Tips for finding the right amount of boat insurance

When deciding on the right amount of boat insurance for physical damage and liability coverage, consider two critical questions: “How much do I have to lose?” and “How much damage could I cause to others?”

How much do I have to lose?

Your primary goal when purchasing physical damage insurance is to restore your financial position to what it was before a loss. If you over-insure your boat, you may end up paying higher premiums than necessary. Conversely, underinsuring your boat leaves your investment vulnerable. To find the right coverage, ensure your insurance limit aligns with your boat’s current market value.

“Markel value” refers to the amount a similar boat would sell for in a competitive market with willing buyers and sellers. In simpler terms, it’s the price you could expect if you sold your boat just before an accident.

If you recently bought your boat, the purchase price serves as a solid estimate of its market value. For older boats, you can check classified listing prices for comparable models on various websites. However, be aware that list prices are typically higher than actual sale prices, which may be 10% to 15% lower due to negotiations.

The best way to establish your boat's current market value is to obtain a marine condition and value survey. A professional surveyor will assess your boat's physical condition, engine hours, maintenance level, optional equipment and geographical location (as boat values can vary by region). By cross-referencing various valuation resources, the surveyor will provide a precise market value for your boat. This information is crucial for understanding your financial risk before any damage occurs.

How much damage can I do to others?

When considering watercraft liability insurance, it's essential to broaden your perspective beyond just your boat. Reflect on all your financial assets, including your home, car, personal belongings, future income, retirement savings, and college funds. All these assets could be at risk if you face a lawsuit for negligence while operating your boat and lack adequate liability coverage. In light of this, consider securing liability limits that meet or exceed your net worth and anticipated future earnings.

If your boat is docked at a marina, think about the potential damage to others’ properties. For instance, if your boat catches fire, could it potentially harm nearby boats worth $50,000 or even $500,000?

Additionally, rephrase your assessment to “How severely could I injure others?” and envision scenarios that might lead to injury or death for your passengers or individuals in other boats. While most states mandate specific minimum limits of auto liability insurance for cars, similar requirements may not apply to boat insurance. However, your marina may stipulate a minimum level of watercraft liability coverage in your dockage agreement.

Properly assessing your boat insurance coverage is vital to safeguarding your investment and protecting your financial future. By understanding your market value and the potential risks to yourself and others, you can make informed decisions about your insurance needs.

We hope these tips ensure that you are adequately covered so you can have an enjoyable experience out on the water. For further protection on the water, Markel boat insurance offers specialized boat insurance that protects you if you become legally liable for someone else’s injuries or property damage due to a boating accident. In addition, Markel boat insurance also offers protection to help cover the cost of repairing or replacing your boat in the event of an accident, fire, theft or vandalism.