financing the purchase of a boat through a bank, you will likely be required to provide proof of insurance for the watercraft. The policy will usually need to cover the boat's full value, and the bank may set minimum requirements for specific types of coverage.

Secondly, if you plan to use a marina or port, you will typically need to have boat insurance. Many marinas require insurance if you wish to use a slip or mooring, and some may even ask to be listed as an "additional insured" or "additional interest" on the policy.

Thirdly, if you live in a state with boat insurance laws, you will need to comply with those requirements. As of January 2024, only Arkansas and Utah have boat insurance laws, while Hawaii also requires insurance for certain boats. In Arkansas, all motorboats with engines of more than 50 horsepower and all personal watercraft (PWC) must be covered by a liability insurance policy with a minimum of $50,000 in coverage. In Utah, all motorboats and PWCs must carry liability insurance when operated on Utah waters, with some exemptions for boats with engines below 50 horsepower and airboats.

Even if none of the above scenarios apply to you, it is generally recommended to get boat insurance to protect yourself and your boat from risks such as theft, collision, or storm damage. Boat insurance can also cover you if someone is injured on your boat or if you cause damage to someone else's property.

When considering boat insurance, it's important to note that homeowners' insurance policies often have limited coverage for boats and may not include marine-specific risks. Therefore, it is often best to separate your boat insurance from your homeowners' policy to ensure adequate protection.

Types of boat insurance

Boat insurance is highly customizable, and there are many different add-ons and aspects of coverage. However, the standard protections that come in a boat insurance policy are similar no matter what type of vessel you have. Here is a list of some of the most common types of boat insurance:

• Liability coverage is designed to financially protect you and other boaters on the water. If you cause an accident, liability coverage will enable your insurer to cover the resulting expenses so that you don't have to pay out of pocket to remedy the damage you've caused.
• Property damage liability coverage is a subsection of liability insurance that covers repairs to someone else's property that you may be responsible for after an accident. For example, you could damage someone's boat or dock after crashing into it. Your insurance company can then cover their repairs.
• Bodily injury coverage is another subsection of liability insurance that covers medical expenses and bills if you injure someone in a boating accident. This can include loss of wages if they're forced out of work for some time.
• Collision coverage financially safeguards your boat after an accident. It enables your insurance company to pay for the repairs to your vessel. Collision coverage is based on the value of your boat, and your insurer can reimburse you for the damages to your vessel depending on how you've outlined its value in your policy.
• Comprehensive coverage protects your vessel from the damage it can sustain other than through a crash with another boat. This includes theft, vandalism, and fire damage. It also typically covers damage you could suffer from hurricanes, flooding, and hail, although the specifics of protection from these hazards vary by carrier.
• Actual cash value policies are a type of boat insurance policy that factors in depreciation when reimbursing you for your boat. 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.
• "Agreed value" policies cover the boat based on its value when the policy was written. While it can cost more upfront, there is no depreciation for a total loss of the boat (some partial losses may be depreciated).
• Uninsured boater coverage covers injuries you or your passengers sustain in an accident when the at-fault party doesn't have liability insurance.
• Boat insurance medical payments are a part of your policy that covers injuries you or your passengers might sustain in an accident related to your boat. Remember, liability insurance only covers injuries other parties suffer that you cause. Medical payments protect you.

How much does boat insurance cost?

The cost of boat insurance varies depending on several factors, including the type of boat, its location, and the profile of the owner. The average cost of boat insurance is around $200 to $500 per year, but rates can range from less than $100 to over $1,000 per year.

Boat insurance rates are typically higher for larger and more expensive boats, as well as for powerboats with more horsepower. The age of the boat also plays a role, with newer boats often being more expensive to insure than older ones. The location of the boat is another factor, with coastal states generally having higher insurance rates than inland states due to the presence of bigger and more costly boats.

The type of coverage chosen also affects the cost of boat insurance. Liability-only policies tend to be cheaper, while comprehensive coverage with add-ons can significantly increase the premium.

It is worth noting that only a few states in the US require boat insurance by law. However, banks and marinas may have their own insurance requirements for boats.

What does boat insurance cover?

Boat insurance is similar to car and home insurance. It helps protect you, your boat, and other boaters from certain risks. It covers your boat whether it's in the water or on land.

Boat insurance covers a wide range of incidents and situations. Here are some of the most common coverages:

• Property damage liability — This covers the cost of damages to someone else's property if you cause an accident.
• Collision damage — This is an optional coverage that pays for repairing or replacing your boat after an accident, minus your deductible.
• Bodily injury liability — This covers the costs associated with injuries to other people involved in a boating accident if you are found legally responsible.
• Hull coverage — This covers any physical damage to your boat, including trailers, equipment, motors, and accessories. It also covers fire and windstorm damage.
• Fuel spill liability — This is a separate policy that covers any fines from an accident involving a fuel spill.
• Medical payments coverage — This covers the medical expenses of you and your passengers if you are injured in an accident on your boat.
• Uninsured watercraft coverage — This covers the expenses if an uninsured boater collides with your boat and you or your passengers are injured.
• Salvage and wreck removal — This covers the cost of removing your boat from the water if it is damaged or sinks.
• Comprehensive coverage — This protects your boat from damage caused by events outside your control, such as theft, vandalism, explosions, fires, falling objects, hurricanes, lightning, and other weather-related issues.
• On-water towing — Some policies offer on-water towing services if your boat breaks down or needs assistance.
• Specialised coverage — This covers specific items on your boat, such as expensive propellers or navigation equipment.
• Consequential damage — This covers losses caused by wear and tear rather than an accident, such as rot, mould, or corrosion.
• Fishing equipment and personal property — Some policies cover the replacement of fishing gear and personal items like scuba gear, marine binoculars, or other valuables that are lost or stolen.

Boat insurance requirements vary depending on your location and the type of boat you own. While most states don't require boat insurance, some marinas and banks may mandate it. Additionally, if you plan to boat in international waters, an experienced marine insurer is highly recommended.

Frequently asked questions