Have You Insured Your Boat or Personal Watercraft?

It's summertime and for many that means leisurely weekends on the river, lake or ocean on their boat or personal watercraft like jet skis.

But just because you're out on the water doesn't mean there aren't risks, to you and others - or to your watercraft. But what kind of coverage do you need? Should you just purchase coverage similar to what you have for your car?

In fact, insuring a small boat or personal watercraft is similar to buying insurance for your car, while buying insurance for a yacht is more like buying homeowner's insurance.

First off, your homeowner's insurance does not extent to your boat, but it may extend coverage if it's a small one with no engine, like a rowboat or a simple sailboat. But if you buy a boat for more than $10,000, your homeowner's policy won't cover it.

So for most of us who purchase a boat, you should also make sure it's covered properly.
 
Watercraft insurance explained
Like home insurance, a boat policy covers you for liability if someone is injured on your craft. The insurer will also give you a choice between replacement cost or cash value in case of a total loss such as a fire or if you have an accident bad enough that will require the boat to be totaled. 

Like auto insurance, a boat policy typically includes coverage for bodily injury that your boat inflicts on others, property damage that it inflicts on docks and other boats, and physical damage to your craft should you hit something or run aground. 

And like auto insurance you can purchase:

• Comprehensive insurance to cover against theft, vandalism and fire.
• Personal property coverage for any personal possessions you may keep on the boat.
• Uninsured boater insurance in case someone who is not insured plows into you.
• Roadside assistance in the event you need a tow.

 
However, many insurers will allow you to lay up or suspend coverage for a specific period of time during the year when you won't be using the boat. But you need to be aware of the time period during which your boat is insured.

Some boat owners have been caught unawares when they have an accident on a nice sunny afternoon in late October, when their policy specifies it's only covered from April 1 to Oct. 1.
 
Agreed vs. market value
When deciding on insurance you need to decide if you want the "agreed value" covered or the "market value" covered.

Under agreed value, you and the insurance company agree on the value of the boat up front so if you need to make a claim for serious damage, the insurer will pay you up to that amount.

However, with market value, the insurer will pay up to the current market value (new price minus depreciation) if the boat is totaled. Insuring the market value can save you up to 25% on the premium, depending on the insurer.

Typically, if you own a new boat you may want to go with agreed value since the boat, much like a car, will depreciate once you take it out of the showroom.
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Here are three other tidbits of information you may want to know:

• If you are towing your boat and the boat is damaged, the car policy will cover it and the limits of that policy apply.
• If the boat is out of water and parked at your home, the watercraft insurance will typically not cover damage, vandalism or theft. That would be covered by your homeowner's policy. In this case, an umbrella policy is recommended.
• Most boat insurance policies have navigational limits, meaning that the boat will only be covered in a certain geographic area.