Boat Insurance Fundamentals

Boats come in all shapes and sizes, just ask any canoe owner who has ever been caught in the wake of a large motorboat. As you might expect, the insurance requirements for these two types of boats are as different as the boats themselves.

If you own a small nonmotorized boat, your boat is probably covered under the personal property section of your homeowner’s insurance policy. However, the coverage will be limited to the perils named on your policy. This means that if your rowboat sinks in the middle of the lake, your home insurance won’t help – but if your boat was damaged by fire in your home, your home insurance policy can help cover the cost of repair or replacement.

Larger motorized boats bring several new coverage considerations. Here are some of the coverage options that are commonly available:

Physical damage coverage: This coverage helps cover the cost of damage to your boat. One important question to ask is whether the coverage is actual cash value or agreed value. Actual cash value coverage is more affordable but the amount of coverage you’ll have for damage to your boat is reduced over time as your boat ages. Agreed value sets a fixed insured amount for your boat and helps prevent coverage surprises if you have a claim but is usually more expensive than actual cash value coverage.

Personal liability coverage: The open water can be risky and while less crowded than Canada’s roadways at rush hour, occasionally boats bump into each other or cause damage to the property of others. Personal liability coverage is a must for motorized boats.

Emergency service: Just like cars, boats can break down, possibly leaving you stranded. Emergency service coverage can help get you and your boat back home safely. With many insurers, this coverage is optional but is worth considering.

Wreck removal: A car that’s involved in a fender bender can usually be towed away. A boat that’s involved in an accident might sink, requiring specialized (and expensive) equipment to pull the sunken boat out of the water. This is coverage you hope you’ll never need – but if you do need it, you’ll be glad you added it to your policy.

​If you have a boat or you’re considering purchasing a boat this season, just reach out to your broker to discuss your coverage options.