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Is it illegal not to have boat insurance on your boat?

Daniel Walker
Licensed Insurance Agent for 15 Years

UPDATED: Mar 19, 2020

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Is it illegal not to have boat insurance on your boat?Many new boaters pull out of the marina with their purchase, wondering whether or not they are legally required to carry boaters insurance.

Even in cases where the salesman instructs them on the issue, many are still confused because they think of their boat in the some way they do their car.

The truth is, in most states and under most conditions, it is not illegal to operate your boat without insurance.

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Those of us who own cars know that we are legally required to purchase, at a minimum, a certain level of liability insurance in order to license or operate our vehicles. While the amount of liability coverage required differs from state to state, all fifty states require at least something. With boats, things are different. Most states do not require minimum liability coverage.

One of the known exceptions to this guideline is the state of Arkansas, which requires a minimum of $50,000 in liability coverage on any boat with an engine of 50hp or greater. In any event, your state insurance office or motor vehicle department will be your best avenue for determining your liability needs.

State Insurance Requirements for Boats with Liens

Liability insurance for boats is designed to provide coverage against bodily injury or property damage caused by your boat or the operation of it. If you purchased your vessel with a bank loan or other financing, and still have an outstanding balance, the lender holds what is known as a “lien” on your boat. The lien gives him a legal financial interest in the boat.

Without insurance coverage, a lawsuit filed against you after an accident could also come back on the lien holder. For this reason, and to protect the lender’s financial interest in your boat, some states do require liability coverage if there are any remaining liens on the vessel.

In addition, where a lender is concerned, your boat is collateral against the money you borrowed. Regardless of state requirements, the lender will almost always also require you to be insured as a prerequisite for obtaining the loan. It is one of the only ways of protecting him from a total loss if your boat is damaged or destroyed.

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Marinas, Storage Facilities and Boat Insurance

While your boat is docked at the marina or housed in off-season storage, it poses a risk to other boats and persons in the vicinity. For instance, a boat left improperly moored could drift from the dock and come into contact with another boat, causing minor damage. As a general rule, marina and storage space owners are not willing to take the risk on boats that are uninsured. More often than not, mandatory boat insurance is required to rent a slip or dry dock.

Boat Insurance is Always a Good Idea

Even if your state doesn’t require you to carry boat insurance, it’s always a good idea anyway. The cost of boat insurance is usually worth it for are several reasons:

  • First, today’s culture is one that is very litigious. A few hours of late night television makes that clear with ad after ad touting the benefits of various lawsuits. It is unwise in the current legal environment to leave yourself unprotected against boating accidents.
  • Second, your boat was probably not a cheap investment. Any time you spend a lot of money on durable goods you risk losing that investment through accidents, bad weather, fire, or vandalism. Doesn’t it make sense to cover yourself with boaters insurance?
  • Finally, boaters insurance is relatively inexpensive compared to some of the other insurances we buy. Coverage can be obtained as a separate policy to cover everything from minimum liability to full coverage on the water craft and any personal property related to its use or storage. Such policies can be purchased for under $1,000 for a typical small cruiser.

For a few hundred dollars annually, you can add boat coverage to your existing homeowners insurance. The coverage usually won’t be as comprehensive as a separate, boat-specific policy, but it will be adequate in protecting you against liability and some amount of loss. In the end, it just doesn’t make sense to not have boat insurance, whether it’s legally required or not. If you can afford to purchase a boat you can most likely afford the insurance as well. In this day in age there’s no excuse not to.

Don’t wait another moment. Enter your zip code now and start your search for the best boat insurance rates today!

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