Do You Need Boat Insurance? 4 Potential Risks if You’re Not Covered

In Canada, most recreational boat owners are not legally required to have insurance for their craft. However, this doesn’t mean that sailing without boat insurance is a good idea. In fact, insurance that keeps you, your passengers, and your boat protected might be (like a life jacket) a smart bet.

Similar to driving, boating comes with risks. Even the most careful and conscientious operators can face issues with liability, damage and loss, financing and marina requirements, or gaps in their home and auto insurance policies that leave them exposed when it comes to an issue with their boat. So, before you shout ‘Ahoy!’, read on to make sure that you, your crew, and your boat are protected every time you head out on the water.

Is boat insurance mandatory in Canada?

Boat insurance is not mandatory in Canada for recreational boat owners. Federal and provincial laws do not require coverage for boats, jet skis, and other recreational watercraft like they do for automobiles. In some cases, however, would-be captains and skippers may be required by third parties to insure their boat. For example, your sailing club, marina, or the boatyard where you store your craft each winter may all require you to have dedicated insurance for your boat. Without it, you could be denied access to those facilities.

Additionally, if you plan to use a financing program to purchase your new boat, some lenders may ask you to provide proof that you have insured it. Financing companies will regard the cost of your boat as their investment and will require that they be named on your insurance policy as a “loss payee.” This means that if your boat is damaged, stolen, or destroyed, the lender will be prioritized and paid first by the insurance company when you file a claim.

Rules about boat coverage across Canada vary between provinces and territories. If you’re unsure about how to best protect your boat, speak to a licensed RBC Insurance advisor for guidance and additional information.

3 Common boat insurance claims

Any boater can run into choppy waters through no fault of their own. Having boat insurance may not guarantee smooth sailing, but your coverage provides the peace of mind that comes from knowing your passengers and property are protected. Here are three typical situations where having boat insurance could save you money and get you back out on the water as soon as possible.

Common boating claim #1: Hitting an object in the water

It’s not always possible to see below the water’s surface and to avoid obstacles such as submerged logs, debris or rocky lakebeds. With a boat insurance policy, a straightforward claim like a dented hull or a broken propeller will trigger a payout and allow you to fund repairs so that you don’t end up stuck on the dock for the better part of the season.

Common boating claim #2: Theft

Boat owners are at risk of theft both during the boating season when their boat is docked in a marina and during off the season, especially if the watercraft is stored in a driveway or left on a trailer. It isn’t only the boat itself that is a target for thieves, motors and other parts can be stolen too, leaving the watercraft susceptible to further damage such as flooding. Without boat insurance, owners could be faced with a repair bill or the cost of replacing their boat all on their own.

Common boating claim #3: Weather damage

Canadian winters can wreak havoc on watercraft, especially for newer boaters who may not have experience in safely storing their boat before the cold weather arrives. Even if you prepare and store your boat properly at the end of boating season, come spring, severe weather may leave you with a nasty surprise in the form of a frozen engine block or a damaged hull. A comprehensive boat insurance policy could help you avoid having to shoulder the repair or replacement costs on your own. Most insurance policies require your boat to be out of the water during the winter months due to freezing and claims made for boats left in the water during the winter may be declined.

Certain homeowner policies offer limited coverage for small watercraft. Review your current plan to find out what events you’re insured against. If you’re concerned that your current coverage may not be enough, reach out to a licensed RBC Insurance advisor to review your options.

4 Potential risks if you’re not covered with boat insurance

While boating without insurance doesn’t break any federal or provincial laws in Canada, it does come with some very serious risks.

Risk 1: You’re personally on the hook for liability

Legal fees and medical bills could, in the event of an accident involving your boat, come out of your own pocket if you don’t have third-party liability insurance. With insurance, the costs associated with injury or property damage resulting from a boating accident may be covered by your insurance policy.

Risk 2: You pay to repair or replace your boat yourself

Avid boaters tend to invest a lot into their boat – money, time, and effort. Repair costs in the event of a storm, a collision, a fire, theft, or vandalism, often run high. Without the proper insurance coverage, boat owners will pay those costs themselves. Worse, the loss of a boat due to theft or extreme damage means that you’re potentially paying for a new boat all on your own.

Collision coverage and comprehensive coverage for boats and other personal watercraft is designed to prevent policy holders from shouldering these costs and allows them to get back out on the water sooner.

Policy holders who choose collision coverage can rest easy knowing that if their boat is damaged while in the water, while being transported from storage to dock, or even while parked in storage, their plan will help pay for repairs or replacements, even in the case that personal property is damaged in the collision.

Should an insured boat sustain damage due to specific weather events, fire, theft, or vandalism (all considered non-collision events and outlined in the plan) comprehensive coverage ensures that the damage or loss is covered by insurance.

Risk 3: You can’t finance or dock your boat

Unless you’re buying a boat and paying the full cost upfront, you’ll need boat insurance in order to be approved for financing. Lenders will often want a guarantee that their investment is protected and that they will be repaid in the event of a loss. Marinas, too, typically require that boaters have insurance in order to access their docks.

Risk 4: Your home and auto policies leave gaps

While some home and auto policies offer a degree of protection for your boat, there are typically large gaps in coverage. Crucially, if your boat is larger or more powerful than your policy allows for, you won’t be covered at all. Be sure to review your existing insurance policies in order to understand their limitations.

While a standalone boat insurance policy will likely cost a bit more, it often provides far more protection to you and your boat and trailer in instances where your home or auto insurance might fall short. To save money, consider bundling your policies for lower premiums.

Boat safety to prevent claims

With a good boat insurance policy in place, you’ll be covered in the event of accidents or theft. And while peace of mind is worth every penny, prevention through practicing safe boating skills can reduce your chances of having to file a claim. Here’s how to stay safe when you’re out on the water:

• Get licenced: Nearly every boater behind the wheel of a motorized boat is required to take a boating safety course, pass the course test, and obtain an Operator Card that proves they have the knowledge and skills to operate their boat safely.

• Pack your life jackets: Boat operators should ensure that they have enough life jackets or personal flotation devices for everyone on board – and that they fit properly and meet Canadian safety standards.

• Make sure your boat is properly equipped: Proper boat care and maintenance, including using a pre-departure checklist and keeping a mandatory safety equipment kit on board, goes a long way towards staying safe in the face of an accident or unforeseen weather event.

• Leave the drinks on the dock: Like drinking and driving, drinking and operating a boat don’t mix, and both are punishable under Canada’s criminal code.

• Watch out for bad weather: Check the forecast before you cast off and keep an eye on the sky for any signs of an approaching storm or sudden squall.

• Winterize wisely: Learn how to store your boat properly outside of boating season to avoid damage and potential theft.

• Install an alarm system: Installing an alarm on a watercraft is essential to protect against sinking, drifting, theft, and onboard fires before minor issues turn into disasters.

If you’re interested in seeing how boat insurance could benefit you, book a call with a licensed RBC Insurance advisor.

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