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5 Boat Insurance Buying Mistakes and How to Avoid Them

If you love recreational boating, you’re not alone: about 100 million people in the U.S. boat yearly. This has propelled (pun intended) the U.S. recreational boating to become a $170 billion market.

The rising number of boaters has also fueled marine vessel sales in the United States. In 2021 alone, there were an estimated 250,000 new powerboat units sold. It was even higher for pre-owned boats, with sales reaching a staggering 1.15 million units.

If you plan to join that crowd of boat owners soon, you must also learn about boat insurance buying mistakes. Otherwise, you could wind up with the wrong policy that won’t do you or your boat any good.

This guide explains the most common errors and how to avoid them, so keep reading.

1. Purchasing Too Much Coverage

Used boats cost an average of $10,000, while new ones cost $42,000. However, their prices can dip or rise significantly depending on their type and size. For instance, Jon boats can cost as low as $1,000 to $5,000, while speedboats can cost at least $30,000 to $50,000.

With so much money on the line, boat owners can become prone to overinsuring their watercraft.

On average, boat insurance costs $20 to $54 monthly or $245 to $652 annually. If you’re not careful, you can end up with $600+ annual premiums when you could have been okay paying only $300+.

To avoid over-insuring your watercraft, look at your existing insurance policies first. An example is your homeowner’s policy, which may already offer some coverage for your boat. Renter’s policies also typically provide boat coverage.

However, your existing home/renter’s policy will likely only offer limited boat coverage. For instance, the insurance terms and conditions may say it will cover up to $1,000 of coverage for boat damage. Also, coverage only often applies to fire, wind, explosion, hail, or theft damage.

While limited, that extra coverage can still help you save on your boat insurance. For example, you can offset whatever your home/renter’s policy covers. So if you originally wanted to buy $10,000 of boat collision insurance, you can make it $9,000.

 2. Buying Insufficient Coverage

Just because most homeowner’s insurance policies offer watercraft coverage doesn’t mean yours do. If you make the mistake of thinking it does, you can end up underinsuring your boat. So, read your existing policy’s terms and conditions first to see if it provides boat coverage.

You may also make the mistake of buying inadequate coverage if you don’t know your boat’s value. It’s the primary factor influencing how much coverage you need and, thus, your policy’s cost. So before purchasing insurance, have your boat valued by a professional first.

 3. Getting an ACV or Replacement Cost Policy

Another mistake to avoid is buying an actual cash value (ACV) or replacement cost policy.

ACV refers to your boat’s current market value less depreciation. For instance, suppose your boat is worth $50,000 when you first insured it. However, it has since depreciated by 20%, making its ACV dip to only $40,000.

Now, suppose your watercraft gets damaged or destroyed. In this case, your boat insurance provider will only pay you $40,000. That’s the most you’d get, even if fixing or replacing your boat would cost more.

What if you have a replacement cost policy, and your watercraft gets damaged or destroyed? In this case, your insurance provider will replace your boat with one that has a similar make or quality. Your insurer will pay you the replacement cost regardless if it exceeds your boat’s ACV.

While that’s much better than an ACV policy, it can still be unfair. After all, an insurer’s perception of “similar” can differ from yours.

So rather than going for an ACV or replacement cost policy, opt for one with an agreed value. With this, you and the provider agree on your boat’s value before you buy the insurance policy. Then, when your watercraft gets damaged or destroyed, you’d get the agreed value.

4. Failing to Check Inclusions

This mistake is similar to buying inadequate coverage. That’s because inclusion options for insurance vary from one boat insurer to another. However, at the very least, they should already include the following coverages:

  • Property damage and bodily injury liability
  • Collision insurance
  • Comprehensive coverage
  • Uninsured boater coverage
  • Medical payments

Insurers may also include value-added coverages at no extra cost to their base offers. For instance, some providers already include hull insurance in their policies.

By contrast, others may consider this an add-on, meaning you have to pay extra to get it.Other add-on coverages you may want to consider include the following:

  • Watersports damages or injuries
  • Roadside assistance
  • Wreckage removal
  • Freezing and ice damage
  • Mechanical breakdown insurance (MBI)
  • Personal property

With all those extras, comparing insurance costs and inclusions is paramount. Doing so lets you determine which policy has everything you need yet costs the least.

 5. Not Considering Exclusions

Just like other insurance products, boat insurance policies also have specific exclusions. These provisions eliminate coverage for specified acts, sources, or types of damage. In short, if they happen to your boat, you won’t get any payment from your insurer.

Once again, insurance companies have varying exclusions. For instance, some may exclude damage from normal wear and tear. However, others may provide limited coverage for them.

Another common exclusion is damage caused by zebra mussels. Most companies specify they don’t cover this, while a few specifically include it.

Intentional or accidental acts of improper use are usually exclusions, too. For instance, suppose a covered section of your boat gets damaged due to incorrect use. Even if it’s a covered area, your policy won’t cover it because the cause of the damage is an exclusion.

Avoid These Boat Insurance Buying Mistakes

If you have a mid-sized watercraft, it likely costs twice or even more than your car.

So if you’re very careful when buying auto insurance, do the same when you get a policy for your boat. This includes steering clear of the most common boat insurance buying mistakes. By avoiding these blunders, you can rest assured your watercraft is adequately insured.

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