Does boat insurance cover sinking?

Whether you own recreational boats for personal use or operate a commercial fishing boat for your business, having customized and comprehensive boat insurance is important in protecting your interests and finances. While standard boat insurance policies offer coverage for several perils, a common question new boaters ask is whether or not they'll be protected if their boat sinks. To learn more about boat insurance coverage and the answer to this pressing question, stick around.

What is boat insurance, and what does it cover?

While the specific boat insurance policies offered by an insurance provider may vary, when you ask for boat insurance coverage in Canada, you'll typically see the following in a standard policy:

Liability coverage

Liability boat insurance, also known as third-party liability insurance, protects boat owners in the event they cause bodily harm or property damage to a third party while operating their watercraft. Should a lawsuit be filed against you, this boat insurance covers the cost of legal fees, medical payments, repair costs, and other fees associated with the settlement of your claim up to your boat policy limits.

Property damage

The next portion of your boat insurance policy is the property damage portion, which is sometimes referred to as collision coverage. This boat insurance will compensate you for any repairs or replacements required for your vessel as a result of a boating accident, whether on the water, in transit, or while parked. It will also protect your personal belongings stored on your boat if they are destroyed in the collision.

Comprehensive boat insurance

Finally, there is comprehensive coverage. Comprehensive covers you from physical damage to your boat that occurs during a non-collision occurrence. This physical damage coverage covers theft, vandalism, fires, falling objects, and any additional covered perils specified in your policy. Again, personal property stored on your boat that is damaged or lost will also be covered.

Does boat insurance cover sinking?

So, does boat insurance cover sinking? The short answer is yes, your boat insurance covers sinking. But there are some things we need to clarify. If your vessel sinks, it's typically covered if it sunk as a result of a covered peril listed in your comprehensive insurance. For example, if an unforeseen risk like severe weather events out of your control occur and your boat sinks, your insurance company will reimburse you for wreckage removal, the total or partial cost of a brand-new boat, fuel spill, and more, depending on the specifics of your sinking coverage.

It's important to note that most boat insurance policies will not reimburse you if your boat sinks as a result of a lack of routine maintenance, negligence or other events that are not listed as a covered loss in your plan. If you've recently purchased a boat or are up for a boat insurance policy renewal, we highly recommend speaking to your insurance company about whether your current coverage will cover you if your boat sinks. Should it not, make sure to add this boat insurance, as it can make a world of difference should the unexpected occur.

Is boat insurance coverage mandatory in Canada?

Unlike other types of insurance in Canada, you are not legally required to purchase boat insurance. That being said, numerous expenses can arise as the result of a liability claim or physical damage that you would essentially be responsible for paying for out of your own pocket without boat insurance in place.

So, when you put it into perspective, having your boat properly insured throughout the year will cost less than it would if you had to pay for medical payments, legal fees, repairs, and more without it. If you want to protect your interests and finances, boat insurance is the way to go so you can enjoy your time out on the water with peace of mind.

What is the difference between actual cash value and replacement value?

When it comes to boat insurance, your insurance company will offer either an agreed-value plan or an actual cash-value coverage. We will explore each one in detail below:

Actual cash value

With an agreed-upon value policy, you'll receive an agreed-upon amount from your insurance company if your boat is stolen or destroyed beyond repair, rendering it a total loss. The agreed-upon value is decided when you first purchase your policy. Unlike an actual cash value calculation, you'll get a larger payout because it doesn't consider the depreciation of your boat over time. Just keep in mind that you may pay more for this type of coverage.

Agreed upon value

In contrast, the amount that you get will be based on the boat's current value minus the actual cash value depreciation. Insurance companies like to use actual cash payment metrics to determine how much money a policyholder will receive if their boat is stolen or damaged, as it takes into account the current market value of the vessel rather than what it was worth when you first purchased it, given that they won't have to pay you as much when you file a claim.

If my boat sinks because I hit a rock, will it be covered?

Hitting a rock is one of the leading causes of sinking boats in Canada. Luckily for you, if you're dealing with a sunken boat because you hit a rock, your insurance company will provide coverage. Keep in mind that if negligence caused you to hit a rock, you may have some difficulties getting your claim approved.

The best thing you can do in this situation is to contact your insurance provider as soon as possible and explain what happened. An insurance agent will ask you a series of questions before starting an insurance claim on your behalf. Within a couple of days, an adjuster will be assigned to your claim and help you navigate the unchartered waters moving ahead. Make sure to document the damage and provide as much evidence as possible, as it will help move your claim along more efficiently and lead to better results.

How to keep your boat safe and secure on the water

To prevent damages from happening in the first place, routine maintenance, along with methods to keep your boat safe and secure while on and off the water, is essential. Here's what you can do:

Secure your boat while docked or parked

The more difficult it is to move your boat, the harder it will be to steal. While parked at home, consider leaving your boat in your backyard, with it secured to a nearby tree. If it is on the water, remove the dingy and never forget your keys on board.

Consider security equipment

Set up security cameras and lights on your property. Additionally, consider adding an alarm system on your boat as well to deter thieves.

Never leave your belongings on board

Make it a habit to take your personal belongings with you as you leave your boat. Thieves are attracted to things they can steal easily, and leaving your phone, wallet, and other items onboard can make you the perfect target.

Choose your marina wisely

If you need to park your boat at a marina rather than at your home, choose one with a good reputation and one that has sufficient security measures in place.

By following these tips, you can keep your boat safe and avoid filing an insurance claim.

Get an affordable boat insurance policy with BrokerLink

At BrokerLink, we help boat owners acquire affordable coverage for their watercraft. With years of experience and access to some of the top insurance companies in Canada, we're able to help you shop around, compare coverages and costs, and possibly qualify for discounts. Beyond standard boat insurance, we also help customers purchase:

• Commercial marine insurance
• Seasonal boat insurance
• Yacht insurance
• And more.

If you're interested in working with BrokerLink, feel free to visit us at one of our many locations if we're located in your neighbourhood. You can also give us a shout over the phone at any time!

And, if you're in a bit of a rush, take advantage of our free online quote tool to get a competitive insurance quote while you're on the go!

1-866-724-2372

FAQs about boat insurance coverage

Do you need a boat licence in Ontario to operate a watercraft?

To get a boat licence in Ontario, you must first finish a boat safety class and pass a written test. Once you complete the Ontario exam, you will be accepted for a licence, which will be mailed to you. As you wait for your licence, you will be given a temporary one, which you must carry with you at all times when operating your boat in case you get into an accident or are pulled over by a coast guard.

How can I register my boat in Alberta?

To register a boat in Alberta, you must complete a registration form, which may be found on the Ministry of Transportation website. The request form is going to ask you several questions, like the value of your boat, the sort of boat you possess, verification of your Canadian citizenship, and proof of ownership, to name a few. When your boat is registered, you will get a title, have the opportunity to name it, and fly any flag you like.

Are boat shows worth going to in Canada?

If you're thinking about making a boat purchase or like boats in general, going to boat shows in Canada can be an exciting experience. To get the most bang for your buck, take advantage of the seminars they offer over the weekend. They are a great way to learn new information and discover new boating devices. Additionally, if you're torn between boat models, this is a great opportunity for you to ask the advice of the sales teams present and hop onto each boat to get a feel for them. Further, the boat exhibitions are also a great way to meet other enthusiasts, try new products, and get some free samples! But keep in mind that salespeople at these conventions tend to lean more on the pushy side. So, if you don't want to feel pressured to make a purchase, use this time to research different boats and figure out what you want. You can later take this information to a dealership for a more laid-back shopping experience.

What boat safety requirements do I need?

Before you go out on the lake, you need to ensure that your boat meets all of the boat safety requirements, especially if you're travelling with guests and small children. Life jackets are one of the most crucial items you need to have stored on your boat at all times. There should be a variety of sizes available, especially those for children. Aside from these, you'll need a reusable floating device in case somebody falls overboard. A fire extinguisher, visible signalling, and sound equipment are also required in case of an emergency. For further information, review the first-time boat owner checklist to ensure you're fully prepared for unexpected challenges.

Is my boat covered by my home insurance policy?

It may be, but it ultimately comes down to the type of home insurance you have. We recommend reaching out to your insurance company for clarification on your property coverage. You may have the option to add boat insurance. Other times, you'll need to purchase an entirely separate policy.

If you have any questions, contact one of our local branches.