Longtime boaters will see retirement as a time when they can enjoy their boats more fully and on longer hauls, without worrying about getting back to work on Monday morning. Bucket-list boaters will have ‘buying a boat’ as a line item on their retirement budget. They will finally buy the boat they swooned over at every Boat Show for the past five years.
Besides the costs of maintenance, docking, storage and fuel, a very important budget line item is boat insurance. Relying on a homeowners insurance policy will rarely provide enough coverage. And not having enough insurance coverage can mean putting the rest of your retirement savings at risk in the case of an under-insured liability lawsuit. An ounce of insurance is worth a ton of protection.
If your boat is small and inexpensive, you may find some limited coverage under your homeowner's insurance policy. You may even be able to add a special endorsement.You would need to check your policy to see what is covered: the dollar amount in case of damage or loss, and under what circumstances.
You would need boat insurance for yachts, high-performance boats, sailboats, fishing boats, small boats and watersports boats. Typically, you would not need it for canoes, small-engine boats and any other small, slow vessel, sometimes defined as running under 25 mph.
However, your homeowner's policy is unlikely to cover you for liability, that is, for any damage your boat does to other people or their property. On the other hand, with boat insurance, you can typically buy $15,000-$300,000 of liability insurance, although $1,000,000+ may be recommended in many cases.
Boat insurance sounds somewhat like car insurance in the names of its basic coverages: Collision Damage, Property Damage, Bodily Injury, Comprehensive, Medical and Uninsured/Underinsured.
Other more boat-specific coverages, which may be included in the policy or as riders, could include environmental (oil spills), personal property not attached (fishing equipment), attached accessories (added navigation equipment), on-road and in-water towing, trailers and accessories, water sports risk and others.
What boat insurance typically excludes is normal wear and tear, defective machinery or machinery damage, and damage from water creatures, mold or insects.
Like auto insurance, boat insurance is available directly from an insurance company or through insurance agents who will in turn write your boat policy through an insurance company.Insurance providers run the gamut from the large, well-known insurers that cover multiple insurance products to smaller insurers who specialize in boats.
Depending on how far from home you intend to ever go with your boat, you can decide between companies that are national or more local. What you want to be certain of is that the company has sufficient financial strength, so you don’t have to worry about whether or not it can pay a claim.
Boat insurance is not always required. (For requirements where you live, check with the boating regulatory agency in your state.) Some states require at least liability insurance, marinas usually require insurance for you to dock your boat there, and a lender will require insurance if you take out a loan to buy your boat.
Beyond what is required by third parties, the coverage you opt for should be that which will bring you peace of mind. It would include the amount of coverage you need specifically to protect yourself, your passengers and your vessel; the liability coverage you need for damage and injury caused by you to others, and the deductible (or maximum out-of-pocket expense) you can afford to pay out in cash per claim.
Having sufficient boat insurance:
- Protects your finances against lawsuits others might bring against you to cover the costs of injuries or damage to persons or property for which you are held responsible;
- Protects whatever investment you made in your boat, particularly if you bought it with a loan that still carries a balance;
- Protects you against fellow boaters who are uninsured or underinsured in incidents that are not your fault; and
- Provides the general peace of mind of knowing you are being a responsible boater.
When you are buying boat insurance, you are looking for the perfect balance between adequate coverage and affordability. As you start the selection process, it will sound very familiar if you have bought auto insurance.
Just like with auto insurance, you will be concerned about the cost of premiums, the ease of putting the insurance in place, what coverages are available, if there is a waiting period and the quality of the insurance provider’s customer support.
Additional criteria that are related to boat insurances include available discounts, how many ways payments can be made, available add-on coverages and the types of boats covered.
Finding the ‘best’ boat insurance takes a little more research than it would for some other forms of insurance because policies are somewhat less standardized in what they cover and what they do not. The details for the same coverage can vary from insurer to insurer, so digging into the details is important.
Finding companies: First check with fellow boaters, if you can. If you belong to an association such as United States Power Squadrons or any sailing organization with local chapters, ask members for referrals. What you are looking for is a list of three or four insurance providers that have good reputations. If your auto insurer also offers boat insurance and you are happy with its service, add that name to the list.
Qualifying companies: At this point, you will want to go online and check each company’s Better Business Bureau rating to see how it handles complaints and problems. Also check how it rates with A.M. Best, the leading insurance rating agency. (An insurer’s FSR – or Financial Strength Rating -- should be at least an ‘A’ so you never have to worry about its ability to honor a claim.)
Next, visit the website for each company and gather as much information as you can. The reviews you find on its site and third-party review sites will help you develop a feel for how comfortable you will be working with the company. Do remember that any company will get negative reviews, simply because most people write to complain. Also, the bigger the company, the more reviews it will have, both positive and negative.The important thing is to look for trends.
Insurance providers differ in the discounts they make available. The more common discounts are for layup periods (when your boat is out of water for certain seasons), fresh water instead of salt water boating, having a diesel boat, having no prior boating claims, completing safety courses and having multi-policies with the same carrier. Some insurers will offer others as well.Identify the ones for which you qualify. Be sure to apply them in any online quoting tool you use and mention them in any conversation you have with a broker or company salesperson.
Contacting companies: Nw you are ready to contact boat insurance companies or brokers, whichever you prefer.Work with them to design the policy that works best for you, and have them all quote similar policies, which include your discounts. The cost of the premium will be a major decision-making factor for you, but so will the ease you feel dealing with the company.
If you are not knowledgeable about boat insurance, you should feel at ease asking questions about insurance for your situation and your boat. Ask specific questions about what is covered, including accessories, trailers and other equipment. Most of all, be sure the company will be available 24/7/365 when you need it.
Part of that ease should reflect two areas seniors are sensitive to when buying insurance: age-friendliness and health-related value.
Age friendliness: This means how convenient and easy it is to deal with an insurance provider as you get older and your needs change.This can take the form of easy-to-navigate websites, several ways of interacting with the company and how the insurer’s customer service representatives address you. For some seniors, boating is something they will do well into their seventies and eighties; your insurance company should not be a hindrance to your enjoyment.
You will want to ask if the company will raise premiums based on your age, even if you are incident free. If it raises rates by age group, by how much will rates go up?
Health-related value: This reflects how the value of a service might change as a person’s health declines. As boating is a relatively physical activity, your health will tell you when boating is no longer safe or enjoyable for you. Pay attention to any side-effects from medications, too. Unless you can recruit healthier boaters to take you boating, you will know when to retire your boating shoes.
The fee for boat insurance is the annual premium your insurer establishes for the coverage you request. The policy you design will ultimately determine how the insurer will compensate you in case of a claim. That depends upon:
- The actual coverages you select and the limits you set for each coverage;
- The deductibles you select; and
- The valuation in case of total loss, whether you opt for your boat’s actual cash value, agreed-upon value or, in some cases, its replacement cost.
Coverages: The coverages available to you are described in the next section.
Deductibles: The deductibles you designate will affect your insurance premiums: the higher each deductible, the lower the premium. According to the Insurance Information Institute, the most typical deductibles are $250 for property damage, $500 for theft and $1,000 for medical payments. Yours may differ.
Valuation: In case your boat is destroyed, actual cash value pays the depreciated value of your boat at the time of the damage. Agreed-upon value pays an amount you and the company had agreed on beforehand. Replacement cost is exactly that: what it will cost to replace the boat you had.
Some additional factors will affect your cost of boat insurance:
- The state in which you live;
- The size, type and age of your boat;
- The size of your boat’s motor and how it is powered;
- The kind of waters (inland or open seas) in which you use your boat;
- Safety features on the boat;
- The discounts for which you qualify;
- Your age and gender;
- Your motor vehicle driving record;
- Your record of boat insurance claims; and
- Your credit scores.
On average, boat insurance premiums are reported to range from $300 to $500 per year, although they can run to $1,000 and above easily, depending on your personal profile and your boat.
As you evaluate your boat insurance options, you will want to look at five initial elements to decide what policy might be best for you.
Cost: The boat insurance you purchase should be a careful balance between the cost of the policy and what makes you feel adequately protected.Be clear about how much financial risk you are willing to take if you cause an accident, and your policy does not cover your liability and losses. Each insurer will weigh the factors of your boat and your profile. Your greatest pricing flexibility comes in the deductibles, the limits to coverages and the add-on coverages you select.
Ease of enrollment: Getting all the coverage you need – and nothing more – at a price you can afford is already a challenge. The process of purchasing your policy from a company should not add to that challenge. The company should offer several ways for you to communicate with it and should allow you to purchase the policy online as well as by phone.
Coverage: Each insurer is free to include or exclude things in its policy as it wishes, so you need to check very carefully. You want to be certain you are getting the exact coverage you need and want.
The coverage possibilities include:
- Collision Damage, which covers repair or replacement of your boat but may require you to buy optional coverage to clean up any wreckage;
- Comprehensive, which compensates you if your boat is vandalized, stolen or damaged in an incident not related to a collision.
- Uninsured/Underinsured Boater, which compensates you if the party responsible for the damage or injury is insufficiently insured.
- Marine Liability, which covers different financial obligations for damages and injuries you cause to others, in the form of Property Damage to another person’s boat, dock or other property; Bodily Injury to include medical bills, lost income, pain and suffering and legal costs; Pollution; and Wreckage Removal. It may also cover any legal fees if you are taken to court.
- Medical, which helps pay for medical bills that result from an injury onboard the insured boat.
- Other coverages, some of which are specific to boating. These may be included in the policy or as riders, and need to be understood. Examples are Mechanical Breakdown, Salvage/Towing (on-road and in-water) and Personal Property/Accessory coverage.
Waiting period: Once your application has gone through underwriting and has been accepted, there should be no waiting period beyond the time it takes to get your agreed-upon initial payment in place, unless you designate otherwise.
Customer service: The quality of customer service is especially important to seniors, particularly as they age and decline in health.Your assessment of an insurer’s customer service should go beyond what hours its representatives are available and how many means of communication it offers. You should expect:
- A friendly and easy-to-use company website;
- Complete and easily accessible decision-making information;
- Simple bill paying (online, phone and maybe a smartphone app);
- Transparency and support during the claims-processing procedure; and
- Ideally, a feeling that the company is attentive to your needs as a senior.
You will only know how good your boat insurance company is when you have an incident, yet it is hard to gauge how an insurer will handle claims processing before you have a claim to process. One way to ensure a good experience is by working with an agent or insurer that has come highly recommended, particularly for how claims are handled. The other way is available if the boat insurer also offers auto insurance. Look online for the U.S. Auto Insurance Claims Satisfaction Study by JD Power. You will get an idea of how that insurer handles claims in general.
Overall, insurers report four main causes of boating accidents:
- Operator inattention
- Improper lookout
- Operator inexperience
- Excessive speed
With time, if seniors extend their boating activities well into their later years, they may add three more possible causes: loss of physical strength and endurance, the side effects of medications and loss of focus.
Boating is like driving. We may have been doing each activity ‘automatically’ and out of habit for many years. Judging our own loss of proficiency is very difficult. It is even more difficult when it is something we love doing.
Initially, aging may simply add to the importance of having sufficient boat insurance. Eventually, once we present a risk to others through injury or property damage, no boat insurance can justify us taking that risk. It will be time to turn our boat over to someone younger and more fit, ideally someone who would love to take us back out on the water every so often.