Read the fine print
7 things you should know about your boat’s insurance policy
Knowing what’s in your boat’s insurance policy could mean the difference between having to pay significant costs out of pocket for a claim or coming away from the claims experience in good shape. Here’s what you need to know about the fine print on some of the most important coverages.
- Consequential damage: Half of all sinkings occur at the dock when some small part below the waterline fails, often because of wear and tear and corrosion or a lack of maintenance, so the policy won’t pay for a new part. But with your boat sunk and a total loss, who pays? Check for consequential damage coverage to pay for these losses resulting from a failed part. Consequential damage coverage often applies only to major or total losses. It’s typical to cover the immediate consequential damage resulting from any fire, explosion, sinking, demasting, collision or stranding.
- Fuel-spill liability: In addition to your policy’s standard liability coverage for physical damage or bodily injury to a third party, fuel-spill liability protects you from claims for cleanup or third-party damage from the accidental discharge of oil or fuel that can occur in a sinking, fire, collision or grounding. A good policy separates out fuel-spill liability and provides coverage up to the maximum amount you can be held liable for under federal law, which is $939,800.
- On-water towing: Many boat insurance policies today offer some kind of on-water towing endorsement that provides a level of towing and assistance for routine breakdowns or soft ungroundings. Know how you will be able to use that coverage including who provides the service and when you’ll have to pay for a tow out of pocket and be reimbursed.
- Salvage coverage: If the boat is not a total loss and needs to be recovered and brought to a repair facility, costs can escalate quickly. Most boaters assume the cost of raising or moving the boat is covered by their policy, but some marine insurers will subtract salvage costs from the insured value of the boat, reducing the funds available to repair the boat or the amount paid in the event of a total loss. Good policies provide salvage coverage that is separate but equal to the boat’s hull-value coverage.
- Boat trailer: Not all boat insurance policies automatically provide boat trailer coverage. Find out if there are geographic limits on where you may trailer the boat. Note that if you have an accident while towing, it’s your boat policy that pays to repair or replace the trailer, but any third-party damage that your trailer causes is covered under your auto policy.
- Liability-only boat policy: If you opt for a liability-only policy, ensure that it provides coverage for property damage and bodily injury to others and that it provides coverage for salvage and removal of a wreck. Make sure separate coverage is available for fuel-spill incidents.
- Not a coverage but a concern: Most boaters don't have the experience to salvage their own boat and deserve an insurance provider that can arrange for salvage as quickly as possible, potentially negotiating with crane operators, storage facilities, marina staff and more. The only way to find out if you'll be left holding the bag or get the help you need is to ask around for other boaters' claims experiences.