How to insure a boat for the first time

New boat owners often assume the homeowners policy covers the boat, or that the auto policy covers the trailer and whatever is on it. Both assumptions are mostly wrong. A homeowners policy typically provides a small amount of property coverage for a boat and trailer kept at the home, limited theft coverage away from it, and liability only for small, low-powered watercraft; anything with a larger engine or a length beyond the policy's definition is excluded from liability altogether. The auto policy extends liability to a trailer while it is being towed, but not to the boat.

A boat policy fills those gaps and adds coverages specific to the water. The region's boaters use a wide range of water, from Lake Mead, Lake Havasu and Lake Powell to Bear Lake, Flaming Gorge, Lake Coeur d'Alene and Lake Pend Oreille, and the hazards differ: sudden desert winds, submerged rocks in a drawn-down reservoir, cold water in the north. This guide covers what to gather and how to build the first policy.

What to gather

The carrier will ask about the boat, the operators and where it will be used.

• The boat's year, make, model, length, hull material, engine type and horsepower, and hull identification number.
• The purchase price, and a marine survey if the boat is older or was bought privately.
• The trailer's make, value and VIN, and a list of equipment aboard: electronics, fishing gear, wakeboard towers, tubes.
• Every person who will operate the boat, with ages, boating experience and any boater education certificates.
• Where the boat will be used and stored: which lakes or rivers, whether it will stay in a marina slip, on a trailer at home, or in a storage facility.
• Your homeowners, auto and umbrella declarations pages, to see what they already provide and what they require.

Step one: choose how the hull is valued

Physical damage coverage for the boat, called hull coverage, is written in one of two ways. An agreed value policy fixes the amount paid on a total loss when the policy is written, based on the purchase price or a survey, and pays it without depreciation. An actual cash value policy pays the boat's market value at the time of the loss, which falls every year and can be disputed. Agreed value costs more and is common for newer boats, while actual cash value suits an older, inexpensive boat where the premium difference matters more than the payout.

Read how partial losses are settled, too. Some agreed value policies still depreciate certain parts, such as canvas, upholstery, sails and outboard motors, on a partial claim. Know which parts before the first repair.

Step two: set liability and injury coverages

Boat liability, sometimes called protection and indemnity, pays when the operator injures someone or damages property: striking a swimmer, colliding with another boat, a wake that swamps a smaller vessel or damages a dock. Liability claims on the water can be severe, and passengers are often friends and family. Set the limit in line with the auto and home liability limits, and confirm that any umbrella recognises the boat and that the boat policy meets its required underlying limit.

Medical payments coverage pays medical bills for people injured aboard or while being towed on skis or a tube, regardless of fault. Uninsured boater coverage pays for your injuries when an at-fault boat operator has no insurance, which is more common on the water than on the road since boats are generally not required to carry insurance. Check whether the policy covers towed water sports; some policies exclude or limit them.

Step three: add the marine-specific coverages

These coverages have no real equivalent on a car, and each matters on western lakes.

• Wreck removal, which pays to raise and remove a sunken or wrecked boat when a marina, park service or other authority requires it. The cost can exceed the boat's value.
• Fuel spill liability, for cleanup costs and fines when fuel or oil from the boat enters the water after an accident.
• On-water towing and assistance, for a tow back to the launch or marina after a breakdown, grounding or empty fuel tank.
• Trailer coverage for physical damage to the trailer itself, which the auto policy does not provide.
• Personal effects and equipment coverage for fishing gear, electronics and water sports equipment, with values stated where the policy asks.
• Emergency expense for lodging and transport if a breakdown strands you far from home.

Step four: check navigation limits, lay-up and operators

Boat policies state where the boat may be used, usually inland lakes and rivers, and some specify a lay-up period when the boat must be out of the water. In Utah and Idaho, where boats are stored for winter, a lay-up period can lower the premium; in Arizona and Nevada, where people boat year-round, confirm the policy has no lay-up that would leave the boat uninsured in use during winter. If you plan to take the boat to the coast or Mexico, the navigation limits need to be extended.

List every regular operator. Some carriers restrict coverage for inexperienced operators or young drivers, and some offer discounts for completed boater education courses. Boater education requirements are set by each state and differ by age and boat type, so confirm with the state's boating agency who in the family must complete one before operating the boat.

Common mistakes

First-time owners make these errors most often.

• Relying on the homeowners policy for a powerboat or personal watercraft.
• Choosing actual cash value on a new, financed boat.
• Skipping wreck removal because it seems unlikely.
• Letting a friend with no experience operate the boat without checking the policy.
• Assuming the umbrella covers the boat without telling the umbrella carrier.
• Taking the boat outside the policy's navigation limits.

A worked example

Suppose a family in Henderson buys a used wake boat for $60,000 and keeps it on a trailer at home, using it on Lake Mead. Their homeowners policy excludes liability for a boat with an inboard engine of that size. They buy a boat policy for $900 a year with $60,000 agreed value, $300,000 of liability, $5,000 of medical payments, uninsured boater coverage, wreck removal and towing. In their second summer, a sudden wind pushes the boat onto rocks near a cove and it sinks. The carrier pays $60,000 less the $1,000 deductible for the hull, and $12,000 to raise and remove the wreck as required by the park. Under an actual cash value policy without wreck removal, they might have received $48,000 and paid the removal themselves. The figures are hypothetical; agreed value and wreck removal decided the outcome.

How to use this

Before the first launch, send us the boat's details and your homeowners, auto and umbrella declarations pages. We will tell you what those policies already cover, quote a boat policy across the carriers we represent in Arizona, Nevada, Utah and Idaho, and flag wreck removal, navigation limits and operator restrictions. For a small, low-powered boat your homeowners policy already handles, we will say no separate policy is needed.