Comparing Types of Boat Insurance

If you are new boat owner, you may be confused about the types of boat insurance available. Boats depreciate like cars so many boat owners opt for coverage based on the age of their boat. In some cases, the insurance company only offers a certain type of insurance due to the age of the boat. Let’s explore some options. 


New Boats 


New boats are considered those that are three years old or newer. If you own a new boat, you will likely want replacement cost coverage. This means that you would receive the amount the boat is worth from the insurance company if you suffer total loss. If your boat is worth $25,000, you would receive that amount which allows you to purchase a replacement boat.  


“Teenage” Boats 


If your boat is between four and ten years old, you will want to consider agreed value coverage. In this case, you and the insurance company will agree on a value for the boat up front. If you experience a total loss, you will receive the agreed upon amount. Although the agreed value is not as high as the purchase price of the boat originally, the insurance premiums will also be lower. If loss is suffered, the agreed value amount should allow you to purchase a boat of similar age.  


Older Boats 


If your boat is older than ten years, you will usually find an insurance policy that is actual cash value. This means you would receive the market value of the boat if you experience a loss. = Since boats depreciate in value, it is likely the market value would be considerably less than the amount you paid for the boat or the amount you would need to buy a replacement boat. In some cases, it is possible to obtain an extended agreed value coverage for a boat that is over 10 years old if that is something you prefer. Keep in mind, your insurance premiums will be higher for the extended agreed value coverage than the actual cash value coverage. 


Determining appropriate insurance coverage for your boat can be confusing, but in most cases, selecting coverage based on the age of the boat is ideal. Since boats depreciate in value, the amount you receive for a total loss of a ten year old boat will be significantly less than the amount you would receive for a total loss of a one year old boat, and the difference in policy types reflects that. Talk to your agent about the right coverage for your maritime needs.  


Stay safe on the water. Call Cloverleaf Insurance at 800-530-5822 for more information on boat insurance.