Basics of Boat Insurance in Canada

Boaters and sailors love talking nautical details. They can spend hours discussing something as simple as the knot they use to tie their boat to the dock—but you’ll almost never hear them talk about yacht insurance. That’s probably why people know so little about boat insurance in general.

This article will help you understand what yacht insurance is, why you need it, how to get it, and how to make sure you’re getting the best deal.

The basics

Yacht insurance protects you in case of an emergency or issue with your registered or licenced yacht. Like other types of insurance like car or home, you are protected against damages cause by mother nature or accidents, with some exceptions.

Before you begin looking for yacht insurance, you’ll need the following information about you and your boat:

  • The age of yacht
  • The length in feet
  • The size of the sails (if relevant)
  • The approximate current value
  • The maximum speed and the horsepower of your boat’s engine
  • The condition (Does it meet Canadian Standards?)
  • Your primary residence and the dock and storage residence of your boat (if different)
  • The type of boat (i.e., cruiser, saltwater fishing boat, etc.)
  • A record of ownership
  • Details on where it will operate (i.e., lakes, bays, rivers, oceans you plan to visit as well as details on how often you will visit each)

This lengthy list will help insurers determine the type of protections you need for your boat and will impact the overall cost of your insurance.

Agreed versus cash value

The insurance of your boat will be based on either the agreed value or the actual cash value of your boat.

An agreed value policy covers the cost of damages and replacement for your yacht based on its value at the time.

An actual cash value policy factors in depreciation. Your boat will depreciate over time and as such will cost less to repair or replace.

The type of insurance you choose will be impacted by which one you can afford—ad agreed value policy will always be more expensive—and whether you envision wanting to replace your yacht with a new or a used one should it ever be necessary.

Why yachts need special insurance

Yachts are larger than other personal vessels and are generally defined as vessels 27 feet and larger. The larger size means these boats can travel farther and thus make them liable to different damages.

All yacht insurance should include basic hull insurance. In the case of any insured damages to the hull, this insurance policy outlines the deductible, and the coverage amounts to either repair or replace it.

Insurance policies will also typically cover the value of any personal items you store in your yacht in case they are damaged as well.

You should also look for a policy that included some type of liability or protection and indemnity insurance coverage. This will protect you in case of any damages caused by you or in an accident where you are deems partially or completely at fault.

Yacht insurance will also typically include the replacement cost of old parts with new ones. Aside from a few items like sails and batteries, you’ll be able to replace your old boat parts with new ones as part of your standard insurance policy, like the agreed value policy outlined above. Be sure to read the fine print, though, as some policies will only pay out the value of the old part. You should also shop around to ensure you’re not paying a premium for something another provider may offer as part of their standard insurance package.

Anticipated costs

Your deductible for your yacht policy can vary greatly depending on the type of coverage. Typically, the deductible will be a percentage based on the value of your yacht insurance. For instance, your policy may offer a 1% deductible for a yacht insured for $500,000, which means your deductible will be $5,000.

Common mistakes

Whether your yacht is financed or owned outright, you will need insurance. Be sure to choose an insurance agent or company who works will underwriters who specialize in boating. Though you may see offers for competitive insurance plans from major insurance companies, but chances are these will not meet your needs. It’s important to work with an agent or company that knows exactly what type of coverage you need for your boat.

Be sure that your insurance coverage begins the moment the vessel is titled to you. That means that the day you buy the boat, it needs to have insurance even if it is not yet in your possession. This insurance can also cover damages during transport and so is a good idea all round.

Read the fine print and make sure your coverage also includes environmental cleanup protection and salvage. In an accident, it’s possible that your yacht causes an oil slick and sinks, in which case you’ll be expected to cover the cost for any cleanup efforts and for removing the boat. As you can imagine that process can be quite expensive so it’s a much better idea to let your insurance agency pay for that for you!

How to save on your insurance

Larger and higher performance boats will always cost more so be sure to choose a boat that is the right size for you and your family. Surprisingly, older boats are also associated with higher premiums, so you may want to consider a new boat after all!

Your insurance premiums will also be impacted by your yacht’s seaworthiness—all the more incentive to keep it running well!

The location where you store and operate your boat can also have a dramatic impact on your insurance rates, so do some research and see if a different port or marine nearby offers you a better rate. If you plan to store your boat out of the water and offshore, that can qualify you for a lower premium so consider all your winter storage options and compare costs.

Get rewarded for being cautious

Just like with a car, your insurance company may offer a discount if you have a safe boating record. Some will also look to your driving records to see if you are a cautious driver and may offer you a lower premium as a result. If you also own a car or a home, see if you can bundle your insurance for savings on all three.

Unlike with a car, you may qualify for a lower premium if your yacht has a crew. For insurance companies, this means that the boat is in many trusted hands, making it more like it stays out of harm’s way.

You can also save on insurance premiums by paying for the entire year upfront, if that’s a feasible financial option for you, or by investing into specialized equipment. An automatic fire suppression system or a GPS-locator for your boat in case of theft can reduce your overall risk and thus reduce your premiums.

Additional Insurance

If you’re looking for an even more comprehensive insurance package, consider adding specialized insurance for any other items (such as additional boats or watercrafts on board). Consequential Damage coverage can also cover the cost of wear and tear if you anticipate this being an issue (i.e., if you live in a place where corrosion from salt water has a significant impact on your boat).

If you plan on travelling, be sure to speak to your insurance provider about a cruising Extension, a temporary form of coverage that protects your boat if you travel.

Be sure to insure your yacht

However you go about it, be sure to insure your yacht. After investing so much into your boat, it’s important to keep it safe. A bit of research on insurance can avoid hours of headaches in the future and can help you get back out onto the water quickly in the case of an accident.

Don’t let anything keep you off the water. Insure your yacht and get out there!

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