a young boy with a lifejacket on a sailboat

All About Boat Insurance in NJ: Policies, Requirements & Tips

Boating is a refreshing, yet expensive, hobby.

While boat insurance is not an obligation in New Jersey, which we will go into more detail on below, it is well worth the investment to protect the money you have put into your boat and to cover you for liability.

In this guide, we’ll review how boat insurance in NJ is different from homeowner’s and auto coverage, different policies, who is covered and how you can save.

Is Boat Insurance Required in NJ?

The main difference between boat insurance and homeowner’s or auto policies is that that is is not required in New Jersey.

It’s not a smart move to take your boat out on the water uninsured, but unlike automobiles, not every state mandates that you carry coverage for your boat.

That said, many states have laws holding you liable for any damage you cause while operating your boat. At a minimum, consider liability coverage to protect yourself from litigation should you be deemed at fault in an accident.

Differences from Homeowner’s Insurance

Many homeowners insurance policies offer limited coverage for boats.

They can work for small boats but these policies may not cover some risks specific to marine issues, such as wreck removal, environmental damage, pollution, and salvage work.

Therefore when dealing with any sizable boats, boat insurance is the best option.

Differences from Auto Insurance

It might seem like boat insurance should be very similar to auto insurance. After all, a boat is like a car on the water, right?

You drive it. You park it. It can be stolen or damaged, but the truth is that there are several key differences between boat insurance and auto insurance.

The “Agreed Value” Option

When you insure a car, the payout in the event of a claim is always determined by the market value of the vehicle at the time of the accident. If your car has depreciated you’ll be written a check for the current value and not what you originally paid for it.

When you insure a boat, however, you can opt to insure at an “agreed value”. In the event that your boat is totaled, you will be entitled to claim its full agreed value regardless of what your boat would sell for.

You Can Suspend Boat Insurance

If you only use your boat for part of the year, you can opt to suspend coverage during the months you have your boat out of the water.

If you choose to only carry seasonal coverage, don’t forget to call your agent and reactivate your policy before boating season. Keep in mind that theft or damage that occurs while the boat is in storage will not be covered if your policy is suspended.

Geographical Limitations

A boater’s policy might be voided if you take your boat to an area not covered by the policy. For example, some policies only provide coverage for inland waters (lakes & rivers) and not for the ocean.

Always familiarize yourself with where you’re covered and where you’re not. Upgrade your policy with the appropriate endorsements if needed.

Types of Coverage

It’s likely that after your home, your boat is your biggest investment. If you want to protect that investment, here are 3 types of coverage that can help.

1. Liability coverage

Much like liability coverage for your car, liability insurance for your boat covers damage or injuries it causes while being operated by you or anyone else. Damage might be to other boats as well as docks or other structures.

Keep in mind that you can be held responsible for indirect damage caused by your boat, such as a large wake that affects a smaller vessel. For maximum protection, liability coverage can even be tailored to protect you against lawsuits and legal fees.

2. Physical damage coverage

We don’t really need to explain why you might want to insure your boat against physical damage. Just think back a few years and remember the aftermath of Superstorm Sandy, which scattered boats of all sizes across Monmouth County.

Of course, physical damage coverage isn’t just for hurricanes of historical proportions. It protects you against damage or loss from any number of marine risks including theft, fire, sinking and collisions.

While physical damage coverage (also known as hull coverage) doesn’t cover everything onboard, it does cover the hull and permanent fixtures like the motor, fuel tanks, batteries, anchors and safety devices as well as a boat trailer. Additional coverage can be purchased for fishing equipment and other possessions.

3. Medical payments coverage

As fun as they are to own and operate, boats pose unique risks. Medical payments coverage helps pay for hospital bills, medication and other treatments in the event of an accident or injury to you or someone else suffered on your boat.

Who and What is Covered?

Without any legal requirements for coverage, boat owners are free to decide which coverages (if any) they want their policy to include.

One of the biggest reasons to get insurance coverage for your boat, despite your lawful ability to operate a boat without it, is to protect yourself and others in the event of an accident resulting in significant medical or legal costs.

With a host of coverage options, it can be hard to know which ones you need to make sure everyone is covered. Here’s a simple of who and what is and isn’t covered by different types of policies.

You are Covered

If you get injured on your boat, medical payments coverage can help pay for hospital bills, medication, rehab and physical therapy. Medical payments coverage applies whether or not you’re at fault and, if there’s another boat involved, whether or not the other party has liability insurance.

Since boat insurance in NJ is not required by law and uninsured boats are commonplace, you can also add uninsured boater coverage for extra peace of mind.

Passengers are Covered

Liability coverage works a lot like homeowner’s insurance in the event someone gets injured while on your boat. Along with property damage liability, it usually covers bodily injury that includes hospitalizations, rehab and related medical expenses. Uninsured boater insurance coverage protects passengers on your boat as well.

Liability Coverage

When someone who isn’t on your boat is injured in an accident for which you’re deemed responsible, liability coverage works more like liability insurance for a car. It covers all the same things covered for a passenger on your boat, plus legal fees if someone sues you.

Reasons for a liability claim are many and varied, from a collision with another boat to one with a dock or other land-based physical structure that results in an injury. You can even be held responsible for an injury suffered as a result of a large wake left by your boat.

Water Skiers are not Covered

Water skiing is a popular activity for boat owners and their friends, but water skiers aren’t covered by typical boat liability insurance. You’ll need a separate policy for water skiing and other water sports coverage.

Additional Coverages

Most boat owners will require more than a “bare bones” policy. Additional elements that may be required are listed below.

  • Specialized Coverage – covers some additions your boat may have, such as high-end props and navigation equipment.
  • Salvage – pays for removal of the boat when it becomes damaged and usually covers all types of damage from minor to substantial.
  • Towing – lowers your out-of-pocket expenses A single tow can be upwards of $400 for each hour your boat is being towed.
  • Consequential Damage – covers wear and tear such as corrosion, rot, and mold.

Factors Influencing Policy Cost

There are several factors that insurers use when deciding what to charge for your boat insurance and whether they will cover you, including:

  • The overall value of the boat
  • The overall condition
  • The type of boat
  • The boat’s age
  • Where the boat will mainly operate, i.e. primarily in lakes, rivers or the ocean
  • The length of the policy

How to Save Money

When you’re looking for boat insurance in New Jersey, there are many ways to spend less. It’s a good idea to take advantage of as many of these discounts as you can.

Each little saving adds up and can end up making a big difference. Here are five ways to save.

1. Increase Your Safety Knowledge

Insurance companies know that when you increase your safety knowledge, it will make you more aware of potential dangers and lessen the chances that you will submit a claim. They will lower your insurance premium based on you taking appropriate classes.

2. Get a Multiple Policy Discount

When you have more than one policy with the same insurance company, you can save money. If you have your homeowner’s and boat insurance with the same company, you can receive discounts of up to 20%.

3. Pay Upfront Annually

You will usually receive a big discount if you can pay for your policy in full at the beginning of the year versus paying monthly—a 10% saving is typical. Not only does this save you money, it is one less thing to worry about each month.

4. Set up Automatic Payments

Many companies offer a discount for simply having your premium automatically deducted from your bank account each month. The insurance company saves on labor and passes these savings on to you.

5. Find Specialty Discounts

Boats are used for a variety of reasons. Your insurance agent may be able to find additional discounts based on your unique circumstances.

At John B. Wright, we believe we have more experience in the maritime insurance field than any other company along the eastern seaboard. Contact us to get a review of your unique boat insurance needs in NJ.