New Boat Owner Guide To Insurance

insurance for boats new boating policy coverage

Are you in the market for a brand-new boat to hit the open water with? Do you currently have a boat that you don't have financial protection for? If so, then you need to learn more about insurance for boats. 

Doing so can help you answer all of your questions. Is boating insurance legally required? How expensive is it? What factors should you look for in a high-quality boat insurance policy? All of these are important to ask yourself as you search. 

See below for an in-depth beginner's guide to boat insurance and what you should look for when buying it for the first time. 

Is Insurance Required for a Boat? 

First things first, you're probably wondering Am I legally required to purchase insurance if I own a boat? The answer is.... (drumroll please!) 

It depends on the state you live in. That said, most states don't legally require you to have insurance for your boats unless you intend on using a mooring or a slip. Only Utah, Arkansas, and Hawaii have specific requirements, and even those are limited. 

Granted, if you are financing the purchase of your boat through a bank (I.E. a bank loan), then the bank will likely require you to have boating insurance on it. This is to protect the investment they've made in the boat. 

Legal or not, it's always wise to have insurance coverage for your boat. Your boat is an investment that you've made, just like a car or a house. It needs to be protected from unforeseen emergencies. 

What if you take the boat out on the water and notice a leak? Without insurance, you'll be forced to pay out of pocket for that expense. With insurance, you'll only have to pay a deductible before the rest is covered by your provider. Find the best marine insurance provider out there for your watercraft. 

How Expensive Will Boat Insurance Be? 

Yet another great question for watercraft owners! Unfortunately, it doesn't have a straight answer. Similar to car insurance, your boat insurance's cost will depend on a variety of different factors, such as: 

• The amount of coverage you need for your boat 
• The deductible amount that you're willing to pay 
• Your boat's age 
• Your boat's value 
• Whether or not the boat will be used as your primary residence (it's more common than you'd think) 
• Whether your boat was self-made or manufactured (if it's the former, it will likely up the price of your premiums) 
• The condition of the boat 
• The power of the boat (such as its horsepower and top speed) 
• How many people on the boat 
• What body of water you'll primarily use it on (lakes, rivers, oceans, ponds, channels, etc.) 

Providers use all of this information to gauge the 'risk' associated with your boat. The riskier they deem it, the higher your premiums will be. 

The good news is that there are always ways to fluctuate your premiums a bit. For example, you can offer to pay a higher deductible on your claims to lower the monthly payments. 

What Are the Different Types of Boat Insurance? 

When it comes to boat insurance (which is specific to boats, not watercraft), there are two main types of policies: actual cash value and agreed value. As their names might imply, these policies handle the depreciation of the boat differently. here's a description: 

Actual Cash Value Policy - These policies only offer a coverage amount that stays in line with the "actual value" of the boat as it depreciates. So, for example, you'll have less coverage on the boat in 2 to 3 years than you do if you invest in the policy today. The positive of that? Your monthly premiums will be less as well. 

Agreed Value Policy - The coverage is a set rate that's determined at the time that the policy is drawn up. Contrary to the actual cash value policy, this policy doesn't have depreciation on total losses. However, it will cost you more upfront. 

Which one should you invest in? That's up to you to decide! Both have their pros and cons, and your provider may not offer one of them. In fact, as your boat ages, your provider might suggest switching to an actual cash value policy to save both you and themselves cash. 

The Benefits of a Boat Insurance Policy 

Last question, here. What are the benefits of having a boat insurance policy. In other words, why should you invest in a policy for your boat. Here are a few of them: 

Cost-Efficient Coverage - You can purchase coverage that is well within your budget. 

Saving Grace for Your Finances - Boat repairs aren't cheap. Boat insurance coverage allows you to minimize the financial cost by covering expensive repairs after you pay your deductible. 

Flexible Coverage - You can have as much or as little coverage as you'd like. There are no legal requirements, so the coverage amount is all about finding a range you're comfortable with. 

Liability Coverage - Accidents don't just happen on the highway, they happen on the open water as well. Liability coverage will protect you from an at-fault incident involving boats. 

Invest in Insurance for Boats Today 

Now that you have seen an in-depth beginner's guide on insurance for boats, be sure to use this knowledge to your advantage. 

Take the time to find the right boat insurance provider for your needs. Make sure they have the boating policy coverage amount you want, cover all the basic needs, and can offer you a premium that's within your budget. 

Be sure to browse our website for more articles on insurance, as well as many other helpful topics that you'll enjoy reading about. Now enjoy yourself out on the water you motor-boating son of a gun, you old sailor you!

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