An introduction to boat insurance

There are said to be more than two million boats in the United Kingdom, yet few people automatically link them with insurance as the same way every driver does with their car. Boat insurance may appear complicated as it combines elements of motor insurance and contents insurance, but there are plenty of policies to choose from.

Is all boat insurance the same?

No, there are a wide variety of policies. This is partly because of the sheer range of boats in use: a canal barge, a rubber dinghy and a luxury yacht are much more different than an Escort, a Mondeo and a BMW! But its also because, as with most insurance, there is often a lot of difference between different boat insurance companies, both in what they charge and what they cover.

What type of costs am I looking at?

For small boats such as a dinghy or inflatable motorboat, and annual premium could be £25 or less. A narrowboat might start from £50. Once you get into yacht territory, premiums vary immensely and you will probably find you are more likely to get a unique quote even than with a car.

What affects premium costs?

As a general rule, the smaller and less elaborate a boat, the more likely the premium is to be based on standardized figures. With more expensive vessels, insurers tend to ask more questions when setting a premium.

The location of a boat is an important factor. While different regions don't tend to have that much variety in terms of boat theft, the type of water greatly affects the risk: there's a big difference between a boat kept moored in a dock and one regularly taken out to sea. One factor many people don't think about is how far away they take the boat from home: some insurers will take into account that damage in remote locations is likely to be more expensive to repair.

As with motor insurance, the person controlling the boat is also a big factor. The assessment isn't as standardized as with car drivers, but you should certainly expect your age and boating experience to play a role.

Valuation

Unlike with motor insurance, boat insurance policies often put the onus on the policyholder to give a valuation on the boat. This is mainly because there is so much variation between boats that it's difficult for the insurer to simply use a set formula. Pay close attention to whether the policy uses the phrase "agreed fixed value". If it does, you'll get this sum in a write-off situation unless it's very clear you have intentionally exaggerated the value. If the policy doesn't mention this phrase, it's more likely the insurers will re-examine the valuation after a claim and retain the right to challenge the amount.

Averaging

Boat policies are subject to the same "averaging" principle that catches people out with many types of insurance -- indeed, because of the self-valuation this can be more of an issue. The principle means that if an insurer pays out a claim for repairable damage, it may look at your insurance value again.  If, for example, it decides you have only covered the boat for two-thirds of its true value, it may only pay out two-thirds of the actual damage costs.