Consumer Counselor
Insurance Information for Michigan Consumers
[FIS-PUB 6370 ] Michigan Department of Insurance and Financial Services | 877-999-6442 | www.Michigan.gov/DIFS [4/20]
Boat Insurance
If you own a boat, you should consider talking
to a licensed insurance agent to ensure your
boat is fully protected.
Your homeowners insurance policy may only
provide limited coverage for a boat when used
in specified waterways. Additionally, if you file a
claim for your boat, it may affect your
homeowners insurance premium. Purchasing a
separate boat insurance policy can alleviate the
risk to your homeowners policy.
Boat Insurance Policies
Purchasing a separate boat insurance policy
will provide tailored protection for your boat.
Boat insurance policies are typically obtained to
cover smaller watercraft (26 feet long or less),
and yacht policies are provided to cover larger,
more expensive watercrafts. There are two
basic parts of a boat insurance policy:
• Physical damage protection – covers
accidental loss or damage to the boat
hull, motor(s), and any other equipment
used to operate the boat.
• Liability (Property and Indemnity)
coverage – covers legal obligations to
third parties such as bodily injury, death,
and damage to someone else’s
property.
Types of Physical Damage Coverage
In the event of a loss to your boat, the amount
of money you receive from the insurance
company may depend on the type of policy you
buy and the age and condition of the boat.
Depreciation is the decrease in value of an
object over time due to wear and tear, and
some types of insurance policies factor this into
your settlement. The types of loss/settlement
options include:
• Agreed Value Policy – this type of policy
covers the boat based on its value when
the policy is written. This policy tends to
be more costly, but depreciation is not
included in the settlement of the claim.
• Actual Cash Value Policy – this type of
policy is less costly but takes
depreciation into account in the event of
a claim.
• Replacement Cost Policy – provides
coverage to return your boat to its pre-
accident condition or better.
Optional Coverages
• In addition to ensuring physical damage
and liability protection for your boat,
check with a licensed agent to see what
optional coverages are offered by
insurance companies.
Boating in Michigan
We live in a state where boats cannot be used
year-round. It is important to understand any
storage requirements on your policy. You may
be required to store it inside, and freezing, ice
damage, and damage caused by certain vermin
may not be covered.
There may also be navigation limits on where
you are allowed to take your boat. If you plan to
use your boat on the Great Lakes, read your
policy and consult with your agent to ensure
your policy will cover it.
Consumer Counselor
Insurance Information for Michigan Consumers
[FIS-PUB 6370 ] Michigan Department of Insurance and Financial Services | 877-999-6442 | www.Michigan.gov/DIFS [4/20]
Short Rate Refunds
Since your boat will only be used during certain
months of the years, some insurers may charge
a higher percentage of the annual premium
during those months. This is done to
discourage boat owners from canceling their
insurance in the offseason. If you cancel your
policy when storing it for the winter, you may
not get the refund you expect.
Be Prepared in Case of a Claim
When you start a new policy on your boat, it is
important to take pictures to document the
condition of your boat. You may also want to
consider having an inspection, so you have a
written report of the boat’s condition. This may
help prevent issues in the event a claim is filed
for physical damage.
About DIFS
The mission of the Michigan Department of
Insurance and Financial Services (DIFS) is to
ensure access to safe and secure insurance
and financial services fundamental for the
opportunity, security and success of Michigan
residents, while fostering economic growth and
sustainability in both industries. In addition, the
Department provides consumer protection,
outreach, and financial literacy and education
services to Michigan citizens. For more
information please contact DIFS at 877-999-
6442 or visit www.michigan.gov/DIFS
.
