The Basics of Boat Insurance (aka Boat Insurance 101)

Here are the basics you need to know prior to purchasing Boat Insurance

Before purchasing boat insurance this review will be very helpful so that you can make an informed decision. Boat insurance policies typically offer coverage on boats up to 26′ in overall length. Vessels greater than 26 feet, it’s generally considered a “yacht”, and therefore qualifies for yacht insurance.

Boat insurance provides physical damage coverage for sudden and accidental damage, or if your vessel is destroyed by a covered peril such as fire, theft, windstorm, lightning or vandalism. This coverage is broad, and provides coverage for the boat, including its auxiliary equipment, machinery, outboard motors, personal property and boat trailer. Boat Insurance policies can offer physical damage coverage on an Agreed Amount Value Actual, or Cash Value (ACV) basis. Both types of boat policies offer important coverage for your vessel, however the differences are significant.

An Actual Cash Value policy will pay for the Replacement Cost less depreciation at the time of the loss. When there is a total loss, used boat pricing guidelines and other applicable resources are used to determine the market value of your vessel. Partial losses are settled by taking the total cost of the repair less the depreciated percentage.

An Agreed Amount Value policy is when the insurance company has agreed on the value of your vessel when the policy is written, and in the event of a total loss you will be paid the agreed upon amount. An Agreed Amount Value policy also replaces old property for new property in the event of a partial loss without any deduction or depreciation . Typically Agreed Amount Value policies require actual cash value on certain damaged property such as batteries, dinghies, trailers, protective covers, aged outboard motors, and trailers, lower drive units or outdrives.

Example of Agreed amount Value vs. Acutal Cash Value with $10,000 damage to a 4 year old Outdrive.

Agreed Amount Value Actual Cash Value
Damage $20,000 Damage $20,000
Less Depreciation $-0 Less Depreciation $-4,000
Less Deductible $-500 Less Deductible $-500
ACV Payment $19,500 Agreed Amount Payment $15,500

Physical Damage coverage is typically subject to a deductible. The vessel and the motor usually have the same deductible with additional deductibles applicable for the trailer and personal effects. The deductible is the amount you are responsible to pay in the event of a loss. The higher the deductible, the lower your insurance premium. Boat policy deductibles are typically calculated as a percentage of your coverage (1%, 2%, 3% of the vessel value) or can also be flat amounts of $250 or $500.

A comprehensive boat insurance policy should also offer coverage for Personal Effects, in order to provide protection for those items not intended for the normal operation of your boat, such as portable or cellular phones, radios, cameras, TV’s, and portable TV’s

Boat Liability

Liability coverage provides protection if you are legally damaging someone else’s property, or causing injury to someone other than yourself or a family member. Boat Insurance liability provides protection if you are sued as a result of colliding with another boat, or if someone is hurt on your vessel due to your negligence. This coverage is typically offered in increments of $100,000 up to $1 million.

Medical Payments

Medical Payments coverage provides protection for medical, ambulance and hospital costs in the event someone is injured while in, upon, boarding or de-boarding your vessel.

Uninsured Boat Owners Coverage

Uninsured Boat Owners coverage provides coverage for injuries caused by an accident that you are entitled to recover from the owner or operator of an uninsured boat or “hit-and-run” boat.


Commercial Towing and Assistance allows you to be reimbursed for the costs incurred when you break down at sea and require a commercial tow to port.

The above are some of the basic coverages you should be on the look for when purchasing boat insurance. As an expert in the field of Boat Insurance, Aspen Agency can help you in making informed decisions about your coverage needs.