Boats vs. Yachts: What Type Of Insurance Is Needed For Each

Language may sometimes come with an intriguing puzzle. Definitions for a boat, yacht, or ship do not always show their appropriateness and usage. For this reason, most of us develop our own “assumed rules” within the boating communities. We just wing it when the rule doesn’t apply.

Yet, for the sake of insurance, understanding the difference between each is vital for appreciating the type of insurance required for either item. If you are new to insurance and the boating community, winging your way around insurance won’t work for you. This guideline should help you through your insurance and maritime fluency.

What Is a Yacht

There is no argument that the term “yacht” suggests something more luxurious than a ship or boat. Interestingly, a yacht outside the US usually describes a sailboat unless it’s explicitly called a motor yacht. Contrarily, people living in the United States still contend with the boats vs. yachts questions as they use it interchangeably. However, a yacht is undoubtedly most appropriate since vessels are luxuriously designed for recreation, comfort, and relaxation.

What Is a Boat

The definition of a boat is somewhat more than either yacht or ship. Irrespective of the size, fit-and-finish, and function, captains usually refer to their vessels as boats. Not being so deliberately confusing, the term “boat” has turned into a pet phrase, a slang description, for floating objects that are too complicated to be described as a raft.

However, it all shakes perfectly when you set slang aside. Boats may be used for recreational purposes but are considerably smaller than either a ship or yacht and come with fewer facilities. Boats are generally powered by elbow grease or small engines.

Difference Between Boats and Yachts

Depending on your region, you can use boats and yachts interchangeably, yet there are several distinctions between the two. Here are some categories to help you determine whether you have encountered a yacht or boat.


Size is a straightforward factor for differentiating between a yacht or otherwise. Yachts are more extensive than other recreation boat types. In general, anything around 35 feet qualifies to be a yacht, although it can be longer.


Large vessels come with motors and also fall in the same category length as yachts. However, if a vessel is mainly used for commercial purposes, it is not a yacht. Yachts are for personal or recreational use.


It is no surprise yachts cost more than their boat counterparts because of the size and amenities highlighted. You will be overwhelmed when comparing yacht and boat prices. Yacht amenities alone are worth more than boats. More so, yacht maintenance and insurance can be expensive, with the latter costing up to 10% of its purchase price.

Propulsion Operation

Although older boats depended on sailers and rowing to move around, that setup seems to apply to only smaller vessels. Motors are more efficient for larger boats, which is why yachts come with considerably larger engines.

However, plenty of boats do not qualify as yachts despite running on motors. Yacht engines can travel longer distances than other boat types thanks to their advanced technology.

Boat Insurance Coverage

When insuring your boat, it is essential to separate it from your homeowners policy. Although some exceptions exist, several homeowner policies don’t cover marine-related risks, such as wreck removal, environmental or pollution damages, or salvage works. Some homeowner policies come with coverage for smaller motors and boats, yet be sure to ask your insurance company how and what damages they would pay for.

Many homeowner policies apply to boats that use lakes, rivers, and inland waterways. You certainly need an experienced insurer if you intend to ride outside the inlet. Meanwhile, there are other factors to consider too.

Boat Insurance Factors

Insurers may consider several factors before deciding to offer a policy. However, for a price, insurers can cover almost every boat. There are many factors to consider in order to guarantee a policy satisfies your particular needs, including:

  • The boat age
  • Length and value
  • The boat type
  • Speed/horsepower
  • Boat condition
  • Ownership (Do multiple people own it?)
  • Operation location (rivers, lakes, ocean, etc.)

Types of Boat Insurance

There are two basic boat insurance types:

  • Agreed Value Policy: Policy coverage is based on the boat’s value when it was written. Although it could be more expensive upfront, there is no depreciation cost for the boat’s total loss.
  • Actual Cash Value: This is less costly upfront, although it factors in depreciation. The policy will cover the boat’s cash value when declared a partial or total loss. Your insurer will probably insist on this policy type as your boat continues to age for significant savings.

What Boat Insurance Covers

Although insurance coverage may depend on the policy type, common coverages may include:

  • Specialized coverage for particular boat parts such as navigation equipment or an expensive propeller
  • Salvage coverage settles the cost of boat removal because of damages.
  • Consequential damage covers losses from depreciation.
  • Cruising extension is an additional, temporary coverage if you intend to leave the US.

However, your type of insurance coverage will be determined by where and how your boat is. An all-risk policy offers the best protection, although it may not cover every loss type. You may include extra coverages, such as personal effects, medical payments, towing, and assistance. Many policies cover equipment that is permanently attached to the boat. However, discuss your options with your insurer to ensure you get everything you need.

Yacht Insurance

A yacht is a luxurious item and therefore requires special protection. A yacht insurance policy should offer indemnity liability coverage for vessel sailing, including bodily harm or damage to other properties and personal ones on the yacht.

Your yacht insurance should cover gas delivery, towing, and assistance when your yacht is stranded. Yet all this will depend on your insurer.

While some insurance covers classic and antique boats, you can choose between an agreed boat policy or actual cash value. You may also receive discounts based on your safety features, boating education, and whether your yacht is electric or hybrid.

Other companies may decrease your yacht insurance policy cost when you buy additional policies, let’s say, for your car or home. Yacht insurance coverage is more extensive and specialized than boats since they travel long distances and are exposed to more risks.

Yacht insurance coverage typically includes depreciation, denting, animal damage, marine life, design defects, icing and freezing, and osmosis.

Two Major Sections of Yacht Insurance

Yacht insurance policies are in two primary sections.

Hull Insurance

Hull insurance is a comprehensive, direct damage coverage that includes an agreed hull coverage sum. The amount is paid when the policy is written and settled in full in a total loss case. There are coverages for replacements of batteries, canvas, partial losses, and outboards.

Protection and Indemnity

Protection and indemnity coverage is the broadest of liability coverage types, mainly because of maritime law. You will require having an insurance plan designed for such risk exposures. Insurance for longshore and harbor workers, together with those for your yacht crew, are included since you can run into six-figure losses. Protection and indemnity additionally cover any judgments against you while also paying for your admiralty court defenses.

Looking for Boat or Yacht Insurance?

Finding the right insurance company is crucial for identifying an ideal plan for your boat or watercraft. Everyone’s situation is different, and the process may demand more to recognize an insurance plan that covers your particular needs. Contact John B. Wright to help you find a plan that best suits your needs and budget.