Does your home insurance extend to cover your new boat as well? In most cases, it is best to have a stand-alone boat insurance policy. Here are some considerations for you to discuss with your independent agent.
Check the Size and Horsepower
A homeowner's insurance policy typically limits the size and horsepower of a boat, so you need to verify that the boat you own would actually be covered under your homeowner's policy. Depending on the size and speed of your boat, you may not be able to add your boat to your homeowner's policy; in these cases, your boat will require a stand-alone policy instead.
No Coverage for Items on Board
If you decide to use your homeowner's policy instead of a stand-alone boat policy, know that the items you have on board will likely not be covered. Replacement of damaged or lost personal items will be your responsibility.
Verify that you have sufficient liability coverage, especially if you plan to participate in fishing tournaments or other sporting events. Even boats docked in the marina may need liability coverage. Your agent can help you determine the right amount for your needs.
Basis of Settlement
Although it may be less expensive to add the boat to your homeowner's policy, it is likely that your settlement will be lower if you file a claim. When boats are added to a home insurance policy, the basis of settlement is typically the actual cash value. This is calculated by subtracting depreciation from replacement cost. Boats depreciate quicker than cars, so the resulting settlement may not allow you to purchase a satisfactory replacement. Stand-alone boat insurance policies typically have a settlement based on an agreed value.
How Claims Affect Your Policy
A claim made for your boat on your home insurance policy will count as a claim against your entire policy. Since the rate of claims can be used to determine cost of the policy, you may see an increase to your homeowner's insurance policy. In addition, if claims are frequent for a policy, the insurance company can decide to cancel or not renew you, which may make it difficult and/or expensive to obtain a new policy.
Many boaters are better off in the long run with a separate boat insurance policy. In addition, boaters won't need to worry that claims on their boat will affect their home insurance policy. The settlement received from a stand-alone boat insurance policy is also more often adequate for purchasing a replacement boat.