Factors Impacting Boat Insurance Premium Cost

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Boat insurance covers several types of water vessels from liability or damage. Your policy will get to work once you figure in a boating incident and injure a third party or destroy another one’s property. Coverage also extends to compensation in the event of theft.

If someone steals your boat and you aren’t able to get it back, your insurer will pay you for the current market value of your watercraft.

What Does Your Boat Insurance Include?

The standard boat insurance includes any physical damage to the hull or vessel. It may also cover boat machinery, equipment, furnishings, or furniture, so long as they are permanently attached to your vessel.

As mentioned, you will also receive compensation if any of your properties were stolen, or someone hijacked your boat.

Most people are unaware that boat insurance will also pay for hospitalization expenses and rehab if you or your passengers sustained injuries while at sea.

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The policy is not all-encompassing, however. For instance, you don’t need this type of insurance for your canoe, small sailboat, or motor-powered vessel if they speed up less than 25mph. However, your homeowner’s policy can have a rider to include your watercraft.

A jet ski is typically excluded, although it can go from 40 to 70 mph. You would need a separate policy to cover you with your jet ski. Similarly, yachts have different protection plans due to how much they cost.

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The following are the most common claims related to boat insurance.

  • Vessel grounding
  • Hitting corrals, rocks, and other objects underwater
  • Injuries
  • Severe weather
  • Theft
  • Collisions
  • Fire

You can expand your policy to include towing on and off bodies of water, mechanical damage, ice/freeze coverage, or damage and loss to your personal property.


Like all policies, your boat insurance has some exclusions.

  • Wear and tear
  • Mechanical breakdown
  • Rust and corrosion
  • Manufacturer defects/faulty design
  • Overuse and abuse
  • Damage due to termites and other bugs
  • Mold damage
  • Damage sustained by marine life

Types of Boat Insurance Coverage

The policy typically splits into two types:

Agreed Amount Value

The compensation amount anchors on the vessel’s valuation you agreed upon with the insurer. If your boat sinks or someone steals it, you already know how much you will receive. The cost is fixed and already includes the equipment and machinery inside.

Actual Cash Value

In this type of policy, the amount is flexible. The cash you receive as compensation will factor in depreciation. At the time of the claim, the insurance company will compare the common and current costs of used vessels in the area to determine your boat’s actual market value.

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Each type has its distinct benefits and disadvantages. The Agreed Value Amount type is generally more expensive than the other type. On the other hand, the Actual Cash Value type will give you a lower payout, especially if your watercraft is past its heyday.

How is Your Boat Insurance Premium Computed?

Insurance companies have a checklist of factors determining how much premium you must pay.

  1. Boat’s age — The older the boat, the higher the premium because of the risks involved. As you know, any vehicle with long mileage is prone to break down. Its general sea-worthiness has gone down. So, as a general rule, the newer the vessel, the higher the insurance.
  2. Current insurance — If your boat is already under some protection, you will likely get credit for that. So, you will receive a favorable premium.
  3. Vessel type — Although horsepower plays a big role in computing your total premium, there are other factors. The more expensive the vessel, the higher your insurance payments would be. Also, a speedboat is more costly to insure than a fishing boat, and a yacht is significantly more expensive than a sailboat. Finally, insurance companies will also consider the weight and length of the vessel to calculate the price.
  4. Navigational patterns — Inland travelers generally pay lower costs than boat owners who regularly take their vessels out to sea. The insurance company typically places limits on where you can sail, and such restrictions are placed on the contract.
  5. Your location — Florida has one of the highest boat insurance premiums due to its coasts. The overall cost of living will also play a part in the final price. Also, using your boat as your primary residence will jack up your payments to your insurer.
  6. The type of insurance — As explained earlier, the agreed-upon value is more expensive than the cash value. Also, it matters if you customize your insurance to include your personal belongings and other potential occurrences beyond the scope of a basic plan. If your policy has too many riders, you will definitely pay more.

It’s difficult to write down all the factors the insurers consider when computing your boat insurance premiums. For instance, some insurance companies will even include the gender of the boat owner as a risk factor.



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