Did you know that Boat Insurance is not the same as insurance for a yacht? In the insurance world, the coverage you have is only as good as the contract (known as the policy) language, and insurance companies have major issues with boats over a certain size.
And they use the contract language to address these issues.
By use of exclusions. Take a typical exclusion found in the standard homeowners policy as it relates to coverage for a boat:
There is no coverage for watercraft liability unless:
- It’s less than 26 feet in overall length; or
- It’s 26 feet or more in overall length and not owned by or rented to an insured
Essentially, in this situation, the insurance company is willing to provide liability coverage if your boat or watercraft is less than 26 feet, OR if it’s longer than 26 feet as long as it’s not a boat or watercraft that you own.
Tip. All insurance companies are different. While the ’26 feet’ size is common in the industry, not all insurance companies use this rule. Some exclude coverage for watercraft smaller, some provide coverage for boats that are larger. Consult your policy, or discuss with your insurance advisor for the answer to your exact situation.
Also, it’s important to keep in mind, we’re approaching this from the insurance perspective so the term ‘yacht’ can be slightly misleading. The insurance world has adopted this term simply because many yachts are larger than 26 feet in length, but the fact is, this type of insurance policy is used to cover many types of boats, including:
- Bowrider boats
- Pontoon boats
- Trawler boats
- Cabin Cruiser boats
- Fishing boats
- Ski and Jet boats
If your watercraft is 26 feet or longer, you will likely need to buy yacht insurance, which provides basically the same coverage as boat insurance, but the terms are different. Under a boat policy, coverage for damage to the craft is called “physical damage.”
Under a yacht policy, the term is “hull.” Liability coverage under a yacht policy carries the name “property and indemnity,” which insurance geeks often abbreviate to P&I. As with boat liability coverage, P&I is available in increments of $100,000. Depending on the size of your craft, you can buy P&I limits from $2 million to as much as $50 million.
Note. Like boat insurance, you should seek a yacht policy that offers coverage for medical payments (for you and your passengers) and uninsured boaters.
The cost of your boat or yacht policy is based on a variety of factors: horsepower; how fast it moves (it can cost as much as 50% more to insure a speedboat than it does a sailboat of similar size); where it is to be used; age of the craft and experience of the vessel’s operator.
Tip. Insurers offer premium discounts of 5% to 20% to those boat/yacht owners who have taken an approved boating safety course. (In some states, such courses are required to operate a boat or yacht.) Premium discounts are available from some insurers for newer vessels and protective devices (depth finders, ship-to-shore radios, burglar alarms). You can also save money on the policy by electing to take a higher deductible.
Similar to the search to find the perfect watercraft, there are a lot of different policies and coverage options available. Some policies might be significantly cheaper than others, but they likely don’t offer the coverage you need. Others might be outrageously expensive because they’re providing coverage options that you’d never use.
Tip. This is a complex area of insurance with many options. Talk to your agent. Let him or her assess the many options out there and find the coverage that best suits your needs and best protects your assets, particularly that pleasure craft you love so much.
If you’d like to learn more, contact one of our Licensed Advisors . We’re here to help.