Most states don’t require boat owners to have insurance, with Arkansas and Utah being the exceptions. Unsurprisingly, many boat owners don’t have it. In fact, almost half of the nearly 12 million registered boats in the United States don’t have boating insurance. While it may not be a requirement by law, boating insurance can make the difference between calmly navigating a boating crisis or paying thousands of dollars to set things right.

Liability-only policies are often tempting for their low price tag, particularly if the boat is old and has depreciated in value significantly. However, boat owners have to consider several other factors. Liability coverage will pay out for property damage and bodily injuries, but it doesn’t cover salvage, wreck removal, and fuel spill costs. The following are several insurance policies boat owners should consider in addition to liability.

1. Consequential loss. The docks account for half of all boat sinkings, most often due to part failure below the waterline. Wear and tear or corrosions are most often to blame for the loss. Most policies won’t replace parts that wear out from typical use or overuse. However, a small part failing can become a big enough problem to sink the ship altogether. While insurance won’t pay for the corroded or worn piece, a consequential loss policy will cover the other repairs or total loss.
2. On-water towing. Tow fees can cost hundreds of dollars and leave boaters stranded while waiting for a third-party service to arrive. Some policies include a towing endorsement, but they often have caveats. For example, the policy may have geographical limitations or may not offer 24-hour service. Most on-water towing policies cost less than $100 a year, and the coverage follows the boater instead of the vessel. For example, boaters with on-water towing insurance have coverage on rented or borrowed boats.
3. Salvage coverage. Boats may need salvaging for a wide array of reasons. Hurricanes can displace them to unlikely locations, and fires can sink them. Salvaging doesn’t always imply significant damage or a total loss, either. If storm surges ferry boats inland, the owners will have to pay to have them lifted and transported back to the water. Depending on the complexity of the salvage job, boat owners can find themselves owing several thousand dollars if they don’t have salvage insurance.
4. Fuel-spill liability. Fuel spills are a common consequence following boating accidents or sinkings. Depending on the size of the spill, the docks may need to shut down for several days to allow an environmental crew to clean up the mess. Boaters should examine their policies closely, as many include limitations and caps for fuel-spill claims. For example, some fuel-spill policies will only pay fuel-spill costs up to the boat’s liability coverage. Federal law can hold boaters liable for up to $939,800 for fuel spill costs, which can leave boaters with an enormous bill.

Most boat owners don’t have the experience or skill set to manage a salvage situation on their own. The financial fallout from an accidental grounding can rapidly balloon into the hundreds of thousands, depending on consequential losses, fuel spills, and more. Contact Windermere Insurance Group to discuss your existing insurance policies and identify any gaps in coverage.