BOAT INSURANCE 101: TO INSURE OR NOT TO INSURE?
While insurance for your boat is not a legal requirement, a wise boater takes the time to get educated on the benefits of a policy that protects not only property but liability too. So we turned to a marine insurance veteran – and former Boating BC board member – Paul Mendham, CIP, President of Navis Marine Insurance, to teach us the basics.
“I’ve seen lots of crazy things,” says Paul. “Boats sunk and docks collapsed by a big wake, or damaged in heavy snowstorms. Many people think they don’t need insurance because they are careful, or that nothing will happen to them. Well, stuff happens – and then you’re the one writing the cheque!”
According to Paul there are two good reasons to insure your boat: to protect your asset, and your net worth arising from liability. If you get into an accident, and cause property damage or hurt someone, without insurance everything you own can be at risk.
What kind of insurance do I need?
That depends on what kind of boat you have. A canoe or kayak – low value, no horsepower and little liability - can be easily added to your home insurance policy. But if you have a powerboat, or a larger sailboat you need a dedicated marine insurance policy. ‘All risk’ policies cover you for most types of losses, but there are exceptions, so be sure to read the fine print.
Where should I buy my insurance?
First you should know an agent represents one insurance company, while a broker works with a variety of companies. Powerboat insurance can be a complex purchase, so choose a broker with specific marine experience, and who can put together a package that suits your needs.
What should I ask my broker?
It’s great to be prepared, so here’s what I would ask:
- What experience do you have insuring boats, and how often do you insure them?
- Which insurance company is insuring my boat, and why do you recommend them?
- What is covered, what extensions are included, and what warranties (conditions) are required of me?
- How will I be paid in case of a claim? Know that there are two types of coverage:
- “Agreed Value” – in the event of a Total Loss, you will be paid the limit shown on the policy.
- “Actual Cash Value” – replacement cost, minus depreciation.
Why is liability insurance important?
It’s important to protect all your assets in case of an accident. In Canada the Marine Liability Act says that a boat owner is legally responsible for up to $1.5M in the event of an accident. If you are found liable, you have to pay.
When should I buy my insurance?
You should be insured from the time you take title of the boat, and before it leaves the dealership. Also ask your dealer about how your deposit is protected, and what their insurance covers – while the boat is on order, and before it arrives at the dealership. Ask for a certificate of insurance, and to be added to their policy as a loss payee, in case anything happens to it.
If you borrow money to buy your boat, insurance is no longer an option, but a requirement of the bank.
How much should I budget for insurance?
Typically if your powerboat is under $100K, you can expect to pay 1% of the insured value, so about $1,000 a year. A $500K boat drops to about .5% of its value.
“The difference between great insurance and bare bones is less than the cost of a tank of gas.”
Are discounts available?
Discounts are available after you have responsibly owned your boat for three to five years, for being claims free, and if you have taken courses at Canadian Power and Sail Squadron or Sail Canada. Discounts are not available for holding the required Pleasure Craft Operator Card…that’s like asking for a discount because you have a driver’s license.
Is my boat insured even when I’m not using it?
Yes, when you buy a year’s policy, your boat is covered in storage, in transit, on the water – and over the winter. The risks don’t stop when you’re not using your boat - it’s more likely to sink when you are not there, and more electrical fires start in the cold months.
Can my insurance be voided?
Yes, if you are involved in any criminal act – such as drinking illegally on your boat - your insurance is void.
What about my trailer?
ICBC requires a license plate, and liability insurance. Physical damage can be added to your boat policy for Agreed Value.
Take time to choose your insurance, Paul advises, to make sure you get everything you need.
He asks, “What’s peace of mind worth to you?