Boat insurance reduces a boat owner's financial risk by helping to pay for various forms of damage to the boat or other property. Boat insurance works in a similar manner to auto insurance. Like auto insurance, owners can choose different types of coverage, different amounts of coverage and different deductible levels. However, even with these differences most boat insurance policies typically cover similar events.
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Property Liability Insurance
Liability insurance pays for damages a boat may cause to other boats or property. For example, if a boat owner accidentally drives the boat into another boat, the boat insurance will help cover the damages to the other boat. Wreck removal and cleanup insurance also covers the costs to clean up after damage to the owner's boat or another boat. As boats may leak oil or other environmentally damaging substances, the costs of wreck removal and cleanup can be substantial.
Bodily Injury Insurance
Bodily injury insurance covers injuries sustained by people injured by the boat. For example, if a boat strikes a person in the water and causes injuries, bodily injury insurance will help cover this event. Medical payments insurance may be separate from bodily injury coverage. This insurance covers passengers in the boat. For example, if a person falls in the boat and suffers an injury, the insurance will pay for a percentage of that person's
medical expenses. As injuries on the water may be significant, boat owners should consider buying as much bodily injury insurance as is reasonably affordable to cover this risk.
Physical Damage Insurance
Physical damage insurance covers damage to the insured boat. For example, if the boat strikes a dock and receives damage, the insurance will pay to have the boat repaired. Insurance generally does not cover maintenance expenses or normal wear and tear. Boat owners should determine whether or not a specific policy provides replacement coverage or actual value coverage. Replacement coverage will pay for a replacement boat while actual value insurance will only cover the owner for the value of the old boat, including depreciation for condition and age, for examples.
Boat owners may purchase uninsured boater insurance to cover damages from another boat that is not insured. Boat owners can also purchase coverage for personal property in a boat such as fishing equipment and water skis. Owners who compete in races or other events may need special insurance coverage, as many policies will not cover damage resulting from these events. In addition to boat insurance, many homeowner' insurance policies will cover losses to a boat at a person's home. For example, if someone steals the boat or the boat becomes damaged due to a falling tree limb, homeowners insurance may cover a portion of the loss.