Understanding Personal Watercraft Insurance

Know your way around insurance terminology

Nobody likes to think about it after already handing over thousands of dollars for a personal watercraft, but one more expenditure — insurance — will ensure that both you and that craft continue to ride off into the sunset.

Insurance, however, can be a confusing subject, and more often that not because of the terminology.

Here are a few concepts you should understand before purchasing, or renewing, that next PWC insurance policy.

Actual Cash Value

Actual Cash Value, or ACV, is a common term when it comes to vehicles. What it means is that an insurance settlement will be for the actual value of your craft at the time of the loss.

Having PWC insurance means you won’t have to foot the repair bills by yourself.

That’s not the cost to replace the vehicle; it’s the cost to repair or replace your PWC minus depreciation. In short, don’t expect to run out and buy a brand new PWC with a settlement. Most likely you’ll get what that craft is worth, whether it’s fresh off the showroom floor…or showing years of abuse.

Deductible

You’re likely familiar with the term from any number of insurance products, but if not, understand that a deductible simply means you’ll have to fork over some of the cash before your insurance coverage picks up the balance. Example? Should you have a $500 deductible, and be involved with an accident that causes $1,300 of damage, the check from your insurer will be for only $800. Higher deductibles are often used to lower the cost of premiums, but keep in mind should a claim occur, that higher deductible increases your financial burden. Deductibles are typically applied to property damage, theft, and medical payments.

Personal Effects

Modern PWC can hold a lot of stuff. Additional Personal Effects coverage can help you replace it.

As PWC become bigger and riders venture farther, the amount of stuff that gets brought onboard grows as well. Want that GoPro, iPhone, handheld GPS, or maybe just even your PFD covered? You’ll need additional Personal Effects coverage. Many policies include a base amount, usually in the neighborhood of $500. If you need more than that, ask your agent about increasing the limit.

Towing

All’s well and good if you have a buddy or Good Samaritan to give you a tow in the event of a breakdown, but if you require commercial towing assistance the costs can be surprisingly high. Many policies cover a specific limit of towing coverage (ex. $500) that will provide for a tow to the nearest facility where repairs can be made, or delivery of gas, oil, parts, or a battery while away from a “safe” harbor.

Watercraft Liability

If you like to tow wakeboarders or tubers, make sure your policy offers watersports coverage.

Liability insurance is designed to pay for property damage or damages for bodily injury for which you are liable by your ownership, maintenance, or use of your PWC. Watercraft liability also typically includes uninsured boater coverage to help in the event you’re involved in an accident with another boater who carries no insurance. Common liability limits range from $25,000 to $1,000,000, and your premiums will reflect your choice.

Like to tow? Many policies will also include some limit of watersports coverage as well.

Medical Payments

Many policies won’t cover things like collisions with a submerged object. Read the fine print.

This type of coverage is designed to pay for necessary medical treatments that result from an accident causing bodily injury to anyone using your craft with your permission. Again, some coverage ($1,000) may be included with a standard policy. Additional limits (typically up to $5,000) are available for an additional premium.

Exclusions

Ask questions and read the fine print. Most policies contain “exclusions,” or scenarios where the coverage will not apply, or a deductible will be subtracted. Typical exclusions include things like modified engines, engine overheating, or collisions with a submerged object. Loss from hurricanes or other natural disasters may also be excluded.

Related Reading
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How To Prevent Personal Watercraft Theft
PWC Riding and Turning Techniques
PWC 101: Safety