Here's something that surprises most new boat owners: whether you legally need boat insurance depends less on the law and more on where you keep your boat and how you paid for it. Only three states actually require boat insurance by law, but if you financed your purchase or plan to dock at a marina, you'll need coverage regardless of what your state says. Let's break down when boat insurance is truly required and when it's just a really smart idea.
State Laws: Where Boat Insurance Is Actually Required
Unlike auto insurance, which every state requires in some form, boat insurance is only legally mandatory in three states: Arkansas, Hawaii, and Utah. Each has different thresholds and coverage requirements.
In Arkansas, you need liability coverage of at least $50,000 if your boat has an engine rated 50 horsepower or higher. This applies to personal watercraft like jet skis too. Hawaii takes a different approach—they only require insurance for boats docked in state-run facilities, but when they do require it, they want serious coverage: $500,000 in liability insurance. If your boat is over 26 feet, you'll also need $500,000 in wreckage removal coverage. Utah sits somewhere in between, requiring boats with 50+ horsepower to carry $25,000 to $50,000 for bodily injury or death coverage, plus $15,000 for property damage.
If you live anywhere else, there's no state law forcing you to buy boat insurance. But before you celebrate that freedom, you need to know about the other requirements that probably do apply to you.
Marina Requirements: The Real Gatekeepers
Here's where things get real: if you want to dock your boat at a marina, you're going to need insurance. Period. Marinas aren't being difficult—they're protecting their docks, their property, and all the other boats moored there. One uninsured boat owner could cause hundreds of thousands in damage.
Most marinas now require minimum liability coverage of $300,000, though many are pushing that to $500,000. In Florida, where storms and hurricane risks are higher, many marinas demand $1 million in liability coverage. You'll also need hull coverage that matches your boat's value, oil pollution and fuel spill protection, and you'll have to list the marina as an additional insured party on your policy.
California Yacht Marina, for example, requires a copy of your current insurance policy showing at least $300,000 in liability coverage before your boat can move in, and all of their locations must be named as additionally insured. If you can't provide this documentation, they won't let you dock. And if your insurance lapses while your boat is there? They can terminate your slip agreement and give you a deadline to remove your boat from their property.
Lender Mandates: Protecting Their Investment
If you financed your boat purchase, your loan agreement almost certainly requires you to maintain insurance. This isn't optional or negotiable—it's written into your contract. Lenders want to protect their investment, and they're not taking chances with a vessel that could sink, burn, or get stolen before you've paid off the loan.
Lenders typically mandate comprehensive coverage, which protects the boat from theft, vandalism, fire, or storm damage. They also require collision coverage, which pays to fix or replace your boat if you hit another vessel, a dock, a submerged rock, or anything else. The policy usually needs to cover the full value of the boat—whatever you financed. In Florida, most lenders now also require wreck removal coverage before they'll fund a vessel purchase, given the state's exposure to hurricanes and tropical storms.
What happens if you let your insurance lapse? Your lender can force-place insurance on your boat at your expense, and that coverage is typically much more expensive and less comprehensive than a policy you'd choose yourself. Worse, defaulting on your insurance requirement could trigger default on your entire loan.
When You Don't Need Insurance (But Probably Should Anyway)
Let's say you own your boat outright, you keep it on a trailer in your driveway, and you live in one of the 47 states that don't require boat insurance. Technically, you could skip insurance altogether. But should you?
Consider what you're risking. If someone gets injured on your boat, you could be personally liable for their medical bills, lost wages, and pain and suffering. We're talking potentially hundreds of thousands of dollars. If you cause an accident that damages another boat or dock, you're on the hook for those repairs. If your boat sinks and needs to be removed from a waterway, wreck removal can cost tens of thousands of dollars—and you might be legally required to pay for it.
Then there's the value of the boat itself. Boats are expensive, and they're vulnerable. They can be stolen, vandalized, damaged by storms, or destroyed by fire. Without insurance, replacing or repairing your boat comes entirely out of your pocket. For most recreational boaters, the average annual insurance cost sits between $300 and $600—a pretty small price for protecting an investment that likely cost tens of thousands of dollars.
What Coverage Actually Includes
When you do buy boat insurance, you're typically getting several types of protection bundled together. Liability coverage is the foundation—it pays for injuries or property damage you cause to others. This covers medical bills if a passenger gets hurt, repairs if you damage someone's dock, and your legal defense if you get sued.
Physical damage coverage protects your boat itself, usually split into comprehensive (for things like theft, fire, vandalism, and weather damage) and collision (for crashes and impacts). You can also add coverage for personal property on the boat, fuel spill liability, towing and assistance, and replacement cost coverage that pays what it costs to buy a comparable new boat rather than your boat's depreciated value.
How to Get Started
If you've decided you need boat insurance—whether because it's legally required, your marina demands it, your lender mandates it, or you just want the protection—start by checking your current homeowners or auto insurance provider. Many insurers offer boat policies, and you might get a discount for bundling. Gather information about your boat: make, model, year, length, value, engine type, and horsepower. Know where you'll be using and storing the boat, and think about what coverage limits make sense for your situation.
Get quotes from multiple insurers, because prices can vary significantly. Ask specifically about the requirements from your marina or lender to make sure the policy will satisfy them. And consider taking a boating safety course—many insurers offer discounts for completion of approved courses, which can help offset your premium while making you a safer boater.
So do you need boat insurance? If you live in Arkansas, Hawaii, or Utah and meet the horsepower thresholds, yes—by law. If you dock at a marina or financed your purchase, yes—by contract. And if you own your boat outright and keep it on your property? Legally, maybe not. But practically speaking, the financial risks of going uninsured are substantial enough that most boat owners find coverage worth every dollar.
