Purchasing and owning a boat or personal watercraft in Maryland can bring hours of joy and entertainment to yourself, family and friends. Whether you’re at Deep Creek Lake, the Chesapeake Bay, or any of the hundreds of other areas, being out on the water is a great experience.
Although there is no state law (or pending legislation) that requires you to purchase insurance coverage, it makes good sense to obtain liability or comprehensive coverage to protect your investment, assets, and possibly financial ruin. You’re not just protecting your investment. You’re also ensuring you won’t spend the rest of your life paying for a preventable mistake. Hurricanes, wind storms, ice and freezing damage, and theft can happen at any time, so it’s important to be properly covered.
If you are financing the purchase, or using the craft as collateral on another loan, you will have to obtain liability and physical damage. There may be maximum deductibles that can be selected and specific mandatory coverage that must be included in the policy. If you do not comply, a “force-place” may be enacted, that protects the financial institution’s interest, but not your own. Therefore, you will pay for a policy that gives you no benefits. A termination charge may also apply. Also, your policy may not allow you to navigate in all areas.
NOTE: Don’t forget to review our Maryland auto insurance rankings, since you need a vehicle to pull the boat! Most carriers offer a discount when you bundle vehicles, homes, and other ancillary products. The premium reduction is generally 5%-15%. This applies to all policies.
MD Boat Policy Options
By purchasing a separate policy, you can choose among many companies that specialize in this type of coverage. More options will be available which allows you to customize benefits and deductibles to better meet your specific needs.
In addition to the boat itself, equipment, personal belongings and a trailer can be included on one policy. Motor coverage is more flexible with a wide variety of deductible choices. Additional items, such as anchors, fire extinguishers, life preservers, first-aid, kit, seat cushions, oars, and ship-to-shore radios are often covered, but there can be variations and limitations. For example, some personal property, such as food, books, clothes, and fishing equipment may not be 100% covered.
Personal liability and medical payments are the most important component of the policy. It protects the boat owner and family members while legally operating the vessel, and will also pay for medical bills to others caused by accidental means. Several different limits of liability are available. A personal umbrella may be used in conjunction with this type of policy. Existing in-force Marketplace or employer-provided healthcare benefits will cover medical expenses, but only to yourself.
If you own a yacht (27 feet or longer), additional coverage and increased liability benefits may be needed. A separate “personal excess liability” policy should be considered, to help protect other household assets.
For smaller boats, adding the vessel to your homeowner’s insurance is often quicker, cheaper, and the best option. If the length of the boat is less than 25 feet, and the motor is an outboard with about 20 horsepower, rates are very inexpensive. However, coverage may be limited with low maximums. If a total loss occurs, you may not be able to replace the boat.
An official endorsement is also available from many carriers. It is added to the homeowner’s policy and often covers boats that are longer or have more power motors than mentioned above. The “endorsement” option may also include medical payments if others (non-family members) are hurt, and liability protection in the event of a lawsuit involving property damage or bodily injury.
NOTE: An experienced broker or website such as ours, can be extremely helpful when determining if an endorsement is the best option. Although cost should be considered, the protection of your assets, and physical damage to the boat are more important factors. Not all companies offer the specific type of policy you may need.
How Is The Rate Calculated?
Boat insurance rates in Maryland are based on many underwriting factors. Although not all carriers determine prices in the same manner, the following criteria are typically used by the major companies:
Deductible – Options from $100 to $5,000 are generally available. Higher deductibles reduce the premium. If you rarely use the boat, and for short distances only, a higher deductible is much more cost-effective.
Liability Limits – Don’t skimp here since spending $10 extra may save you $100,000. Also, consider a personal umbrella rider.
History Of Claims – If there have been no claims, you’ll likely receive a discounted price. If you have submitted multiple claims within the last 24 months, you should not consider changing companies. The best rates are offered when there have been no submitted claims within the last 36 months and all operators have at least five years of experience operating boats.
Boat Age And Dimensions – Bigger and/or newer boats will be more expensive. Of course, the market value also impacts the premium. Custom-built and special-order vessels will also cost more to cover.
Purpose And Use – How will it be used and how often? Will you be going out-of-state or mostly local? Are you experienced in those specific conditions? Are you close to large bodies of water or lakes, or do you have to drive 500 miles to find suitable locations?
Boating Experience – Just like an auto insurance policy, the more years of experience you have on the water, the lower your premium will become. Of course, major violations (DUI for example) could cause a carrier to deny coverage.
Housing – Is it kept outside at night and unlocked? Or is it kept inside a locked garage or storage facility? Also, have there been any recent theft or vandalism claims while the vessel was in storage?
Courses and Extra Training – Many carriers offer discounts for online (and in-person) courses that are completed and documented. Your premiums could reduce by as much as 20%, depending on the insurance company. You can also complete multiple courses to maximize your discounts.
Additional Discounts – Many items, such as fire extinguishers, safety skills training, ship-to-shore communication, hybrid construction, idle assisted steering, and owning a home will help reduce your premium. Lengthy experience operating boats also helps. Also, if you are the original owner, an additional reduction may apply.
How Are Claims Paid?
Typically, a police report is required for fire, vandalism, theft, accident, and related claims. If you are negligent, of course, your liability protection will pay the damages (up to your limits) to the impacted party. You may also own a separate personal umbrella liability policy that will provide additional protection if the damages exceed the limits of your current boat policy. Generally, additional non-commercial coverage can be purchased in increments of $250,000 to $5 million.
Actual Cash Value (ACV) Vs. Replacement Cost Value (RCV)
ACV is very common and pays you the current value of the boat at the time of the loss, minus the depreciation. For example, if the purchase price was $20,000 three years ago, you may receive $14,000 ($20,000 cost new minus $6,000 of depreciation. Older boats will be charged much higher depreciation amounts. NOTE: Not all claims are total losses, including hail and lightning damage.
RCV is the “replacement cost value” and represents the cost to replace the boat at the time the claim was submitted. You may also be offered another boat that is similar in value, although this is rare since availability is typically a problem. If the offer is extended to you, it’s imperative to hire an experienced mechanic to complete a full inspection. If the condition of the vessel is a concern, do not accept the offer.
Excess Or Surplus Lines Coverage
Unfortunately, not all boats can be easily covered by conventional insurers. The reasons can vary, but fairly common higher-risk underwriting situations include the driving record of the owner, condition or existing damage, combination of owner-inexperience and size and power of boat, or excess claims paid within last 3-5 years. More than one prior submitted claim that resulted in a total loss will make it difficult to find a competitive quote.
However, often a Surplus Lines carrier is able to offer a policy. Since additional risk must be taken, premiums are typically more expensive, often as much as 20%-75% more. Once you have been denied coverage by three different companies, Surplus Lines plans may become available. NOTE: A licensed agent must also provide proof of the three denials and the carrier used to write the policy must be licensed and approved by the MD Department of Insurance.
The “Surplus” companies do not have to meet the same safety and compliance requirements as other auto insurers. Although unregulated, these carriers must meet stated requirements to offer policies in the state of Maryland. Since prices can widely vary, obtaining at least two separate quotes is highly recommended.
What If My Insurance Company Treats Me Unfairly?
Consumers are protected by the MD Insurance Administration, which ensures that companies (and brokers) are acting within the law. Many complaints are claims-related, and often accuse the carrier of not negotiating in good faith and/or offering an unreasonable settlement amount. Both of these practices are prohibited, and each violation is subject to specific penalties.
You can submit a formal complaint in writing accompanied by any supporting evidence that may help your position. The complaint will be personally investigated and reviewed. Some property and casualty claim disputes can initially be filed by telephone. A “Rapid Response” program can also assist you by streamlining the process by avoiding the written portion of the complaint. A final decision is provided to all involved parties.
Licensing And Registration
If your boat has a motorized “propulsion system,” and the principal usage will be in-state, then you will have to license and register the vessel. This applies to both commercial and private usage. Registration form DNR B-240 is required along with a notarized bill of sale. Initial fees must be paid within one month of the purchase, otherwise, additional fees may apply.
Generally, the annual fee is $24. However, for smaller boats (less than 16 ft), the fee is waived. A special license is required if you were born in July of 1972 or later and a certificate of boating safety education must be presented during the registration process. In lieu of the certificate, an exam can be passed.
Additional Helpful Resources:
Maryland Clean Marinas – The Department of Natural Resources has rigid pollution prevention guidelines and the owners of these Marinas have agreed to abide by these standards. Marina “partners are also included. Although they are not actual marinas, they are proponents of major conservation and reducing pollution.
Abandoned Boats And Debris – The Department of Natural Resources provides money, experience, and assistance to aid public agencies that manage or own boats that may qualify. Depending on the vessel, up to $50,000 is available in refundable grants.
Natural Resources Police – More than two hundred officers and personnel are at your service to help enforce state and federal laws. Search and rescue, emergency help, and free information are also provided.