A boat is a watercraft of a large range of types and sizes. Nowadays, a boat is a large investment, and is also a sizable moving object, so it’s subject to accidents that can damage it, someone else’s boat, or even personal property.

Like a car, it’s important to have insurance to cover your boat in the event something happens. Here are several types of insurance to cover your boat, and to cover other people and their property, that you might want to consider.

Loss or Damage

The first type of insurance is just for your boat. This is coverage against something happening to your boat: it sinks, gets stolen, shark eats it, etc. With this type of insurance, the defining condition will be how the value of your boat is established.

There are essentially three ways to do this: agreed upon value, actual cash value, and replacement cost. “Agreed upon value” simply means that at the outset of the policy, the boat owner and the insurer agree upon the value of the boat. No matter how much time passes, no matter if the boat’s value appreciates or depreciates, it’s always the agreed upon value.

This insurance works for boaters who never really add value to their boat. But if you’re adding a new motor or electronics or other accessories, that added value won’t be reflected since you agreed upon the value at the outset, regardless of what you do to the boat.

Next is “actual cash value,” and this is simply the value of the boat the day you lose it. There’s an appraisal, and you get the amount the boat is worth at that time. Depreciation is an issue here, and some people are shocked to find that their boat isn’t worth as much as they thought it was.

Finally, there’s “replacement cost.” Here, the insurance company pays to replace your boat. If the value of your boat has gone up or down, they’ll cover it. The upside here is you don’t have to haggle with anyone over what the boat was worth. You get it replaced. This policy also has some upside when it comes to repairs.

For example, let’s say you have a two-year old outboard motor, and you damage its lower unit badly on some rocks. With an actual cash value policy, you get money to cover parts for a two-year old outboard. And that might not be enough to fix it if the parts are hard to find. On the other hand, with a replacement cost, you get that lower unit replaced with a brand new one, with no haggling involved.

A replacement cost policy is more expensive than the other two, but if something happens it could save you thousands of dollars if you had to replace an entire boat.

Liability Coverage

This one is easy, and it only works one way. If you and your boat injure another person or damage someone else’s property, this insurance covers it. Or if you hit another boat and damage it? Covered. Hit someone’s dock and damage it? Covered. Hurt a boater in a crash? Covered, and that includes lost wages, pain and suffering, medical bills, and everything else that goes along with injury.

Boating with a Home Insurance Rider

Some people choose to add their boat as a rider to their home insurance policy. It can be done, but your house isn’t moving on the water, so it’s not going to hit rocks, damage property, crash another boat or injure someone. If all of the specific types of claims you have to make aren’t specified in the rider, you may not be covered.

The better bet is to think of your boat like a car, and insure it the same ways: one, for damage or loss of your own boat; and two, for injury to others and damage to their personal property.

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