Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The legal requirement for insuring boats differs from state to state. In most cases, insurance is not required on any boat free from lien. Furthermore, for boats that were purchased through bank financing, some states only require insurance if the boat is brand new.

Others require it on any craft that is financed. Boaters will need to check with their individual states for details.

If you need to compare insurance rates for your boat, simply enter your zip code now!

Whether or not boat insurance is mandatory in your situation, you will want to assess the benefits of having it and the risks of going without. If you’re not sure whether or not boat insurance is right for you, continue reading to find out more about what different policies have to offer and what you might expect to pay for it.

Liability Protection

Even if your state doesn’t require boat insurance of any kind, purchasing a minimum amount of liability insurance is just good common sense. It’s true that recreational boating is a very safe activity. But people still have accidents that injure passengers and damage property.

Liability insurance covers the expense of any damage or injury deemed caused by the boat owner or his designated operators. It also protects the boat owner’s assets in the event of a third-party lawsuit.

Minimum liability policies normally provide coverage within the $100,000 to $300,000 range. Of course, if you have the money to spend you could purchase up to $1 million in coverage. Minimum liability amounts will usually be enough to cover any slip rental or storage facility requirements, as well as most minor accidents.

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Other Types of Coverage

Like auto insurance, minimum liability coverage can be enhanced with a number of other products. One of those enhancements, which also qualifies as “common sense”, would be loss protection. In other words, this is coverage that will pay the boat owner in the event of external loss or damage. These policies usually are structured in one of two ways.

The first type is called Actual Cash Value (ACV). With an ACV policy, the owner is reimbursed for partial or total losses based on their actual cash value at the time the loss occurred. These kinds of policies tend to be less expensive, but they are subject to depreciation. In addition, some personal property not directly related to the boat may be ineligible for coverage.

The second type of loss policy is called Hull Value (HV). The HV policy will pay the full replacement value of the boat in case of total loss, plus the replacement cost of partial loss of the boat or its related equipment. Some pieces of equipment may still be subject to depreciation under an HV policy. Types of damage or loss covered by both policies include theft, fire, weather. etc.

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Factors that Determine Cost

Due to the wide variety of watercraft on the market, it’s hard to say what the average annual cost of boat insurance is. However, understanding the factors that determine the cost of a policy will give you a good idea of what to expect.

  • Boat length and motor size are the first things the insurer looks at. A base price is established based on the length, as measured in feet. On average, the typical 25′ cruiser starts between $300 to $500 annually. Smaller fishing boats would be less, larger yachts would be more. The base price is then adjusted according to the size of the motor.
  • Next, the insurer takes into account the equipment and fixtures on the boat. The replacement costs of those pieces are added together, then divided by the total number of premium payments the policy calls for. For example, if the replacement cost were $2,000 on a five-year policy with annual premiums, that would add $400 to the base price.
  • Finally, age and condition of the boat are factored in. A used boat which has been maintained to the point where is still has good retail value will command the most reasonable rates. An older boat which has been restored will typically be higher. Brand new watercraft, especially those considered to be luxury boats, will raise premiums to their highest level.

Purchasing appropriate insurance is a smart thing for any boat owner to do. Your boat is as much an investment as your house, car, or vacation property. Why not give it the same level of protection? With boat insurance you have the peace of mind that comes from knowing you’ll not be left financially high and dry if there’s an unfortunate accident or weather event.

Don’t wait another minute. Online boat insurance quotes are available by simply entering your zip code into the free comparison tool below right now!