Do You Have to Have Insurance on a Boat?

Whether it’s mandatory to get boat insurance mainly depends on where you’re located. If you are living in states such as Arkansas, Hawaii, and Utah, it is mandatory for you to get liability boat insurance with minimum coverage.

However, if you’re located in any of the other 47 states then you’re not legally required to have boat insurance. Typically, boat insurance is primarily for your own financial protection from accidents and unexpected events that can lead to bodily injuries, boat, and property damage.

Also, if you’re renting a boat, acquiring one on lease, or purchasing it on loan, your marina or lender may ask for proof of boat insurance to ensure that you can cover any accidental liability, boat damage, or property damage.

While boat insurance isn’t legally mandatory in most states throughout the U.S. it is often essential for both financial protection and meeting contractual requirements. In this article, you’ll learn why boat insurance is so essential and when it might be required.

When is Boat Insurance Required?

Even though boat insurance isn’t universally required by law in most states in the U.S., it is still highly necessary in many situations.

Typically, you’ll need boat insurance when purchasing a boat with a loan, renting a boat, docking it at a marina, and meeting certain state legal requirements. Most importantly, it ensures financial protection against accidents and unexpected events.

Boat insurance is often required for circumstantial reasons, and to properly understand each of these aspects in-depth, here’s an overview of 5 crucial situations when boat insurance is required.

Ensuring Financial Protection

The main reason to get boat insurance is to ensure that you’re financially protected against accidents. Depending on the size and engine of your boat, it can cost you a significant amount to repair and replace your boat.

Usually, the cost of repairing a boat is 10% of its purchasing price, but that can vary depending on the damage and the actual cost incurred. In case if the boat is beyond repair, then it can cost you much more to replace it.

With boat insurance, you can cover your boat’s actual cash value, which is the amount of compensation you will get after deducting your boat’s depreciation cost.

On the other hand, if you accidentally hit another boat, and if you’re at fault for the accident, then you’re liable to compensate the other boat’s driver, and its passengers for boat and property damage, along with bodily injuries.

If you don’t have boat insurance, and if you’re unable to compensate the other boat’s driver, and anyone else harmed by the accident, then you may get into legal trouble, especially when you’re sued.

Purchasing a Boat on Loan

In many cases, financial institutions or boat dealerships will ask for proof of boat insurance to ensure that you can cover any damages in case of an accident. Technically, while you’re periodically paying the boat’s loan amount, you don’t own it until you’ve paid it in full.

So, when your boat gets damaged, your financial advisors are equally at risk, and that’s the main reason most lenders will verify whether you’ve adequate boat insurance. If you’re planning to purchase a boat on loan, then it is crucial for you to get boat insurance before or while purchasing the boat.

Renting a Boat

Similarly, like financial lenders, most boat rental companies require boat insurance to rent a boat. In this case, you don’t even own it, so if the boat gets damaged, it’s the boat rental company that will bear the loss.

If you think of it from a business perspective, that’s a huge loss. Legally, whenever you’re renting a boat, any accidental damage during the rental period is your financial responsibility.

However, as boat insurance isn’t legally required in most states in the U.S., many boat riders may not even have boat insurance. So, that’s why many boat rental companies require you to have boat insurance to rent a boat so that you can cover the boat’s repair and replacement costs.

Essentially, it’s mutually beneficial as boat insurance; it protects you from high financial burdens and provides the rental company with damage repairs or replacement costs up to your coverage limits.

Learn More: Do I Need Insurance When I Rent a Boat?

Docking at a Marina or Port

While you may be under the impression that your boat is safely docked at the marina, it can get stolen or accidentally damaged by incidents that are beyond your control. These situations can include boat damage due to vandalism, fire outbreaks, or natural disasters such as severe storms.

Another boat driver may even hit your one accidentally and damage it. In worst-case scenarios, if your boat sinks, then it can cost you $5,000 to $10,000 or more to get it out of the water.

So, you won’t just have to pay for the boat’s repair/replacement costs, but also trail it back to land, and then to the repair store. However, if you have boat insurance coverage such as boat liability, wreckage removal, collision, and comprehensive boat insurance coverage then you can cover these costs with your boat insurance policy.

Abiding by State Requirements

In the U.S., boat insurance is mandatory and legally required in 3 out of 50 states, which include Arkansas, Hawaii, and Utah. If you’re located in any of these states, it is essential to know the state requirements, which include mandatory coverage and required limits as follows.

• Arkansas: In Arkansas, you’re required to have a minimum liability boat insurance coverage of at least $50,000. Although liability insurance is only mandatory for boats with 50 horsepower and beyond.
• Hawaii: According to Hawaii’s Division of Boating and Ocean Recreation (DOBOR), water vessels greater than 26 feet in length are legally required to carry liability boat insurance of $500,000. Additionally, you’re also required to have at least $100,000 for salvage costs for grounded and sunken vessels, damage to docks, pollution containment, wreck removals, etc.
• Utah: It is legally required to carry boat insurance for boats and watercraft with a horsepower of 50 and above. Here in Utah, it is mandatory to have liability boat insurance, which includes $25,000 to $50,000 for bodily injuries or death, $15,000 for property damages, or $65,000 as a combined minimum per accident.  

As boat insurance is legally mandatory in these 3 states, it is essential to ensure you have the minimum coverage to avoid fines and other legal consequences. Although in many cases, the minimum boat insurance coverage may not be enough.

If you’re renting a boat or financing one on loan, then you may be required to carry other coverages such as wreckage removal, collision, and comprehensive coverage with adequate coverage limits depending on the type, size, and engine capacity of your watercraft.

If you’re looking for a reliable insurance agency offering affordable boat and watercraft coverage in Arizona, Colorado, Florida, Georgia, Michigan, Nevada, and Texas, you should consider exploring our insurance solutions.  

Is Boat Insurance Required in Michigan?

You might be wondering whether boat insurance is required in Michigan, after all, it is popularly known as the Great Lakes State, with more than 41.5% of the area covered by water bodies. This makes Michigan prominent and the 2nd most popular state for recreational boating.

Regardless of the widespread popularity of boating, boat insurance isn’t mandatory or legally required. However, as Michigan is a popular recreational area for boating it is also prone to boat accidents. So, to financially protect yourself and stay on the safe side, it is recommended that you consider getting adequate boat and watercraft insurance in Michigan.

What Happens if You Don’t Have Boat Insurance?

Boat insurance is a legal requirement in 3 states, which include Arkansas, Hawaii, and Utah. You cannot dock or cruise a boat without the required minimum boat insurance coverage in these states.

If you do, then you can face serious legal consequences starting from fines to even jail time. Apart from that, if you hit another boat, and if you’re uninsured, then you will have to pay the other driver out of pocket. If you cannot do that, then you may get into further legal trouble, especially if the other boat’s driver sues you.

You may be compelled to deal with court proceedings, and if you’re unable to pay for the damages immediately, the court may order a wage garnishment. If that happens, a certain percentage of your salary or income will be transferred as compensation to the other boat’s driver.

You can also face a similar situation if you rent a boat, and it gets damaged after an accident, and now you’re unable to pay for the repair and replacement costs for being uninsured.

Apart from the legal consequences, you may even face inconvenience getting a boat for rent or even purchasing it on loan. This is mainly because most rental companies and financial lenders require boat insurance.

In a nutshell, if you don’t have boat insurance, you can get into a range of both financial and legal troubles. So, that’s why it’s always better to have boat insurance even in states where it is not mandatory.

Steps to Get Boat Insurance

Whether you’re ready to purchase boat insurance or you just started exploring your options, here’s a simple step-by-step as follows.

• Find Boat Insurance Companies Nearby: It is crucial to find boat insurance companies nearby, especially to ensure that the area you’re planning to cruise is covered by insurance.
• Explore Rates and Coverage Options: Prioritize finding boat insurance companies that offer coverages a wide range of coverages, mainly including liability coverage, collision coverage, comprehensive coverage, and wreckage removal coverage. It is essential to ensure you get the best selection of coverage at an affordable rate.
• Analyze the Insurance Company: Go through the customer reviews on their website, social media, Google Business Profile, and other third-party sites such as Reddit and Quora. It’s important to choose a boat insurance company that has a smooth registration and insurance claims process.
• Negotiate With Your Top Choices: It’s ideal to choose up to 3 boat insurers in terms of the best rate, credibility, and reliability. You can negotiate the insurance premiums and choose the one offering the cheapest rate with the best coverage options.
• Confirm the Deal and Complete the Formalities: Once you have decided which insurer is offering the best deal to your budget, confirm it and purchase the boat insurance policy. Complete the paperwork and other formalities, once you’re done, make the payment and your insurance should be effective immediately or within a few hours.

If you’d like personalized help, our licensed boat insurance agents are always available. Find an agent online today for a free consultation.

The Bottom Line: Is Boat Insurance Actually Necessary?

Even if boat insurance isn’t mandatory in your state, it is still essential, especially for your own financial protection. Unlike other vehicles, boat rides can become extremely risky with sudden shifts in weather conditions.

Additionally, even if it’s safely docked at the harbor, it is still prone to theft and weather damage. Also, compared to other vehicles, it can be more expensive to repair or replace a boat.

In a nutshell, if you weigh the pros and cons of getting boat insurance, the benefits heavily outweigh the costs. While boat insurance is quite cheap, it can be several times more expensive to cover boat accidental damages out of pocket, especially if it’s severe.

If you’re interested in exploring boat insurance coverage at affordable rates within your budget, please contact us for a free quote and a personalized boat insurance policy.

Frequently Asked Questions (FAQ)

In what states is boat insurance required?

Boat insurance is legally required in Arkansas, Hawaii, and Utah. In Arkansas, boaters must carry a minimum of $50,000 in liability coverage. In Hawaii, the requirement is $500,000. In Utah, boaters need between $25,000 and $50,000 for bodily injury or death, $15,000 for property damage, or a combined minimum of $65,000 per accident.

What size boat motor requires insurance?

In the three states where boat insurance is mandatory, if your boat’s motor or engine capacity is 50 horsepower or more, then you’re legally required to get boat liability insurance with at least the minimum coverage.

How important is boat insurance?

Even if boat insurance isn’t mandatory in your state, it is still essential for you to carry it, especially to protect yourself from accidental damage or injuries that can be financially overwhelming to pay out of pocket.