This base-level policy covers you if you damage someone else's property, including other boats and comes with liability cover (if someone sues you). It doesn't cover damage to your own boat.
Third party fire and theft
This covers your boat against fire and theft plus damage to other people's property and liability – but storms, floods and hail are not included.
Comprehensive
This is the only type of insurance to cover damage to your own boat as well as others, plus lots of other risks including storms, floods and hail damage.
Third party insurance isn't compulsory for boats but it's recommended that you get some form of cover. If you don't take out insurance when you register the boat, you won't be covered for liability.
What does boat insurance cover you for?
Here are a few situations you may be covered for, depending on your level of insurance:
Scenario
Comprehensive
Third party fire and theft
Third party property
You crash your boat into someone's dock and now you need to cover the costs of the repair to the dock as well as repairs to your own boat.
✅
❌
❌
Someone broke their leg on your boat. Your insurance could pay damages for the injury.
✅
✅
✅
Someone steals your boat.
✅
✅
❌
A flood overtakes your boat.
✅
❌
❌
You're towing your boat and you damage it in a crash.
✅
❌
❌
What additional cover options do you have?
In addition to basic cover, insurers offer a collection of other benefits that may be useful to you as a boat owner. Here are the most common:
Contents cover. Your typical cover doesn't protect your personal belongings. For an extra premium, you can get cover for personal items like clothing, fishing equipment, diving equipment, water sports equipment and electronics.
Lay-up cover. If you store your boat during certain seasons, you may be able to save on premiums while it's stored. With lay-up cover, you basically have 2 policies in 1: 1 for the timeframe you're using the boat and 1 for the timeframe you're storing it. You'll be charged a little more upfront, but you'll save on your premiums in the long run.
Racing cover (sailboats only). Basic boat insurance doesn't cover you when you're racing. The sailboat racing option expands your cover to protect you when you're racing in an organised event.
Water skiing liability. A basic boat insurance policy won't cover you if you're towing a water skier and that's what caused the damage or injury. With the water skier's liability option, you're covered for injuries to the water skier and for any damage caused to others as a result of this activity.
What types of boats can you get covered?
There are a lot of different types of boats and they all have different insurance options. Here are a few of the most common:
Yachts. These high-value boats get a lot of use and usually have a lot of luxuries on board. They'll often require a customised boat insurance policy. It's possible that some very high-value yachts are too expensive for normal insurers to cover.
Powerboats. This is a broad category that includes many motorised boats such as cruisers, runabouts and even some smaller yachts. Most boating enthusiasts will have a boat that falls into this category and will have plenty of boat insurance options.
Sailboats. This is the only type insurers will offer racing insurance for, usually as an add-on.
Personal watercraft (PWC). This category includes jetskis, aqua bikes and other small motorised vessels.
House boats. You may need to find a dedicated marine insurance company to find a policy shaped specifically to your needs.
What should you look out for when choosing your policy?
Is your boat in insurable condition?
Most policies will require that you pay for a marine survey to show that the boat is seaworthy and in good working order. This includes keeping your boat and moorings in good working order.
What value do you want insured?
You sometimes have 2 choices for insuring your watercraft: agreed value or market value. Market value means the reasonable and expected cost of replacing the boat at the time of the incident. This is what's most commonly offered. Agreed value refers to the price of your boat that has been agreed between you and your insurer (and is sometimes more appropriate for expensive boats).
How far can you take your boat from land?
Most policies have a geographical limit (how far you can take your vessel from land) of 200 nautical miles from Australia's shores. You're covered if you stay within that range, but not if you sail beyond it.
Will you be towing your boat?
If your boat is damaged while being transported on a trailer, some boat insurance policies may not cover you – but car insurance probably will, at least for liability. If you're not sure, ask the insurer directly.
Before you take out boat insurance, ask yourself what you really need. Maybe your boat isn't worth a whole lot and all you want is a policy that covers you in case you damage someone else's boat. Otherwise, it's probably worth getting comprehensive cover. Regardless of what you get, make sure you follow the correct safety and maintenance rules. If you don't, there's a risk that any claims you make will be denied.
The cost of boat insurance will vary from person to person and boat to boat. When calculating your premiums, insurers will take the following into consideration:
The type of boat you have
What materials your boat is made of
Where you store/dock the boat
Your boat's hull length
How much you want to insure the boat for
Your boat's maximum speed
What cover options you want to add
Whether or not the boat is paid off
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Further questions you may have
Boat insurance isn't compulsory in Australia like car insurance is but most states, including NSW, recommend that you get it. Otherwise, you won't be covered for liability – for example, if you injure someone and they sue you.
Boat insurance isn't a legal requirement in Australia so there is no minimum boat size requirement. However, if you want to avoid paying for damage to your boat or other people's property, then you should get insurance.
Your insurer may not pay out if:
You didn't secure your boat well enough. Most insurers require a minimum level of security. Boats on trailers are typically required to be stored in locked garages, or if in the open air (carports, etc), secured with approved anti-theft devices. Simple padlocks and chains usually do not meet security standards.
You were using the boat recklessly or for unapproved activities. You won't be covered if you were breaking the law or using your boat in an unapproved fashion at the time of the accident. For example, you'll be denied if you were racing it at the time and you don't have the racing add-on.
You sailed outside your geographical limits. Always know the geographic limits of your insurance policy. You risk having your claim denied if you go beyond this limit (unless a storm carried you out that far).
You were towing your boat with your car. If you reverse into another car while towing your boat, your policy won't cover damage to your boat unless clearly stated otherwise (although it may cover damage to the other person's car, depending on the policy). Because it was on the road at the time, this is a matter for car insurance.
You didn't maintain your boat well enough. If you haven't maintained your boat properly, an insurer may try to use this as a reason not to pay out.
You used the boat when it was supposed to be stored. If you have lay-up cover and you use the boat during a time when you've agreed to store it, you won't be able to claim.
Your boat was moored when it was not supposed to be. If your boat was registered as a trailer boat, but was moored at the time of the accident, the insurance company may refuse to pay out.
You let someone else drive your boat. You're only eligible to claim if the person driving at the time of the accident is listed on the policy as an approved driver.
Yes, comprehensive boat insurance should be able to cover hull damage. It typically covers accidental damage.
Yes, comprehensive boat insurance typically covers accidental damage. If your vessel is damaged because you hit a rock, your insurer will pay to fix the boat.
You don't necessarily want the cheapest policy around because you might end up with a dodgy policy that doesn't protect you enough. However, you can save money on boat insurance by demonstrating that you're a safe and effective boater. Here are some tips:
Have a storm plan. Insurance companies appreciate someone who knows in advance how they'd stay safe and minimise damage in a storm. Some companies will give discounts to boaters who follow storm plans, while others won't let you sign up without one.
Keep to calm waters. If you're only going to be boating where the water is usually calm, bring that up with your insurer. It may offer to reduce your premium.
Consider the seasons. Some seasons bring harsher weather, so you can save on your premiums if you avoid boating during those seasons. Store your boat when you're not using it and save even more money with the lay-up option.
Keep a clean sailing record. You can save on your premiums by demonstrating to insurers that you're a good driver, both on land and water.
Store your boat when you're not using it. You can usually save on insurance if you store your boat in a garage as opposed to mooring it when you aren't using it. Plus you'll have the added benefit of reducing wear and tear. Storing it might not always make sense from a transportation perspective so make sure to weigh these savings against other costs you'll take on when storing your boat away from water.
Liability covers damages and injuries you cause to other people, and there's no telling if your next accident might destroy someone's dock or multimillion-dollar yacht. Because the damage can be so high, most policies will offer at least $10 million in liability cover.
Passengers on the boat are covered under the liability part of the policy but water skiers and wakeboarders don't count as passengers. If you want water skiers and wakeboarders to be covered, you need to make sure the policy clearly includes optional water skier liability.
If you depend on your boat for income, you'll need commercial boat insurance. It has many of the same features as regular boat insurance, but it adds aspects of business insurance to it. You'll probably need to go through a specialty marine insurance provider for this product.
Gary Ross Hunter was an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146). See full bio
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You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees.
You save time. We spend 100s of hours researching car insurance so you can sort the gold from the junk faster.
You can trust us. We say it like it is. We aren't owned by an insurer and our opinions are our own.
