Insurance Read Time: 4 min

What Does Boat Insurance Cover?

You're an avid boater, but have you considered what kind of coverage you need to keep your boat and equipment protected? While boat insurance is not required in many states, it's important to keep in mind that accidents on the water are fairly common. In 2020 alone, 5,265 recreation watercraft accidents were reported, causing $63 million in property damage.1

As a boater, you may stand to benefit from having a boat insurance plan, even if it's not required in your state. Below, we cover the basics of boat insurance to help you decide whether this type of coverage could be right for you.

What Is Boat Insurance?

The purpose of boat insurance is to cover the policyholder in the event that the boat is damaged, destroyed, stolen, or otherwise lost. A boat insurance policy will provide coverage for just about any watercraft with a motor. This includes yachts, fishing boats, paddle boats, pontoon boats, and leisure crafts. However, most boat insurance policies do not cover personal watercrafts, canoes, or kayaks.

What Does Boat Insurance Cover?

A boat insurance policy can include several types of coverage, such as:

  • Comprehensive coverage: Covers incidences such as theft or vandalism. This coverage will also come into play in the event that your boat is damaged in a non-collision incident.
  • Collision damage: Covers the cost of repairing or replacing a boat after damage or destruction in a collision.
  • Bodily injury liability coverage: Covers the cost of medical bills, legal expenses, and lost income if you injure someone while using your boat.
  • Property damage liability: Covers the cost of the damages that you may cause to another person's property or structure, like a boat or dock.

There are also other coverage options, such as coverage for personal property, medical payments, oil spills, and roadside assistance.

How Does Boat Insurance Work?

A boat owner in the market for boat insurance can be expected to complete a questionnaire about themselves, their boat, and the coverage options they are interested in—all factors that will impact the cost of coverage.

Once you have purchased the boat insurance policy, you'll have the ability to file a claim in the event that you damage your boat, injure someone else with your boat, or damage someone else's property with your boat. If the claim is approved, the insurer will cover the cost of the injuries or losses up to the coverage limits.

How Much Does Boat Insurance Cost?

You can expect to pay about 1.5 percent of the value of your boat every year for a boat insurance plan. This means that if your boat is worth $50,000, it could cost you around $750 to insure your boat for one year. If you have a yacht worth $1 million, you can expect to pay about $15,000 each year for insurance. These are rough estimates, and they will vary greatly depending on your coverage needs.2

Boat Insurance Cost Considerations

The top factors that impact the cost of boat insurance include your boat ownership experience, your driving record, the boat's storage location, and the number of boat owners. The type of boat, motor, and add-ons are also part of what determines the policy premium.


In general, the more experienced a boat owner is, the lower the boat insurance monthly premium tends to be. Insurers expect that a boat owner with more experience is less likely to get into an accident. Likewise, if you have a clean driving record, this should lower the cost of boat insurance.

Storage and Usage

A boat owner who intends to use their boat in open waters will pay more for boat insurance than a boat owner who takes their boat out in lakes. If you store your boat in a shed, this will likely reduce costs as well.

Number of Boat Owners

The cost of boat insurance can depend on the number of registered boat owners in your area. In general, the more boat owners there are, the more claims there will be. This can cause boat insurance companies to charge higher premiums. Alternatively, an increase in new boat ownership has the potential to create a competitive market space, meaning you could see a decrease in the cost of coverage.

Is Boat Insurance Required?

In short, it depends. For example, some states require boaters to have boat insurance with liability coverage, while other states do not.

Additionally, a boater may be required to have boat insurance before they can dock their boat at a marina. You will also likely be required to buy a boat insurance policy if you get a loan to purchase a boat.

Boat insurance is intended to address the unique needs of boaters when it comes to the risks they face when they store their boats and bring them out into the water. Whether it's required by your state or not, a boat insurance policy can provide important coverage that every boater should consider.

1., 2022
2., 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

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