The type of boat insurance you choose will vary depending on the purpose of the boat. In some limited cases, commercial or passenger vessels will be required under maritime law to have various types of insurance. For most recreational boats, however, boat insurance is not required by federal or state law. However, you may wish to have optional insurance for your watercraft or passenger boat in order to protect your boat from damage and yourself from liability.
In some cases, your standard homeowners insurance policy will provide some coverage for your watercraft. This coverage is generally very limited and may provide a few thousand dollars of protection, at most. Reliance on your homeowners policy is rarely the best choice. Instead, look into special boat insurance policies that will cover you for both damage to your watercraft and for any liability you may incur as a result of a boating accident.
Most boat insurance is sold based on the size of the watercraft and comes in the form of an all-risk policy, which will indemnify you for any potential damage that occurs to the boat regardless of the specific cause. Separate policies may be sold for boats (usually under 26 feet), yachts (26 feet and over), and personal watercrafts (vessels such as jet skis). Each type of vessel may have different insurance requirements. You should purchase a policy based on the size of your boat that will cover the replacement cost of the vessel should it become damaged. If the boat serves as collateral for a loan, such insurance may be required by the lender.
Liability protection is another important type of boat insurance. Liability coverage will pay your legal fees and the cost of a settlement or damage award against you if someone is injured on your boat or as a result of a boating accident for which you are at fault. You should purchase a sufficient amount of liability coverage to protect your assets. The more coverage you buy, the greater your protection in the event of an incident that results in serious harm.
When you enter into a boat insurance contract, the contract may be governed under admiralty or maritime law. It is important to understand how the contract is enforced and to note that the insurer and insured each must operate in good faith. If you have questions about the purchase of boat insurance or about the coverage or enforcement of your policy, contact an experienced attorney for assistance and advice.