Boat Insurance Buying Tips
More first-time boat buyers are getting on the water this season than in summers past. Along with the boat, many new owners also find themselves shopping for boat insurance for the first time. What are the most basic things new boat owners should know about buying a boat policy? Our friends and partners at BoatUS, the nation’s largest advocacy, services, and safety group with more than 700,000 members, offers three wise buying tips.
- Know the two basic types of boat insurance policies: Agreed Hull Value (AHV) and Actual Cash Value (ACV). AHV policies are the most popular type of boat insurance policy sold today because if there is a total loss, there are no surprises: You and your boat insurer have already agreed on the value paid on the vessel. If, at the policy’s inception, you and your insurer agree to a hull value of $35,000, you will get $35,000 on a total loss.
ACV policies often appeal to the more frugal because they cost less. However, if the boat is a total loss, the insurance company will pay the claim based on the actual value of the boat on the day of the loss, which is likely to be lower than what it was on the day that you purchased the boat.
With both AHV and ACV policy types, it’s also good to understand how partial losses are paid, as depreciation can be a factor on certain equipment and boat parts and often vary among boat insurers.
- Look at how the boat policy handles towing assistance coverage. First ensure the policy offers an on-water towing coverage endorsement, understand how that coverage is offered and how it will pay for the tow. Otherwise, you may have to pay a hefty towing bill out of your own pocket. Adding an on-water towing endorsement to your boat policy is often less expensive than purchasing a stand-alone annual towing plan. BoatUS offers this coverage for as low as $36 a year with no deductibles and an easy-to-use App that summons the closest local TowBoatUS towing captain.
New boat buyers who will be trailering their boat may want to ask about roadside assistance services as most auto clubs don’t handle disabled boat trailers – which may explain why they are sometimes seen left unattended on the side of a road, a prime target for theft.
- Pay attention to a policy’s boat salvage coverage because this could offer you significant financial benefits should you have to file a claim. A boat policy’s salvage coverage will pay to recover your sunk or partially sunk boat from under the collapsed shed, at its dock or stuck on a beach, and transport it safely to a repair facility. Some boat insurance policies either (1) won’t pay for it, (2) will deduct the cost of salvage from your total payout leaving you with less money or (3) will make you coordinate the salvage, leaving you to hire the marine salvors, cranes and barges by yourself – a difficult task on a good day and especially challenging after a major storm event.