A CONSUMER GUIDE TO
INSURANCE
FOR BOATS AND
PERSONAL WATERCRAFT
A CONSUMER GUIDE TO
INSURANCE
FOR BOATS AND
PERSONAL WATERCRAFT
INSURANCE ADMINISTRATION
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
TABLE OF CONTENTS
Introduction ....................................................1
Do I Need Insurance On My Boat or Personal Watercraft? .................1
What Types of Policies and Coverage Are Available? ......................3
What Factors Aect the Premiums of a Boat Owner’s Insurance Policy? .......6
How Are Losses Paid Under a Boat Owner’s Insurance Policy? ..............8
What Happens if I Cannot Find Coverage?.............................9
Where Can I Obtain Information on Boating Rules,
Regulations, and Safety Issues? .....................................10
Shopping Checklist for Boat Owners Insurance Coverage .................10
How To File a Complaint .........................................13
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
INTRODUCTION
e Maryland Insurance Administration (MIA) is an independent state agency that
regulates Maryland’s insurance marketplace and protects consumers by ensuring
that insurers and insurance producers (agents and brokers) act in accordance with
insurance laws. We produced this guide to help educate Maryland residents about
insurance for boats and other personal watercraft.
e Insurance Administration is responsible for investigating and resolving
complaints and questions concerning insurers that conduct business in Maryland.
DO I NEED
INSURANCE ON MY
BOAT OR PERSONAL
WATERCRAFT?
For many people, the purchase of a boat or personal watercraft is one of the
more expensive purchases they will make, after the purchase of a home or an
automobile. Yet insurance for the boat or watercraft is one of those products
that most people never think about until there is a need to le a claim.
In Maryland, there is no law, regulation or other rule that requires you to
purchase insurance for your boat or personal watercraft. It is still a good idea to
purchase an insurance policy to protect you and your investment.
Purchasing a personal watercraft insurance policy will not prevent a claim from
arising. However, it will help you recover nancially in the event that your boat
or personal watercraft is damaged by a covered cause of loss or in the event
that a claim is made against you for damages to another person or another’s
property arising out of your operation of the watercraft.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
Keep in mind that if you have borrowed money for the purchase of the
watercraft, the lender may require that you purchase an insurance policy
to protect its interest in the property. In addition, if you fail to maintain a
policy, a lender may purchase a “force place” insurance policy to protect its
interest in the watercraft. When a lender obtains
“force- place” insurance, you will be charged for
the coverage, but you will not have the benet of
insurance for your interest in the watercraft.
For example, suppose you purchase a boat or
watercraft for $25,000, and borrow $15,000
of the purchase price. en suppose you either
do not obtain an insurance policy or allow your
insurance policy to lapse because, you fail to pay the premium due or the
policy is non-renewed or canceled. e lender will force place an insurance
policy on your boat or watercraft with coverage up to the amount of its interest
($15,000). e lender then will include the cost of the insurance premium in
your monthly loan installment payment. In the event of a total loss, the lender
would receive from the insurance company the amount of the outstanding
balance on the loan, but you would not receive any money. is is true even
if the watercraft’s actual cash value exceeds the amount of the loan. In other
words, only the lender is protected by forced placed insurance coverage, and
any equity in excess of the loan amount would be lost. You can avoid this
result and protect your interest in the watercraft by purchasing your own policy
and naming your lender as an additional insured.
ere are dierent types of protections and policies available depending on
the type and size of the watercraft you own. Knowing your options may
help you determine not only if the watercraft should be insured, but also
how best to do so.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
WHAT TYPES OF
POLICIES AND
COVERAGE ARE
AVAILABLE?
e type of coverage or policy available will depend in large part on the type of
watercraft you own. Coverage generally is obtained via a homeowner’s policy,
a watercraft endorsement to a homeowner’s policy, or under a separate boat
owner’s policy.
HOMEOWNERS POLICY OR ENDORSEMENT
A homeowner’s insurance policy may provide some coverage for smaller vessels,
such as sailboats less than 26-feet long or power boats with outboard engines
of less than 25 horsepower. However, if coverage is provided, it may be very
limited. For example, coverage for property damage to the boat may be capped
at $1,000 for the watercraft, trailers, furnishings, equipment parts and motors.
Some insurance companies sell watercraft endorsements that are added to
your homeowners’ insurance policy. e endorsement will provide, for an
additional premium, coverage for sailing vessels more than 26 feet in length or
power boats with outboard engines of greater than 25 horsepower.
It is important to read your policy and talk to your agent to determine if it
provides coverage for the watercraft you own or are considering purchasing, or
whether you will need an endorsement. You also should discuss what the terms
and conditions of coverage are.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
If the watercraft is covered by a homeowner’s insurance policy and/or
watercraft endorsement, there also will be coverage for personal liability
and medical payments to others. e liability section of the policy provides
coverage to the insured (you) or resident relatives in the household when they
are legally responsible for causing bodily injury and/or property damage to
others while operating the watercraft. e medical payments coverage in the
policy provides for payment of reasonable and necessary medical expenses for
any person, other than the insured and the insured’s household relatives, who
have been injured accidentally.
BOAT OWNERS POLICIES
In addition, many insurance companies sell separate boat owner insurance
policies. ese policies tend to provide broader coverage for vessels, their
equipment, and the trailers used for towing them.
Many boat owners insurance policies provide coverage for the physical loss to
the property (watercraft, motors, equipment and trailers) unless the cause of
loss is specically excluded by the language of the policy. Typical exclusions
include: damages due to wear and tear; marring; scratching; deterioration;
rust; corrosion; mold; wet or dry rot; latent or physical defects; structural
mechanical, electrical breakdown or overheating; freezing (unless reasonable
care has been used to winterize the watercraft)
and equipment; repairing, renovating, servicing
or maintenance; intentional or criminal acts of
insureds; damage from illegal transport or trade;
damage from business pursuits; damage if the
watercraft is in a race, speed or other contest;
neglect; war or warlike acts.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
You should be aware that what is included as “boat equipment” may vary
from insurance policy to insurance policy. In general, the following items
are covered: anchors, batteries, bilge pumps, boat furniture and deck chairs,
depth nders, life preservers, horns, masts, mooring cleats and lines, oars, seat
cushions, ship-to-shore radios, and tarpaulins/covers. Your policy may not
include all of these various types of equipment. You should read your contract
to learn what types of damages are covered, and which are excluded under the
specic terms of your policy, as well as review your specic policy with your
agent to ensure that all the equipment you need to be protected is covered by
your insurance policy.
A boat owners insurance policy provides you with liability and medical
payments coverage as discussed above. e medical payments coverage usually
will extend to the boat owner (insured), family members or any other person
while in, upon, or alighting the watercraft. is coverage is broader than that
provided by a homeowner insurance policy. A boat owner’s policy may provide
additional coverages, such as emergency services, wreck removal, personal
eects, towing, and coverage for necessary repairs after a loss.
Some watercraft policies contain a navigational waters limitation. ese
provisions limit your coverage to certain areas or waterways, such as the
Chesapeake Bay, inland rivers, etc. If the insured watercraft goes outside its
restricted territory, this may result in voiding the insurance coverage in the
event of a loss. It is important that you are aware of any territorial restrictions
that may be placed on the policy, that these reect the areas where you
operate your boat or personal watercraft, and that your premium reects the
imposition of these territorial restrictions. If you plan to take your boat into a
new area or waterway, speak with your insurance company or agent to be sure
that your insurance policy will protect you.
Each policy is dierent, so prior to purchasing your boat owners or
homeowners policy or endorsement, you should review the policy language
and discuss the types of coverage with your insurance agent.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
WHAT FACTORS AFFECT
THE PREMIUM OF A
BOAT OWNERS
INSURANCE POLICY?
Premiums are based on many factors, but the more common ones are:
• Type and length of the boat;
• Motor type and horsepower;
• Age, value and condition of the boat;
• Usage – territory, length of time, etc.;
• Location where boat is moored/stored;
• Owner’s/insured’s driving record;
• Experience on the water;
• Claims history; and
• Deductible (amount of the loss for which you would be responsible).
To lower your premium, you may want to:
• Increase the deductible, because the higher the deductible, the lower the
premium;
• take boating safety courses;
• maintain a good motor vehicle record;
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
• make sure the vessel remains in good condition;
• remain claims free;
• carry Coast Guard-approved re extinguishers and ship-to-shore radios
onboard;
• ask about multi-policy discounts if you have other policies with the
same insurer; and
• ask your agent or broker if they charge a fee for making a premium
payment with a credit card. ey are permitted to charge the actual
expenses incurred when a premium payment is made using a credit card,
provided the amount of the fee is disclosed.
Many watercraft policies have restrictive provisions with respect to canceling the
policy and refunding unearned premiums. In
some instances, the premium may be fully earned at
inception. is means that if you cancel the policy,
no premium will be refunded. Other policies may
assess a “cancellation or short-rate penalty” if the
policy is cancelled mid-term, which will reduce the
amount of your premium refund. While this may
seem unfair, one of the reasons for these cancellation
penalties is to discourage boat owners from insuring
the watercraft only during the boating season, which, in Maryland, usually
spans the months of April through October. Underwriting, policy issuance and
cancellation expenses can be higher for boat insurance than, for example, auto
insurance. erefore, it is important that you read the cancellation provision of
your policy to determine if any premium will be refunded in the event that you
cancel the policy. If you have any questions about the cancellation provisions or
any other provision of your policy, you should discuss your concerns with your
insurance agent or company.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
HOW ARE LOSSES PAID
UNDER A BOAT OWNERS
INSURANCE POLICY?
In calculating the amount of a claim, insurers use several dierent methods. One
common method is “actual cash value” (ACV). ACV is equal to the cost to replace
the boat or personal watercraft, less an amount for its depreciation. Some policies
provide for an “agreed value” or “stated value” settlement. is means that, if the
boat or personal watercraft is destroyed as a result of a covered cause of loss, you
would receive a previously agreed-upon amount for the loss of the boat or personal
watercraft. Other policies may provide “replacement cost value” (RCV). is
means that if the boat or personal watercraft is destroyed as a result of a covered
cause of loss, you will be paid an amount to replace the boat or watercraft with a
like kind and quality boat or watercraft. e dierent methods can result in you,
the insured, being paid a dierent amount for the same covered damage. Your
policy will specify which method the insurer will use.
It is important that you read your policy and understand the type of coverage you
have purchased before any loss occurs, so you know how claims will be settled in
the event of a covered loss. Be aware of any navigational waters limitations (as
discussed under types of policies and coverage).
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
WHAT HAPPENS
IF I CANNOT FIND
COVERAGE?
Coverage may be dicult to nd for any number of
reasons, including the age, type or condition of the
vessel, the driving record of the owner or operators,
the number of claims led or the waterways where the
boat is operated. In such a situation, coverage may be
provided by an insurance company that specializes in
underwriting risks that present an increased hazard,
known as excess and surplus lines insurers. ese
policies only can be procured through a surplus-lines
broker. e premiums charged for these types of policies may be higher than those
charged by other insurers, because the risk is greater. Under state law, most often,
before you can purchase insurance from a surplus line insurer, you must be turned
down for coverage by three authorized insurers that write that particular kind and
class of insurance in the state. In addition, the surplus-lines broker or insurance
producer placing the surplus line insurance must execute an adavit attesting that
coverage was denied by three authorized insurers.
Surplus-lines insurers are NOT regulated by the Maryland Insurance
Administration; however, they must be approved by the Administration to conduct
business on a surplus-lines basis in the state. Before you obtain insurance through
a surplus-lines broker and insurer, you should check with the Maryland Insurance
Administration to ensure that the broker is licensed to sell this type of coverage and
the insurer is approved to underwrite it. is information is available on the MIA’s
website at www.insurance.maryland.gov.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
WHERE CAN I FIND
INFORMATION ON
BOATING RULES,
REGULATIONS AND
SAFETY ISSUES?
Many agencies and organizations provide boater safety information, navigational
rules and regulations. Some of those include:
• e United States Coast Guard (www.uscgboating.org)
Click the tabs for “safety” and “regulations.”
• Maryland Department of Natural Resources (www.dnr.state.md.us)
Click the tabs for “boating” and “regulations.”
SHOPPING CHECKLIST
FOR BOAT OWNERS
INSURANCE COVERAGE
When shopping for coverage, it is important to comparison shop, because the cost
of coverage depends on so many dierent factors. e following checklist will help.
Make and Model of Vessel:____________________________________________
Year:___________________ Serial Number:_____________________________
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
Company 1 Company 2 Company 3
1) Coverage Limits for:
Boat
Equipment
Trailer
Liability
Medical Payments
2) Deductible Amount
3) Settlement Method:
Actual Cash Value
(ACV)
Agreed Value
Replacement Cost
4) What is considered
covered boat equipment?
anchors
batteries
bilge pumps
boat furniture and
deck chairs
depth nders
life preservers
horns
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
Company 1 Company 2 Company 3
masts
mooring cleats and lines
oars
seat cushions
ship-to-shore radios
tarpaulins/covers
other
5) What personal eects
are covered?
6) Does the policy
include coverage for:
Emergency Services? Yes / No Yes / No Yes / No
Towing? Yes / No Yes / No Yes / No
Newly Acquired
Watercraft? Yes / No Yes / No Yes / No
Wreck Removal? Yes / No Yes / No Yes / No
7) Cancellation/Refund Fully Earned, Fully Earned, Fully Earned,
of Unearned Pro Rata Pro Rata Pro Rata
Premium Method? or Short Rate or Short Rate or Short
8) Navigational Territory Yes / No Yes / No Yes / No
Restrictions?
9) Premium $ $ $
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
HOW TO FILE A
COMPLAINT
e Maryland Insurance Administration’s primary role is to protect consumers
from illegal insurance practices by making certain that insurers and producers doing
business in Maryland act in accordance with state insurance laws. You may contact
the Insurance Administration to le a complaint against an insurer or producer who
you believe is not acting in accordance with Maryland law.
Maryland’s insurance laws not only govern insurers’ conduct – they also protect
Maryland consumers. Insurers are prohibited from settling claims in an arbitrary
and capricious manner. is means that insurers’ claim settlement practices must
be fair, nondiscriminatory and adhere to Maryland insurance laws.
If you feel that your insurer has acted improperly, you have the right to take action
by ling a complaint with the Maryland Insurance Administration. However, some
disputes may be governed by your policy’s terms and may not be a problem the
Maryland Insurance Administration can resolve for you.
Complaints must be received in writing. Please provide as much detail as possible,
including copies of pertinent documents. A trained, professional investigator will
handle your complaint. e investigator will contact the insurer/producer to try to
resolve the issue. Meanwhile you will be advised of the steps being taken on your
behalf. Complaint les are not closed until the Maryland Insurance Administration
has made a determination regarding the complaint.
e MIA also established a Rapid Response Program designed to help certain
consumers resolve property and casualty claims (such as auto and homeowners
claims including those made under commercial lines policies) quickly and
without having to le a formal written complaint. For more information about
this program, please contact us at 410-468-2340 or 800-492-6116 ext. 2340.
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
A CONSUMER GUIDE TO INSURANCE FOR BOATS AND PERSONAL WATERCRAFT
Participation in the Rapid Response Program is voluntary and does not aect your
right to le a formal complaint.
For additional information or if you have a complaint, please contact the Maryland
Insurance Administration’s Consumer Complaint Investigation Division at
410-468-2000 or toll-free at 800-492-6116. Consumers may also le their written
complaint in person or by mail.
Consumers may also le a complaint by going online to the Maryland Insurance
Administration’s web site at www.insurance.maryland.gov and under Consumers,
click on File a Complaint.
MIA-WC-1 (11/19)
is consumer guide should be used for educational purposes only. It is
not intended to provide legal advice or opinions regarding coverage under a
specic policy or contract; nor should it be construed as an endorsement of any
product, service, person, or organization mentioned in this guide.
is publication has been produced by the Maryland Insurance Administration
(MIA) to provide consumers with general information about insurance-related
issues and/or state programs and services. is publication may contain
copyrighted material which was used with permission of the copyright
owner. Publication herein does not authorize any use or appropriation of such
copyrighted material without consent of the owner.
All publications issued by the MIA are available free of charge on the MIA’s
website or by request. e publication may be reproduced in its entirety
without further permission of the MIA provided the text and format are not
altered or amended in any way, and no fee is assessed for the publication or
duplication thereof. e MIA’s name and contact information must remain
clearly visible, and no other name, including that of the company or agent
reproducing the publication, may appear anywhere in the reproduction. Partial
reproductions are not permitted without the prior written consent of the MIA.
People with disabilities may request this document in an
alternative format. Requests should be submitted in writing
to the Director of Communications at the address listed below.
200 St. Paul Place, Suite 2700
Baltimore, MD 21202
410-468-2000
800-492-6116
800-735-2258 TTY
www.insurance.maryland.gov
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INSURANCE ADMINISTRATION
