top of page

Marine Insurance Insider, Spills the Beans on Boat Insurance Coverage!

(5 Important Areas to Ensure You’re Covered)




Recently, I interviewed the President of one of the largest boat insurance agencies in the country and he spilled the beans to me about areas some in the insurance industry don’t cover.  The details are often in the fine print and a boater won’t realize they are not covered until it is too late.


During our interview, Mr. X (he did not want to reveal his identity) explained the five most important areas to check on your insurance policy so you aren’t stuck in a horrible situation like some of the stories he shared with me.  Like many, I have never read the details of my car, homeowners or boat insurance policy.  I figured they were all basically the same.  Well, turns out that’s not exactly the case when it comes to boat insurance.


Below are the highlights from our forty-five minute interview. 


-Agreed/Replacement Value vs. Book Value

This component determines how much your policy will pay out on a claim if your boat is damaged, sinks or stolen.  Check your policy to ensure you are covered up to an agreed value or replacement value.  Many general insurance companies will only cover the Book Value on a claim.

Here’s an example:  Let’s say a client buys a new 22’ ATX from me for $110,000.  If he has an agreed value or Replacement Value policy, the policy states an actual dollar amount that he will be paid, in this case $110,000.  So, if his boat is stolen 3 years from now, the policy will pay $110,000.

But, if his policy is written as a Book Value and his boat is stolen 3 years from now, the policy will only pay the book value at that time which may be only $80,000.  This one seemingly minor verbiage change could result in a huge financial hit which won’t be discovered until it’s too late.

-Parts and Labor Rates on Repairs

There are two main ways insurance companies handle claims on repairs.  Let’s say you hit a branch on the water in your 3 year old MB Sports and knock out your under water gear.  Our Indmar Certified Mechanic will say you’ll need to replace the whole thing which will cost $3,000 parts and $2,000 labor.


General insurance carriers will look at the claim and depreciate the underwater gear based on the 3 years of use and only cover say, 75% of the parts cost or $2,250.  They may also have a maximum hourly labor rate they will charge which is generally under the marine labor rate.  So you are left with the choice of using an Indmar Certified Marine Mechanic and covering the difference or finding a cheaper mechanic.


On most marine policies, they will pay 100% of the parts and the normal shop rate of any Certified Marine Service Shop.  This gets you back on the water faster with no money out of your pocket knowing the job was done right.


-Salvage Coverage

Another area that is often times left out of boat insurance policies is the salvage coverage.  If your boat sinks, you are required to remove the boat and clean up any environmental hazards such as gas, oil and other fluids that may have leaked out.


The expense of this type of salvage job can get into the thousands to ten-thousand plus.  If there is no insurance to cover the expense, it will fall on your pocket book.  Something that you don’t want to find out after the fact.


-Towing Reimbursement

Towing reimbursement is seldom found in general insurance coverage but can be found in many policies offered by marine specific insurance specialist.  This towing reimbursement will cover the use of a towing service such as Sea Tow or Boat US whose memberships are generally about the cost of a single tow.


Because marine insurance companies understand that leaving your boat on the water if it breaks down will probably lead to a larger claim, they take the position of better safe than sorry.  In their risk models, it is cheaper in the long run to pay the $150.00 tow fee every time than to risk the loss or damage of a vessel. 


-Speed of claims approval

As a boater, there is nothing worse than having a perfect boating day and you not being able to use your boat because it is in the shop.  When shopping for boat insurance, find out what their process is for approving claims of different values.


Some of the better marine insurance companies will automatically approve a claim if submitted with an estimate from a Certified Mechanic shop where they have a relationship.  With a quick payment of that claim, the only thing keeping  you from hitting the water right away is the speed that the shop can get parts in and handle the work.  As a marina with Certified Indmar mechanics, it really puts the pressure on us to get the work done right away.  But, that’s preferred to having a boater time on the water missing because of unnecessary red-tape and bureaucracy.


Take a few minutes to pull out your boat insurance policy and scan through the fine print to determine if you are fully covered.  Don’t wait until you have a claim to figure out if it’ll cost you money out of your pocket or if your experience will be a good one.

Opt 3_edited_edited.jpg
bottom of page