Why do you need boat insurance?

Spending time on your boat is one of the best ways to pass those beautiful summer days. The sun is shining and the breeze is in your hair. If you get hot, just jump in the cool water! What could be better?

Here’s one part of boating life you probably haven’t spent that much time thinking about: getting the right insurance. We get it. Looking for the right boat insurance is a lot less fun than spending time out on the water! However, getting the right insurance plan for your boat will help you enjoy the summer months worry-free, knowing your boat has the right coverage. In this article, we’ll explain what boat insurance is, what it covers and why it’s a good investment! Keep reading to learn more.

Boat insurance rules and requirements in Canada

A common source of confusion for new boat owners is whether boat insurance is legally required. In Canada, for private pleasure crafts, boat insurance is not required by federal or provincial law. Mandatory insurance rules apply to commercial and passenger vessels, not recreational boats used for personal enjoyment.

That said, insurance is often required in practice. Many marinas, yacht clubs and storage yards will not allow dockage or storage without proof of liability coverage, often requiring a limit of at least $2 million. Lenders financing a boat will also typically require boat insurance coverage and may ask to be listed as a loss payee on the policy. Always verify boat insurance requirements before you dock or store your boat.

Other boating rules to be aware of

Even though insurance isn’t mandatory, boating itself is regulated in Canada. According to Transport Canada, anyone operating a motorized pleasure craft must carry proof of competency, most commonly a Pleasure Craft Operator Card (PCOC). This requirement applies regardless of age and failure to carry valid proof can result in fines.

Transport Canada also maintains a national licensing system for pleasure craft, tracking ownership and licence activity across the country. Also, any pleasure craft equipped with 10 horsepower (7.5 kW) or more must have a valid Pleasure Craft Licence (PCL) or be registered. A PCL:

• Must be displayed on both sides of the bow

• Is valid for 10 years

The Small Vessel Regulations also set mandatory safety gear requirements for pleasure craft (e.g., PFDs, visual signals, fire extinguishers, etc.). Failing to meet these requirements can result in fines and may also affect how an insurance claim is handled.

What does boat insurance cover?

Boat insurance usually covers most watercraft with motors. That can include fishing boats, pontoon boats, yachts and paddle boats. Kayaks and canoes usually aren’t covered by boat insurance, but can be included on a home insurance policy. Here are a few of the things boat insurance can cover:

• Injury to others and damage to their property

• Unexpected damage to your boat from an accident

• Recovery costs if your boat sinks

• Damage to property on your boat

Types of boat insurance

Not all boats are created equal! The type of boat insurance you purchase will depend on the type of boat you have. Here are a few of the questions your insurance broker will ask about your boat:

• Is your boat powered by an engine?

• What is the size of your boat?

• What type of boat do you have? Fishing boat, yacht, sailboat and motorboat are a few examples.

• Do you use this boat for personal reasons only? (Note that if you use this boat for business purposes, you will need commercial boat insurance, which is a different thing entirely!)

• Where do you store your boat?

• Do you have a trailer to tow your boat?

• How much coverage do you want?

There are different levels of coverage you can purchase for your boat and you can choose from basic coverage to something more extensive. Talking with an insurance broker will help you determine what kind of coverage makes the most sense for your specific situation. Here are a few types of coverage you might want to consider for your boat:

Protection and indemnity (liability insurance)

This coverage helps protect you if someone is injured or their property is damaged. It can help pay for legal fees, medical expenses and repair costs. Many policies also include wreck removal and pollution liability, often with specific sub-limits.

This coverage is especially important given that boating incidents remain a leading cause of water-related injuries in Canada. National data shows that boating is involved in roughly 24% of recreational water-related drowning deaths, with powerboats accounting for the majority of those cases.

Hull insurance (physical damage)

Hull coverage protects the boat itself. Policies are typically written on either an agreed value basis (a pre-set value) or an actual cash value basis (factoring in depreciation). Optional or additional coverages may include:

• Uninsured or underinsured boater coverage

• Personal effects and onboard equipment

• Emergency towing and assistance

• Trailer coverage

• Fishing gear and electronics

• Loss of use coverage if your boat can’t be used after a claim

An insurance broker can help tailor coverage based on how and where you use your boat.

Trailer and towing coverage

Towing a boat involves both your auto insurance and your boat insurance and each one plays a different role. In most cases, if you tow your boat:

• Your auto insurance typically covers liability while towing

• Your boat insurance usually covers physical damage to the boat and trailer

Because coverage is split between policies, a broker can help explain how they work together.

Why you should get boat insurance

A common misconception new boat owners have is that their home insurance extends to their boats. Unfortunately, this is usually not the case.

Depending on your policy, home insurance may cover some small, non-motorized watercraft such as kayaks or canoes, often with strict limits. It typically won’t cover a motorized boat, especially once the value or horsepower increases. Boat insurance helps protect this significant purchase and provides financial protection if someone is injured, property is damaged or your boat is stolen or seriously damaged.

Canadian law also places responsibility on boat owners when something goes wrong. Under the Wrecked, Abandoned or Hazardous Vessels Act, owners can be held responsible for the costs associated with hazardous wrecks, including removal and environmental damage. Insurance can help manage these costs if a boating accident results in a wreck or pollution.

What boat insurance usually doesn’t cover

Boat insurance is designed to cover sudden and accidental losses. This means that most policies won’t cover:

• Wear and tear or gradual deterioration

• Corrosion or rust

• Manufacturer defects

• Damage caused by vermin

• Racing or speed contests, unless endorsed

• Illegal operation or operating outside navigational limits

What affects how much boat insurance costs?

Boat insurance premiums are commonly calculated as a percentage of the boat’s current market value, often around 1.5%. But your rate can vary based on how much risk an insurance provider is taking on. The more likely a claim is or the more expensive that claim could be, the more it can affect your premium. For most boat owners, the biggest factors are:

• Boat length, horsepower and value

• Type of boat

• Storage location and security

• Waters navigated

• Claims history and boating experience

• Safety training and certification

• Bundling with home or car insurance

Boat insurance buyer’s checklist

Before getting a quote, having this information on hand can make it easier to understand what boat insurance coverage you need and how a policy is set up:

• Boat make, model, year and value

• Storage details (in-season and off-season)

• Waters you plan to navigate

• Operator experience and PCOC details

• Trailer information

• Safety equipment onboard

• Hull identification number (HIN) and engine details

Contact BrokerLink today

If you have any questions about boat insurance or if you’re looking to insure your boat, BrokerLink can help. Our expert insurance advisors are ready to help you find a comprehensive boat insurance policy that meets your needs. You’ll walk away confident you have the coverage you need at a price that’s fair!

You can reach us by phone, email or in person at any one of our locations throughout Canada. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive boat insurance quote in minutes.

Call Us 1-866-724-2372

FAQs on boat insurance

Does my boat insurance cover my boat if it’s not on the water?

That depends on the circumstances and the coverage you have. Boat insurance may apply during storage or transport, while auto insurance usually covers liability when towing. Your broker can explain how both policies work together.

What are the factors that determine a boat’s insurance rate?

Many factors will determine your boat insurance rate. The size and type of boat, where you will be using your boat and your claims history will all be considered by the insurance company.

How do I lower the cost of boat insurance?

You can keep your boat insurance low by practicing safe boating habits on the water and storing it properly when it’s not to avoid claims. You can also consider bundling your boat insurance with your car and home insurance. Talk to a broker to see if you are eligible for bundling!