Although the policies are different, boat and yacht insurance policies share many similarities. As we've already said, it's important to know what your policy does and doesn't cover, so read the policy carefully.
Yachts and boats less than 15 years old are typically insured on an "agreed value" basis. That means the insurer will pay the full amount for which you're insured in case of a total loss. There's no depreciation deduction.
Vessels, like cars, lose value as they age. Insurance companies usually re-evaluate the market value of a boat every five years. That way, the coverage more accurately reflects your needs.
On the other hand, boats more than 15 years old are covered on an actual cash value basis. In that case, the insurance company would pay you what the boat is worth, minus depreciation, in case of a total loss. No matter the age of the vessel, insurance companies will only pay the actual cash value of some items -- such as sails, covers or outboard motors.
If you suffer a partial loss, the old, damaged item or items are usually replaced with new ones. Insurers sometimes refer to this as "new for old."
Both yacht and boat insurance can also include uninsured boat, towing and medical payments coverages. If you're beginning to think we've gotten boat insurance mixed up with auto insurance, we haven't. The two aren't that different.
Uninsured boat coverage serves the same purpose as uninsured motorist coverage does in car insurance: to cover you in case the "other guy" doesn't have insurance. Medical payments coverage pays for medical costs incurred by someone on your boat. Towing coverage pays for the cost of having a commercial outfit tow your vessel back to port if it breaks down.
The following short video (about 4 minutes), which was provided to us by BoatU.S., includes a few specific things to watch out for in a marine insurance policy.
