Currently, only two states have boat insurance laws—Arkansas and Utah, but not Texas. However, you may still need insurance if you are financing your boat or docking it at a marina. If you are financing, most lienholders require you to carry comprehensive and collision coverage. In addition, if you plan to dock your boat, some marinas will require you to show proof of liability coverage, which comes standard on boat policies. Typically, the comprehensive portion covers events out of your control, such as theft, vandalism, sunken boat, fires, heavy winds, hurricanes, and other weather-related damage. Collision covers damage from boating accidents, such as hitting a dock, a submerged object, or another boat.
Even if you don’t technically need boat insurance, it is still good to have because it can help pay for damages to your boat, as well as any damages or injuries you cause to others. Boat insurance covers you in the event of a loss or damage to your boat. It covers most watercraft with motors, including pontoon boats, paddle boats, fishing boats and leisure crafts. Boat insurance does not usually cover kayaks, canoes, or personal watercrafts. For small watercrafts, you may find limited coverage under your homeowner’s policy. You may also be able to add a special endorsement or buy separate coverage.
The amount of boat insurance you need depends on several factors, including the boat’s motor size, its value, age of the boat, and how you use it. For example, if you purchase a high-performance speed boat, you will need more coverage for bodily injury and property damage liability than if you buy a pleasure cruiser. The amount of compensation you receive for a claim depends on a few things, including your deductibles and limits. In the event of a loss, it is very important to know whether your policy pays actual cash value (ACV) or agreed value (AV). ACV is cheaper, because it only pays for what the boat was worth at the time of the loss. It factors in depreciation and wear and tear on the vessel. Agreed Value pays a price that you and your insurer agree upon in advance, an amount that is likely to be closer to the amount you paid for the boat when it was new.
Once the boating season is over, and you have your boat shined up and stored away, you might think about saving money by cancelling your boat insurance policy. After all, what could possibly happen to your boat when it’s locked in a storage facility or garage? Well, quite a lot… When your boat is insured it is covered even when it is docked or in storage. Your policy can cover things like sinking, weather damage, vandalism and theft, which can happen any time, not just during boating season.
Surprisingly, the number of claims filed during cold-weather months is higher than one would think. Many boat claims are for fire, theft, vandalism, and flooding – all of which occur year-round. Without comprehensive coverage, which pays for damage caused by circumstances other than a boat collision, boats damaged or destroyed by these events would not be covered. Boaters could also be held responsible for injuries that occur on or around their boats, even during the off season, even if the injured person was there illegally. Without liability coverage – which pays for injuries to other people or damage to their property if you cause an accident – you could be legally responsible for damages or the medical bills of those injured. By cancelling a policy for the winter months, you will most likely pay more than what you would have by keeping the policy in effect.
To sum it up simply, boat insurance works the same way car insurance does. If you damage your boat or cause injuries or damages to someone else, you file a claim with your insurance company asking them to pay for it. If it is a covered loss, your insurer pays for the losses or injuries up to your coverage limits. In Texas, it may not be required, but it is wise to carry the insurance on your investment.