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When you are ready to buy boat insurance, you must decide on the amount of coverage you need for your boat, the deductible (maximum out-of-pocket expense per claim) and the types of coverage you need.

If you have an accident, have a theft occurrence, or have another loss that is covered under your policy, you can file a claim and receive a payment covering the loss.

If you were in an accident with another boat that caused serious damage to your vessel, one of the following things would most likely occur:

• • If you were at fault, your boat liability insurance would cover the damage up to the limits of the policy.
• • If the other boater was at fault, their coverage would pay for your damage, up to the limits of their policy.
• • If the other boater was at fault, but did not have boat insurance, or did not have enough to cover your expenses, uninsured/underinsured boaters coverage could cover the damage (if you had that coverage in place).

There are two basic types of boat insurance - “agreed value” and “actual cash value.” How depreciation is handled is what sets them apart.

An "agreed value" policy covers the boat based on its value when the policy was written. While it can cost more up front, there is no depreciation for a total loss of the boat (some partial losses may be depreciated).

"Actual cash value" policies cost less up front, but factor in depreciation. The policy will only pay up to the actual cash value of the boat at the time it is declared a total or partial loss. Eventually, as your boat ages, your insurer will likely insist on an actual cash value policy and often gives a substantial savings.

A lot of things, varying from policy to policy. To get you started, here are a few of the things covered by the average boat insurance policy, and that most boaters consider especially important:

Collision damage

Includes repair or replacement of your boat, but may or may not include clean-up of wreckage unless you purchase optional additional coverage.

Property damage liability

Covers damage you might cause to someone else’s boat, a dock, or other property or structures.

Bodily injury liability

Covers injury you might cause someone while using your boat; includes medical bills, lost income, pain and suffering, and legal expenses.

Comprehensive

Provides compensation if your boat is vandalized, stolen, or damaged in an incident other than a collision.

Additional coverage options

Coverage for medical payments, fishing equipment, oil spills, personal property and roadside assistance, as well as damage and injuries from accidents caused by boaters who are uninsured or under insured. The amount of compensation you receive for a claim depends on a few things, including your deductibles, limits, and whether your boater’s insurance covers your boat’s actual cash value, replacement cost, or agreed-upon value.

A deductible is the amount of money you must pay out of your own pocket before your boat insurance policy kicks in.

Here’s one example of how deductibles work: Let’s say your boat collides with a submerged rock, you have a policy limit of up to $10,000 and your deductible is $1,000. If the cost to repair your boat is $500, you will pay the entire $500 since it is less than your deductible. If the cost to repair your boat is $8,000, you will pay your deductible of $1,000 and your insurer will pay the remaining $7,000.

To keep monthly premiums low, boat owners and operators can opt for higher deductibles. But if you can’t pay your deductible or accident-related expenses above and beyond your policy limits, you may find yourself in financial crisis. Choose wisely. Consider your risk tolerance and financial circumstances when deciding the level of protection that’s right for you and your family – then work with your insurance representative to create a policy that balances your individual needs with a premium and deductible you can afford.

A marine survey is a physical inspection of a boat and subsequent detailed written report by someone certified by the National Association of Marine Surveyors or the Society of Accredited Marine Surveyors. The surveyor will assess and document the boat’s condition and value (both market value and replacement value).

Each insurance company will require surveys and updated surveys at different times. Most insurance companies require the original survey at 10 years of age for boats used in salt water and at 15 years of age for boats used in fresh water.

After the original survey, most companies will require an updated survey every 5 to 10 years.