Is Your Insurance Coverage Seaworthy?

With nearly 12 million registered recreational vessels navigating our nation’s waterways, it may surprise you to learn that boating accidents are relatively rare. Unfortunately, these mishaps do occasionally happen – and sometimes with tragic results. In 2017 alone, the Coast Guard recorded 4,291 recreational boating accidents, resulting in 658 deaths and 2,629 injuries. In addition, the price tag for boating-related property damage totaled approximately $46 million that same year.1

To ensure smooth sailing this summer, make sure you know and follow safe boating practices and carry appropriate insurance coverage. Here are some other tips to consider.

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Before You Leave the Dock

  • Check weather forecasts before heading out. Let someone know where you’re going and when you expect to return.
  • Check your engine, fuel, and electrical and steering systems; be on the lookout for exhaust-system leaks.
  • Carry one or more fire extinguishers appropriate for the size and type of boat. Keep them accessible and in good condition for immediate use.
  • Equip the vessel with required navigation lights and a whistle, horn, or bell.
  • Consider additional safety devices, such as a paddle or oars, a first-aid kit, a supply of fresh water, a flashlight, flares, a radio, a tool kit, and spare parts.

Out on the Water

  • Make sure that the skipper and passengers wear U.S. Coast Guard–approved life jackets. In 2017, 84.5% of drowning victims in boating accidents were not wearing a life jacket.2
  • Know and obey marine traffic laws. Learn standard distress signals.
  • Be alert for other watercraft, swimmers, floating debris, and shallow waters.
  • Don’t overload the vessel and take care to distribute the load evenly. Don’t stand up or shift weight suddenly in a small boat. Don’t permit riding on the bow, seatbacks, or gunwales.
  • Never operate a boat while under the influence of alcohol or drugs. In 2017, alcohol use was the leading factor in fatal boating accidents.3

The U.S. Coast Guard Auxiliary offers free advice and boating safety courses. If requested, the auxiliary will conduct a free Vessel Safety Check (VSC) on your boat. Boats meeting safety standards are awarded a VSC decal that is recognized by law enforcement and safety organizations. Many insurance companies offer discounts for boats that undergo a VSC annually.4

Insuring Your Boat

Homeowners or renters insurance policies may provide limited property damage coverage for small watercraft such as canoes, small sailboats, and powerboats with small motors (typically less than 25 horsepower). Liability coverage is generally not included; however, you may be able to add it as an endorsement.

Larger and more powerful boats (and personal watercraft such as jet skis and wave runners) should be covered under a separate boat insurance policy. State requirements vary, but most lenders will ask for proof of insurance. Keep in mind that your homeowners policy may not cover your boat even if it is parked in the garage.

There are two types of coverage for physical loss or damage to a boat and permanently attached equipment:

Actual cash value — Pays for replacement costs less depreciation at the time of the loss. In the event of a total loss, market value is based on used-boat pricing guides and similar sources. Partial losses are paid based on the total cost of repairs minus a percentage for depreciation, and the policy deductible also applies. An actual cash value policy is typically the more economical alternative, but coverage is narrower.

Agreed amount value — Coverage is based on the value of your vessel as agreed upon by you and your insurer. In the event of a total loss, you would typically receive the agreed value minus the policy deducible. In a partial loss, these policies may replace structural items without any deduction for depreciation, after the policy deductible. An agreed value policy typically costs more than an actual cash value policy but offers broader coverage.

Watercraft policies generally exclude certain types of damage, such as normal wear and tear, defective machinery, and damage caused by mold, insects, animals, or zebra mussels.

Boat insurance usually also covers the following:

  • Bodily injury caused to another person
  • Property damage caused to someone else’s property, such as another boat or a dock
  • Guest passenger liability for legal expenses incurred by someone using the boat with the owner’s permission
  • Medical payments for injuries to the boat owner and other passengers
  • Theft

Ask your insurance representative about coverage for special equipment kept on the boat, such as fishing gear and water skis. Also ask whether your insurance covers towing.

Spending time on your boat or other watercraft should be a relaxing break from the hustle of everyday life. Take a few moments to review your coverage and be sure that you have the protection you may need.