Summer is the perfect time to head out on your boat and enjoy the scenery of a lake or ocean and go fishing, or other recreational water activities. But before you buy that boat, it’s important to know what your homeowners’ insurance policy covers and whether or not you need to get boater’s insurance.
How Your Boat May Be Covered By Homeowners Insurance
Believe it or not, your homeowners policy may cover a small boat with no engine or a very small engine, like a sailboat. It’s a minimal amount of coverage, but may be all you need. If, however, you’re purchasing a $20,000+ boat, your homeowners policy won’t be enough.
If your boat is parked on your property and is damaged, your homeowners insurance will probably cover the damage, but may not include vandalism or stolen property on the boat.
For these reasons, it’s probably not a good idea to rely on homeowners insurance for your boat.
What Boater’s Insurance Covers
Boat insurance policies are a lot like home and auto insurance policies—sometimes including coverage from each of them. For instance, like auto insurance, a boat policy usually provides coverage if your boat is damaged from hitting something or running aground. It covers property damage caused by your boat, whether it hits a dock or another boat. It also includes bodily injury coverage for any harm your boat causes to other people. You’ll need to obtain comprehensive coverage for theft, fires, vandalism, uninsured boater insurance, and personal property coverage such as fishing equipment and other property found on your boat.
A boat policy is similar to home insurance because it covers you for liability if someone has an accident while aboard your boat. In the case of a total loss, you also have the option of getting the replacement cost or cash value for your boat.
A Key Difference Between Boat Insurance and Auto and Home Insurance
Unlike auto and home insurance, a boat policy can let you suspend coverage for specific periods of time when you’re not using your boat. This is a nice benefit for boaters who live up north and who don’t use their boats for several months out of the year. Make sure you know what the time period is, in case you decide to take your boat out on a nice day in October, only to have some misfortune and realize you’re boat isn’t covered during that month.
In addition to time constraints, make sure your coverage extends to any place you want to take your boat. Some areas may be excluded for security reasons.
When Car Insurance Covers Your Boat
If you’re driving on the road with your boat hitched to the back of your vehicle, and you back into someone, your car insurance policy will take over. Unfortunately, the boat is limited to the coverage of your auto policy, which means it may not pay for injury, loss of life or property damage.
Agreed Value and Market Value Policies
Like your car, your boat’s value depreciates the moment you purchase it. If your policy is “agreed value,” a total loss means you’ll be paid for the cost of the boat at the time you bought it. This is helpful if you own an older boat. The insurance company and the person buying insurance have to agree on the value of the boat upfront. Then no matter what happens to the boat, you’ll be paid up to the agreed value.
“Market value” means that if anything happens to your boat, you’ll be paid what the boat is currently worth, not what it was worth when you bought it. For example, if you bought the boat in 2007, you won’t be paid enough money to get a 2016 model; you’ll get enough to buy a 2007 model. Many insurance companies will offer big discounts with market value policies, because you’re agreeing to take less money in the event of damage.
What factors will help you get a better discount on your boat? Find out in our next blog, as we continue part 2 of our discussion of boat insurance policies.
For all your home, auto, boat and other insurance needs, please contact Zawada Insurance Agency, Inc. We’re a family-owned and operated independent insurance agency, located in Worcester, Massachusetts, serving central Massachusetts and beyond.