A boat rental business rents out various types of boats, such as motorboats, sailboats, pontoon boats, jet skis, kayaks, canoes, and more to individuals or groups for a period of time.
With the above in mind, it will be safe to say that every boat rental business needs insurance policy coverage, and the insurance policy coverage for the boat rental business is to protect the patrons (customers), the business owner, the employees, and lastly the boats.
An insurance policy protects your boat rental business from lawsuits and claims, and when we talk about boat rental insurance, we are talking of insurance policy coverage that covers canoes, kayaks, water bikes, jet skis, personal watercraft, powerboats, some sailboats, some houseboats, pedal boats, and pontoons.
Best Insurance Policy for a Boat Rental Business
General Liability Insurance
General liability insurance offers liability insurance coverage that helps protect a business from claims that come as a result of bodily injuries, equipment damage, fire outbreaks, or property damage to others within your business premises.
For example, if one of your customers slips and gets injured in your facility while trying to rent a boat, the business could be held responsible for their injuries. A general liability insurance policy would cover the cost of any medical bills or legal fees associated with the incident.
The truth is that, if you do not have general liability insurance coverage in place, you will be required to pay from your pocket whenever there are issues in your boat rental business.
Cost: In the U.S., the average cost of liability insurance for a small boat rental business is between $300 and $1,000 per year.
However, in certain states, the cost can increase significantly. For example, in California, the average cost of liability insurance for a small boat rental business is around $2,000 per year.
Premises Liability or Commercial Property Insurance
The fact that you will be operating your boat rental business from a rented, leased, or owned jetty or facility means that you will require commercial property insurance coverage for the property.
Aside from that, you will need commercial property insurance to protect all the boats, safety equipment, and gadgets in your facility.
Note that all commercial properties in the United States are mandated to have commercial property insurance coverage.
No doubt, having commercial property insurance coverage is needed to protect your business from damages caused by floods, rainstorms, fire outbreaks, or any natural disaster that may destroy your property.
Cost: In the United States, the average cost of liability insurance for a small boat rental business is between $300 and $1,000 per year. However, in certain states, the cost can increase significantly.
It would also be best to know what liability limit you need. For instance, BoatUS provides daily boat rental insurance with a $100,000 to $1,000,000 coverage limit. Insurance limits vary from carrier to carrier, and you need to call your insurance provider to know how much you can get.
Boat insurance which in some quarters is referred to as personal watercraft insurance is an insurance coverage that helps protect your boats (vessels) from perils such as theft, collisions, lightning strikes, and damage to other people and their property.
Interestingly, your boat insurance gives you liability coverage, medical payments coverage, and uninsured watercraft coverage (this covers losses and costs that may arise from collisions with uninsured vessels at sea).
Cost: Cost varies depending on the type of insurance policy you choose, but the average cost can be between $300 – $500 or even well over $1,000. It depends on the type of boat, the length, the age, how many you rent out, and more.
Maritime Employers Liability Coverage or Workers’ Compensation Insurance
The fact that you will have some employees working with or for you means that you will need maritime employers liability coverage or workers’ compensation insurance.
As a matter of fact, in the United States of America, it is illegal to have workers and not have workers’ compensation insurance policies to protect them.
Note that the only reason why you may not need workers’ compensation insurance is if you are operating a one-man business – sole proprietorship. Unless you are a one-man boat rental business, you will need a policy to help cover your employees.
Cost: The amount you pay for workers’ compensation is a specific rate for every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and payroll (per $100).
Business Interruption Insurance
A business interruption insurance policy provides coverage to ensure that if something unfortunate happens and affects your boat rental, you will not go out of business.
For example, if your boat rental or the facility housing your boat rental suffers a devastating fire incident that leaves almost all equipment damaged, this policy will cover fixed expenses and gross benefits while you plan how to bounce back.
A business interruption insurance policy keeps your boat rental business afloat even when things go wrong. In most cases, there is a 48 to 72-hour waiting period before your policy kicks in with income coverage.
Cost: The cost of business interruption insurance depends on your business value and income.
Commercial Towing Insurance Coverage
This insurance policy is necessary because, when your boat malfunctions or is damaged miles into the sea, it may need to be towed back to your dock. However, this is an unusual occurrence for rental boats, it costs a large amount of money.
Note that towing costs for a boat may include jumpstarts, fuel delivery, and soft ungrounding. Commercial towing insurance covers all costs involved in towing your damaged crafts back to the coast for repair.
Cost: The cost of commercial towing insurance coverage varies.
Although umbrella insurance might not be compulsory for all businesses, but should you need robust coverage for your boat rental business, then you will need umbrella insurance policy cover. Umbrella insurance provides an additional layer of coverage that goes beyond the limits of primary liability insurance.
Basically, umbrella insurance policy coverage provides excess liability protection in case of catastrophic events that may cause significant financial losses to your boat rental business.
For example, if a customer or an employee files a lawsuit against the boat rental business that exceeds the limits of primary liability coverage, umbrella insurance will provide additional coverage to meet the excess costs.
Cost: The cost of commercial umbrella insurance varies based on your level of risk and how much coverage you buy, among other factors. Small businesses pay about $40 per month for each $1 million of umbrella coverage.
Note that the cost of an insurance policy cover will depend on the level of risks, the insurance company, and of course, the type of insurance policy cover you want to buy.
Basically, the average boat rental business in the United States of America spends between $400-$1,100 per year for $1 million in general liability coverage and other insurance policy cover.
What Insurance Companies Offer Such a Policy?
Progressive offers an extensive list of discounts. You could lower your monthly premiums by paying your policy upfront, completing boat safety courses, and more. Progressive’s policies include accident forgiveness, which keeps rates from increasing if your claims are for $500 or less.
Note that Progressive has more limitations than other companies with regard to the vessels it insures. Personal watercraft, such as jet skis, worth over $27,000 are not covered. In hurricane-prone states, insurance is not available for boats over 35 feet in length or valued at over $175,000
BoatUS is owned by Geico and offers agreed value, actual cash value, and liability coverage policies for most types of boats — though not replacement cost coverage, which many insurers offer.
Also, note that since the company is a subsidiary of Geico, both offer the same policy. In fact, the Geico boat insurance quote process redirects you to the BoatUS website
The four membership plans cost between $25 and $179 per year. Each one includes 24/7 towing assistance, jump-starts, fuel delivery, and soft grounding.
The highest plan tier may cover the full cost of emergency tows and reimburse policyholders up to $3,000 for towing services provided by companies outside BoatUS’ towing network.
Foremost stands out by selling over five insurance packages tailored to different boat types, ages, and coverage levels. This can simplify the process of choosing the right policy features for your needs.
Foremost has three main packages: Saver, Plus, and Elite. Saver is an inexpensive insurance option that provides actual cash value settlements, which is the amount it would take to repair or replace your boat minus depreciation.
Plus provides total loss replacement settlement, which pays to repair your boat to its previous condition and with the same materials as before an accident, rather than a depreciated amount.
The Elite is the most comprehensive choice, adding pollution (spill) liability, wreck removal, pet coverage, towing services, and more.
State Farm provides liability protection when you rent a boat during a vacation or while yours is being repaired. The company may also reimburse part of your rental costs if you rent a boat while yours is in the shop. If you rent your boat, State Farm may also help pay for damages to your boat caused by the person who rented it.
Your base policy will include emergency service insurance, which pays for expenses you might incur if you need assistance with your boat, motor, or trailer.
This coverage is usually an optional rider and covers only vessel towing. State Farm policies also cover wreck removal, which reimburses you for the expense of raising, removing, or destroying your boat’s wreck when it’s damaged due to a covered incident and you’re legally required to remove it.
Insurance companies typically cover boats up to 50 feet in length and up to $500,000 in value. Chubb, on the other hand, has two yacht insurance plans tailored to vessels that are between 36 and 70 feet in length and valued at up to $3 million. Coverage is also available for captained vessels that are 70 feet or longer and valued at $3 million and up.
It may also pay up to $25,000 to cover the cost of fines and penalties as a result of marine environmental damage and more.
Coverage is also available for captained vessels of 70 feet or longer and valued at $3 million and up. Yacht owners receive coverage of up to $10,000 to charter a boat if their own vessel can’t be repaired within 72 hours.
Markel’s insurance policy covers vessels used for business purposes, including commercial fishing, boating classes, renting, and chartering.
Its marine insurance policy also covers liability for any damage the vessel causes to the rental facility where it is stored. Markel covers several types of boats, whether they be yachts you charter for sightseeing or boats you own and operate.
It also offers various boat insurance options, including coverage for damaged equipment and liability coverage for property damages, bodily injury, pollution (including fuel spills), and the crew. Markel’s policies for boats meant for personal use start at as little as $100 per year.
Nationwide offers six insurance packages that are ideal for fishing trips. The company also includes roadside assistance at no additional cost if you purchase boat trailer insurance as well.
United Services Automobile Association (USAA)
USAA consistently scores high on J.D. Power’s customer satisfaction studies. The company also covers many types of watercraft, including yachts and boats valued at over $150,000. Please note that Members get a 5% discount on coverage for most watercraft valued under $150,000.