Insuring Your Boat

General Insurance Information

   What is the best coverage for my boat?

It is best to have what is known as an "All Risk" policy, which will provide coverage for all types of losses except those specifically excluded in the policy. Typical exclusions may include wear and tear, gradual deterioration, marring, denting, scratching, animal damage, and manufacturing defects, defects in design, and ice and freezing.

How much should I insure my boat for?

You should insure your boat for the amount it would cost you to replace it with like kind and quality. This is called "Agreed Value" or "Stated Value" coverage, and in the event of a total loss, will pay the full insured amount. Beware of policies providing "Actual Cash Value" (ACV) coverage, which means the value of your boat will be replacement cost less depreciation.

Additional coverage provided.

The following are typically included on most recreational marine policies (limits and deductibles may differ between policies - refer to your policy wording for details):
                              - Medical payments - $5,000 limit, no deductible
                              - Personal effects- $1,000 limit with a $100 deductible
                              - Uninsured boater liability, no deductible
                              - Accidental death benefit - $10,000 limit, no deductible 
                              - Additional claims expense (loss of use) - $1,500 limit, no deductible

Boating Courses

Most insurance companies offer discounts for successfully passing recognized boating courses. Ask your broker what courses are recognized and the discounts offered.

Boat Insurance FAQ

What are the differences between boat and yacht insurance?

Generally "boats" are considered to be 26' and smaller, and "yachts" are 27' and larger. Generally speaking yacht coverage is broader and more specialized because larger boats travel further and have more unique exposures. Boat insurance varies by boat length and type, by the cost of the boat and the level of coverage you want. Consult your insurance broker for quotes or compare rates online. Some smaller boats may be insured as a rider on a homeowner's policy but the coverage may not be as good as what you get with a stand-alone marine policy.

What is Protection & Indemnity?

On a recreational marine policy the liability coverage is called protection and indemnity. In addition to paying for damage your cause to other boats and properties it provides coverage for legal costs, wreck removal, salvage fees, and pollution damage caused by the boat.

Who is allowed to operate my boat?

Most policies will allow anyone to operate your boat so long as you have given them permission. There are exceptions, of course, especially with high performance boats or personal watercraft so ALWAYS READ YOUR POLICY.

Do I need to insure the boat during winter?

Year-round boating is not possible in most areas of Canada but your lender, marina, yacht club or storage yard will require you have coverage in effect all year. If you store the boat at home don’t assume your homeowner’s insurance will cover the boat if you cancel the boat policy. Some insurance companies will not offer a new policy the following year if you cancel mid-term.

When I finance my new boat purchase how can I be certain all the insurance paperwork is in order so I can get my boat on time?

Don’t leave the insurance until the last minute especially if you are financing the purchase. Once you decide to buy a boat, contact a broker and obtain a quote. When you close the deal your insurance brokers can fax a binder letter confirming coverage directly to your dealer or lender.

What should I look for in a yacht policy?

There are two main sections of a yacht policy. HULL INSURANCE is all risk direct damage coverage that creates a very broad insuring agreement. It will include AGREED AMOUNT hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss. A true yacht policy also includes REPLACEMENT COST (new for old) coverage on partial losses, with possible exceptions for sails, canvas, batteries, outboards and sometimes outdrives, which are depreciated. PROTECTION & INDEMNITY insurance is the broadest of all liability coverage, and because maritime law is unique, you will need coverage designed for those exposures. Besides providing payment of judgments against you, P&I also provides for your legal defense in court.

What's not covered?

Exclusions on a yacht policy generally include wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, defects in design, and ice and freezing.

What is a Warranty?

Yacht policies contain clauses called warranties that are contractual promises. They describe conditions that the boat owner must do, or must not do during the term of the policy. For example, a private pleasure warranty states the boat must not be used for commercial purposes. A fire extinguisher warranty states the boat owner must comply with applicable regulations regarding fire extinguishers on board. Warranties are very important because if they are breached the policy is considered null and void from the moment the breach occurs. In addition to the above warranties address conditions such as winter lay-up, and navigation area limits. It is important to understand the warranties in your policy and to adhere to them at all times.

Is a marine survey required?

Insurance companies ask for a survey once a boat reaches a certain age. These surveys are prepared by independent surveyors and are used to verify the condition, seaworthiness and the value of the boat. Surveys also protect boat owners by identifying safety and maintenance problems. If you are considering a boat over 10 years old, ask your insurance broker if a marine survey is required.

Can I use the boat for charters?

If your policy contains a private pleasure warranty, then hiring the boat for charters invalidates your policy. Some insurance companies will add temporary charter coverage for an additional premium. If the boat is going to be chartered on a regular basis, a commercial policy is recommended.