Boat insurance provides protection against physical damage losses to the boat, machinery and equipment. This is referred to as Hull Insurance. While the boat insurance industry does not use the terms comprehensive and collision, if you are familiar with these terms for automobile insurance, this would be the equivalent coverage. Each boat insurance company will have a different definition of Hull Insurance. It may include coverage for spars, sails, machinery, furniture, dinghies/tenders, outboard motors, fittings, and other equipment normally required for the operation or maintenance of the vessel.

Each insurance company will vary on how your motor is covered. Engines can be insured on replacement cost or depreciated value. If the boat insurance policy is written on actual cash value, then the engine will always be depreciated in the event of a loss. If the boat insurance policy is written on agreed value, some boat insurance companies will replace new for old without a deduction for depreciation, but only until the engine becomes a certain age. As the engine ages, the replacement cost may change to depreciated value. The age that a boat insurance company will apply depreciated value varies. Some will apply depreciated value on all outboards or stern drives regardless of age. The age when depreciated value is applied can be different for outboards, stern drives and inboards.

There are so many different policies available and ways to mix and match them that you have incredible options when purchasing marine insurance. The “all risk” policy is an example of staying guarded against unforeseen situations that one would not think to name specifically. The “all risk” policies insure everything except for situations that are specifically excluded. For example, wear and tear and manufacturer’s defects could be exclusions to your “all risk” policy. It really depends on the insurer and what you are willing to pay when dealing with the exclusions. On the other hand the “named peril” policy would only cover what is specifically named or stated within the policy.  Fire, lightning, wind, and theft would be common named perils. A “named peril” policy cannot effectively guard against all the odd, unexpected situations that can happen to a boat owner. Think of the oddest situation you have experienced as a boat owner. With an “all risk” policy, if it is not specifically excluded, then it is covered.

For yacht owners it is important to remember to cover your Dinghy or Tender used to service your yacht. Some policies automatically include a Tender as a covered item in the hull (boat, machinery and equipment) definition. Some companies do not provide any coverage automatically and you have to provide them the details on the tender or it will not be covered. Many companies provide specific requirements regarding size or horsepower in order to qualify as a tender; others just say small boat. Personal Watercraft are normally specifically excluded and not considered a tender.

So when thinking about purchasing boat insurance, have a look at what’s available, ask the questions that are going to help you get the best coverage you can, and sail away happy.

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Thanks to Marine Insurance experts at United Marine Underwriters (UMU) for providing this informative piece on the myths of boat insurance.  Leave a comment here or visit their site for more information.