Boat Insurance Canada

Boat Insurance Canada

Boat insurance in Canada can be purchased through your home insurance policy, up to policy limits, or added as a floater for boats that exceed the value limited by a habitational policy.  This is meant for Watercraft without a motor, such as a canoe or kayaks.

Boat insurance can also be a standalone product, usually for higher ticket boats or marine craft, personal watercraft vehicles such as jet skis.

Boat insurance in Canada is not required by law but it’s a good idea to have it! Boat insurance can protect you against:

• Damage to your boat, theft or loss of attached equipment
• Damages or injuries caused by your boat to third party property and people
• Liability coverage for injury to passengers on board or who are being towed i.e. water skiers or tubers etc.

Some factors that will affect the price or rating of boat insurance:

• Size of the boat
• Value of the boat
• Body of water in which the boat is used on
• Size of the motor

Marine and Boat Insurance in Canada

Marine and Boat insurance are terms used interchangeably by many Canadians, however, there is a difference!

Marine insurance is purchased with commercial intent while boat insurance is meant for recreational boaters.

Some examples of recreational boats that would require insurance are:

• Sailboat
• Pontoon boat
• Houseboat
• Jet Boat
• Cabin Boat

Examples of commercial vessels that might require marine insurance are as follows:

• Water Taxis
• Fishing charters
• Rental boats
• Tankers
• Barges
• Tug boats
• Cruise Ships

Do you need boat insurance in Ontario?

Boat insurance in Ontario is not required by law, compared to auto insurance. The question of whether you need boat insurance depends on your risk threshold or whether you are insured through another insurance policy such as homeowners.  Some habitational policies will provide insurance coverage to a boat or personal watercraft, although the limitations and restrictions may prove not sufficient for your requirements.

Boat insurance like any type of insurance brings peace of mind! Knowing that you have insurance coverage in place in the event of a covered loss is the whole point of having insurance. Maybe you’re not sure of all potential risks and exposures by operating a boat without insurance.

Do you need boat insurance in B.C?

Boat insurance in British Colombia is not required by law but strongly recommended. Just as in Ontario, the exposures of owning and navigating a boat are similar to anywhere else in Canada.  However, lienholders and Marinas do require you carry insurance before they allow for financing or the use of the marina property, respectively.

Other scenarios that might require Boat insurance

Although boat insurance isn’t a legal requirement, here are some situations where it may be needed:

• Marinas usually require proof of insurance before they allow the use or store your boat on their property.
• Finance companies usually require you to purchase boat insurance as part of their sales agreement. Lienholders such as finance companies and banks, lending institutions require that you get insurance to protect their investment. In a situation where you need boat insurance to satisfy a lienholder requirement, an endorsement is added to the policy that names the lienholder as a loss payee. This means if a claims settlement cheque were issued by the insurance company it would be co-payable to you and the financing company.

How much does it cost to insure a boat?

The cost of boat insurance depends on several factors including:

Your driving record – your driving record, or MVR affect the calculation of your boat insurance premium.

Horsepower of the Boat or Vessel – the more horsepower the increase in the likelihood of an accident increases, and so does the premium. Most boat insurance companies have limitations as to the maximum horsepower they will insure.

Usage of the Boat – how you use the boat or vessel will also dramatically affect the price of boat insurance. For example, the cost to insure a boat or vessel for commercial purposes would probably be higher compared to recreational use.

Size and value of boat or vessel – the size and value or your boat or vessel are also taken into consideration when calculating your boat insurance quote.  Usually, a higher value is associated with a larger boat; therefore the premium would cost more.

Types of Boat or Vessel – different types of boats represent different risk factors to insurance companies. Some boats are safer than others and this will be reflected in the premium generated.

Principal Location – the body of water your boat is used on will also affect the cost of boat insurance. Geographical areas where weather is more severe or prone to hurricanes and other storms would probably generate a higher premium.

Additional boat equipment – insurance for your boat equipment and personal belongings can also be insured

Boating experience – age and boating experience is a big factor that will affect your boat insurance cost. The more experience and ages you are the more likely that your boat insurance premium will lower.

Claim History – similar to many other insurance products, claims history will affect your boat insurance premium.  The more claims on your loss history the more the premium will likely be.

What is covered under boat insurance?

Boat insurance coverage is similar to other insurance products in that coverage usually extends to the following:

Liability – liability coverages coverage you for any damages or injuries you may cause while in the use or operation of the boat or vessel.

Collision – very similar to the collision coverage you normally would get through auto insurance but instead covers repairs or replacement of your boat should it get damaged.

Comprehensive Coverage – again very similar to vehicle insurance and usually covers theft, attempted theft, vandalism, and damages from vermin.

Personal Property or contents – this insures your personal property onboard your boat or vessel, up to policy limits and subject to conditions and restrictions.

Is a boat covered under homeowner’s insurance?

Depending on the type of home owner’s policy you may have some coverage but it may not be enough for your boat insurance requirements.

There are always conditions, limitations and restrictions to any insurance policy and boat insurance coverage under a home insurance policy are no exception.

Some of the following limitations and conditions of boat insurance coverage in a homeowner’s policy are:

• The boat, watercraft or vessel shouldn’t exceed a length of 26 feet (maybe slightly different depending on the insurance company)
• The value of the boat, watercraft or vessel shouldn’t exceed $3,000 (could be different depending on the type of home insurance policy and the insurance company)
• A restriction on horsepower is always a condition of boat insurance coverage through home insurance. Marine and Boat insurance companies usually set a horsepower limit of 50. (Again, you may see slightly different stipulations depending on the insurance product and the insurance company.
• It must be used in a personal or recreational way. Commercial ventures and any other uses not tied to personal or hobbyist use is normally excluded from a homeowner’s insurance policy!

Is my boat covered by my car insurance?

Car insurance does not cover boats, watercraft or any other type of vessel.  However, there may be coverage when attached to a trailer, depending on the circumstances of a claim.

Whether there is coverage or not to your boat or watercraft, all values are settled on an Actual cash Basis, not replacement cost.

Replacement cost vs. ACV vs Agreed Value in Boat insurance

The terms of a claim settlement can be based on three methods:

Actual Cash Value – the definition of actual cash value is the cost to repair or replace the damaged object, less depreciation.  Fair market value could be considered actual cash value, or ACV.

Replacement Cost – replacement cost means that depreciation is not factored into the indemnity settlement. Replacement cost is better insurance coverage than actual cash value as you’re not taking a loss on depreciation.

Agreed Value – “agreed value” boat insurance means that the basis for claim settlement is based on an actual, expressed amount of insurance that both the policyholder and insurance company agree to.

Agreed value is usually based on an official appraisal of the boat.  The limit of insurance or the amount paid out should that boat be a total loss would be the amount stated in the insurance contract.

Agreed Value coverage is not as popular as other types of boat insurance coverage.

Peter Martire, CIP, CRM