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How Do Boat Insurance Rates Get Affected?

Boat Insurance Rates - How Do They Work?

There are many factors that can affect boat insurance rates. While some of these factors can be in your control, others are not. So if your regular sailing route passes over a lake with higher number of claims, you should expect to pay more for the coverage compared to a lake that has a lesser claims rate.

But that is not the only factor that affects boat insurance rates. The other factors taken into account are:

  • How much your boat is used: A boat that is used occasionally for fishing trips will usually have lower insurance rates than a boat used for parasailing, wake boarding, and tow water skiing.
  • Your previous claims record: The more claims filed previously, the higher the rate will be.
  • Your previous record in automobile driving: If you are a good automobile driver, you are highly likely to be a good boat driver.
  • Other’s experience in driving boat: If you add others like a teenager in the family as a driver, the rates can get higher.
  • Boat horsepower: Usually, the higher the engine horsepower, the higher will be the boats insurance rates.
  • Steps towards safety: If you have completed some certified safety course or your boat has fire extinguisher and radio approved by Cost Guard, the rates may get reduced.
  • Age and gender: According to various studies, you are highly likely to get better boat insurance rates if you are a woman and above 27, as compared to men in your age. Even if the driving records are equivalent.
  • Boat specifications: The boat’s make, model, year and even the motor are important factors. The rates can be different even when the motor is outboard or inboard.
  • Credit score: Insurance companies have somehow determined that those with lower credit score are more likely to enter boat accidents. A lower credit score could mean paying more for the boat insurance than others who have higher credit score.
  • The Area: If the area where you will be using your boat has natural hazards, the rates can get affected. For example, if the region has hurricanes.

Difference between Agreed Amount and Actual Cash Value policies

Agreed Amount Value Policy

This is the type of policy where the insurance company and you have fixed an “agreed amount” as your boat’s value. This is the amount that the insurance company will pay you if there is a loss. Such policies also cover replacement of old items if there is partial loss. In that case there is no deduction against depreciation.

Actual Cash Value Policy

This type of policy will pay for the Replacement costs in case of a loss, but they deduct depreciation. In case of a total loss, the company considers used-boat prices and various resources to determine the market value of the boat. This type of boat insurance is cheaper, but the returns will be smaller in case of a loss. The only good scenario is if your boat can be replaced for its equivalent worth as a used boat.

Kind of Coverage

You should have the following things covered (some of them may be required to be covered under law):

  • Coverage Against Physical Damage: This type of coverage is the primary cover, but you should also get coverage for the engine, hull and trailer. This coverage provides protection against theft, collision, windstorms, lightening and even vandalism.
  • Coverage for Personal Effect: This is going to cover your personal belongings on the boat. This includes your phone, television, radio, camera and other such personal effects. General insurance providers usually don’t offer this coverage.
  • Boat Liability: You will have to buy this insurance cover if your boat is financed. Almost every state makes it mandatory in case a boat is financed. It will cover damages done at your hands to someone else and/or their boat.
  • Uninsured Boat Owners Cover: If you have uninsured boat owners cover, it will protect your interests. The policy will cover any damages you caused by an uninsured driver or if there is a hit and run case.
  • Commercial Towing Cover: You will need this coverage to be reimbursed when your boat stalls and has to be towed in. It can also cover towing when your boat gets grounded ashore.
  • Medical Liability Cover: This will cover medical and ambulance costs if anyone gets injured on your boat or while boarding or getting off.
  • Salvage Cover: If your boat sinks, it is this coverage that will bear the costs involved in salvaging your boat. It is an essential on almost all lakes and rivers.
  • Spillage Cover: If there is spillage of fuel or oil into water, this coverage will provide cover for the cleanup costs.

How to reduce boat insurance rates

  • You should choose the right kind of boat when buying a new one. If you want to reduce the insurance rates, safety should be your first priority and not performance.
  • A lower priced boat will have lesser premium.
  • If you can do some boat safety course, it may help you get a discount. It can also be helpful in difficult situations.


Insure your Marina

Boat owners who use a marina for their boat, will also need to provide insurance cover to the marina. Marinas don’t want to bear the cost of damages caused to other boats or the marina itself.

Typically, marinas will require you to show that you have such an insurance cover. Even when you travel beyond borders, you will require such insurance to be able to check in.

You may not be an as adventurous sailor who embarks on cruises to destinations where insurance is a must. However, you should still take your own protection into consideration. If there is any accident, you will have to bear the damage costs, not only to your own boat but to other boat (s), properties (like docks), and even the environment (when there is fuel spillage).

So make sure to have your boat insured just like your house or car.