You’re packing up for a sun-filled, jam-packed day on the lake with the family on the pontoon boat. Life jackets? Check! Coolers, sandwiches, drinks? Check! Kids and dog? Got ’em. But you might be forgetting one thing—watercraft insurance.
Okay, okay. Maybe watercraft insurance isn’t something you can fit in the cooler. But you still need it.
We’ll break down everything you should know so you can hit that water with confidence!
What Is Watercraft Insurance?
There’s nothing more fun than cruising around the Gulf of Mexico on a Jet Ski looking for dolphins (and trying not to hit them!).
But when that inevitable accident comes, watercraft insurance will quickly become your new best friend.
Watercraft insurance is a blanket term for three different types of insurance: boat insurance, yacht insurance and personal watercraft insurance. It covers things like damage to your boat, yacht or Jet Ski. You can also get watercraft liability protection that pays for bodily injury and medical expenses if passengers or other people are injured in an accident you cause.
Homeowners insurance and auto insurance policies only cover certain types of watercraft—anything that doesn’t go any faster than 25 miles per hour.1 (Let’s hear it for canoes!) But if you have a bigger or faster boat, you’re going to need extra coverage.
How Does Watercraft Insurance Work?
Watercraft insurance works like any other insurance policy. You pay a monthly premium and the insurer agrees to help pay for anything covered in the policy. Once you pay a certain amount of your own money toward the incident—called the deductible—the insurance company will start pitching in.
We’ll break down each type of watercraft insurance so you can figure out what you need.
Boat insurance covers you if your boat is damaged or destroyed. It can also cover things like theft, towing, injuries to others, and damage to other people’s boats or property—like if you didn’t see your neighbor’s dock in the fog and turned it into kindling. Oops!
Boat insurance typically covers any watercraft with motors or sails. Things that float and have an engine that can go over 25 miles per hour, like:
- Fishing boats
- Charter boats
If you cause an accident, liability protection will cover costs related to property damage, legal fees and medical bills for others involved. Because the last thing you want to take home with you from that summer trip to the lake house is a $100,000 medical bill.
Boat insurance doesn’t cover everything though. Like if you and a shark decide to do a Jaws re-enactment and it tears up your fishing boat—that’s not covered. Insurers also won’t cover things like normal wear and tear as your boat gets older, or damage from fish, dolphins or mussel infestations.
You can also get boat insurance add-ons to really supercharge your policy:
- On-water towing
- Ice and freeze coverage for winterizing mistakes
- Personal property
- Uninsured/underinsured boaters coverage
But be careful with these. If your boat is paid off—and you have a good-sized emergency fund in place—you won’t need these add-ons. (And if you’re making payments on a boat, insurance add-ons will just suck up more of your money. Sell your boat and get on the fast track to becoming debt-free!)
To really make sure you get the right coverage, we recommend working with one of our Endorsed Local Providers (ELPs). Our pros are experts in all types of insurance and can help you get the right amount of boat insurance.
And if you’re trying to figure out what to name your new boat, here’s some inspiration of options from the world wide web:
Since yachts are bigger (sometimes a lot bigger) than typical fishing boats—and you can use them to sail around the world!—yacht insurance policies are more comprehensive than other types of watercraft insurance. So while yachts mean more fun, excitement and crazy memories, they also mean more risk.
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Yacht insurance also costs more since yachts cost more. Deductibles are based on a percentage of what the yacht is worth. So a 1% deductible on a yacht worth $300,000 would mean a deductible of $3,000.
With yacht insurance, you’ll get two layers of protection: 1) hull insurance and 2) what’s called P&I (protection and indemnity).
Hull insurance (you guessed it) protects the hull. So if it’s damaged, you won’t be stuck paying everything out of pocket.
The P&I part is more complicated. It includes things like longshore and harbor workers’ coverage, Jones Act coverage to protect the yacht’s crew, and any legal expenses that come up if you’re sued.
Personal Watercraft Insurance
Personal watercraft (PWC) insurance works a lot like boat and yacht insurance, it just covers recreational vehicles like Jet Skis. These babies are a blast, but most homeowners insurance policies won’t cover them.
Personal watercraft insurance gives you liability coverage if you crash into someone and you’re sued. You’ll also get bodily injury coverage for others who are hurt in an accident. And last but not least, it covers property damage, theft and towing.
When researching coverage for your PWC, make sure your coverage includes the places you plan to use it. Some plans have limits about where you can go.
How Much Does Watercraft Insurance Cost?
Now that you’re an expert on watercraft insurance, let’s look at how much boat insurance costs.
The average boat owner pays between $200 to $500 a year for boat insurance. But for bigger, more expensive boats, you might end up paying between 1–5% of the boat’s value.
Your exact costs will vary based on factors like the type of boat, how much it set you back, its age, your age, where you live, and any safety features it has (or doesn’t have). The size of motor also plays a role. So if you’re feeling the need for speed, get ready to feel the pinch—in your wallet.
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Do I Need Watercraft Insurance?
A lot of states don’t require you to have watercraft insurance, but it’s still a good idea. And if your boat isn’t paid off, the lender might require it. Also, marinas where you’re docking your boat sometimes ask you to get it.
If you just have a canoe, kayak or paddle boat, check if your homeowners or auto insurance policies cover it. Or ask your insurance agent to look into it for you. You might already be covered.
But if you have a bigger boat—like a fishing boat, speed boat, yacht or pontoon—you need boat insurance to protect your finances from expensive accidents.
It’s also a good idea to have watercraft insurance year-round since accidents don’t care if it’s the off-season.
While you’re out there having fun in the summer sun, think how much better that water will feel when you know you’re protected.
If you’re in the market for watercraft insurance coverage, the best place to start is with our network of insurance agents. They’re part of a Ramsey program called Endorsed Local Providers (ELPs) and can save you time as your personal insurance shopper (who doesn’t want that?). And they’re RamseyTrusted. So they’ll look at your unique needs to make sure you get the best coverage at the best price.
Our car insurance pros are also boat insurance pros and can help get you set up with the right watercraft insurance.