Key Takeaways
- Boatowners insurance is a PACKAGE policy combining hull coverage (physical damage to the boat), medical payments, and watercraft liability—similar structure to auto insurance
- The homeowners policy provides LIMITED watercraft liability (typically boats with 25 hp or less motors) but does NOT cover physical damage to the boat itself
- Hull coverage can be written on AGREED VALUE (insurer pays full value at time of loss) or ACTUAL CASH VALUE (depreciation applies)—agreed value is preferred for expensive boats
- Personal watercraft (jet skis, WaveRunners) typically require separate policies or endorsements—they are usually excluded from homeowners and standard boatowners policies
- Navigational limits specify WHERE the boat can be used—exceeding these limits can void coverage (e.g., 'Great Lakes only' or 'within 25 miles of coast')
Boatowners and Personal Watercraft Insurance
Why Separate Coverage is Needed
Homeowners policies provide LIMITED watercraft coverage:
| Coverage | Homeowners Provides? |
|---|---|
| Liability | Yes—for small boats (usually ≤25 hp motors, under 26 feet) |
| Physical Damage to Boat | NO—never covers the boat itself |
| Personal Watercraft (PWC) | Usually NO—jet skis typically excluded |
| Large Boats | NO—usually require separate policy |
Quick Answer: Homeowners covers liability for small boats but NEVER covers physical damage to the boat. For hull coverage and larger boats, you need a separate boatowners policy.
Boatowners Policy Structure
Boatowners insurance is a PACKAGE policy similar to auto insurance:
Coverage Parts
| Coverage | What It Covers |
|---|---|
| Hull Coverage | Physical damage to the boat, motor, trailer, and equipment |
| Liability | Bodily injury and property damage to others |
| Medical Payments | Injuries to passengers regardless of fault |
| Uninsured Watercraft | Injuries by uninsured boat operators |
| Towing and Assistance | Emergency towing and fuel delivery |
Hull Coverage Options
Agreed Value vs. Actual Cash Value
| Valuation | How It Works | Best For |
|---|---|---|
| Agreed Value | Insurer pays full agreed amount at total loss—NO depreciation | Expensive, classic, or specialty boats |
| Actual Cash Value | Replacement cost minus depreciation | Older or less valuable boats |
Exam Tip: Agreed Value policies cost more but pay the full insured amount at total loss. With ACV, you may receive significantly less than you insured due to depreciation.
Covered Perils
Boatowners policies typically cover:
- Collision with another boat or object
- Sinking, capsizing, and stranding
- Fire, lightning, and explosion
- Theft of boat or equipment
- Windstorm and hail
- Vandalism
Common Exclusions
- Wear and tear, deterioration
- Mechanical breakdown (engine failure)
- Ice and freezing damage (may be covered with endorsement)
- Manufacturer defects
- Racing (unless endorsed)
Personal Watercraft (PWC) Coverage
Personal watercraft (jet skis, WaveRunners, Sea-Doos) typically require separate coverage:
PWC Policy Differences
| Feature | PWC Policy | Standard Boatowners |
|---|---|---|
| Hull Coverage | Available | Available |
| Liability Limits | Often lower | Higher limits available |
| Navigation Area | Often more restricted | Broader navigation |
| Racing Exclusion | Strictly enforced | May have endorsement |
| Age Restrictions | More common | Less common |
State PWC Requirements
Many states have specific PWC regulations:
- Minimum operator age (typically 14-16)
- Required boater safety certification
- Restricted operating hours (daytime only)
- Distance requirements from shore/swimmers
Navigational Limits
Navigational limits specify where the boat can be operated:
Common Limit Types
| Limit Type | Description |
|---|---|
| Territorial | Specific water bodies (Great Lakes, Gulf of Mexico) |
| Coastal | Within specified miles of coast (25, 50, or 100 miles) |
| Inland | Lakes, rivers, and protected waters only |
| Seasonal | Specific dates (May 1 - October 31) |
Important: Operating outside navigational limits can VOID COVERAGE. Always verify limits match intended use.
Lay-Up Period
What is Lay-Up?
The lay-up period is when the boat is stored and not in use (typically winter months).
Lay-Up Credits
| Feature | Details |
|---|---|
| Reduced Premium | Lower rates during lay-up |
| Restricted Coverage | Limited to fire, theft, vandalism |
| Required Storage | Often must be stored properly (out of water, winterized) |
Key Endorsements
| Endorsement | Coverage Added |
|---|---|
| Fishing Equipment | Covers rods, reels, tackle |
| Racing Coverage | Covers competitive events |
| Wreck Removal | Costs to remove sunken boat |
| Pollution Liability | Fuel spills and environmental damage |
| Consequential Damage | Engine damage from water intrusion |
Does a homeowners policy cover physical damage to the insured's boat?
What is the advantage of Agreed Value hull coverage over Actual Cash Value?
What happens if a boat owner operates their vessel outside the policy's navigational limits?