Watercraft Nonowned Insurance

Watercraft nonowned insurance is a type of financial safeguard that covers marine vessels that are owned by someone other than the policyholder while they are being operated by the policyholder. Watercraft nonowned insurance is a type of property and casualty insurance, meaning that it covers physical property belonging to a person or business. Depending on the specific policy, watercraft nonowned insurance may cover physical damage, legal liability or both.

Watercraft nonowned insurance makes it easier for an operator of a watercraft to drive that watercraft even if they don’t own the vehicle. For example, if the holder of a watercraft insurance policy borrowed a friend's boat, they would want to make sure their policy covered nonowned watercraft in case they had an accident while operating it. If the basic watercraft insurance policy does not include this coverage, it may be possible to add it via an endorsement or rider.

Homeowners insurance for most individuals generally doesn’t extend to personally owned boats or jet skis, so it’s certainly unlikely to cover nonowned watercraft. Those who operate watercraft they don’t personally own may want to consider a personal umbrella policy to plug the gaps in their coverage. Here are two types of nonowned watercraft coverage an umbrella policy may provide, according to the International Risk Management Institute:

• Nonowned watercraft liability coverage: Bodily injury and property damage liability coverage is provided when you operate hired or borrowed boats that are not covered by primary homeowner’s liability coverage; for example 30-foot sailboats, houseboats and sometimes jet skis.
• Nonowned watercraft legal liability coverage: Covers damage to nonowned watercraft either caused by you or for which you have agreed to be responsible under a rental contract.

For companies, a general liability insurance policy typically covers bodily injury or property damage that occur as a result of an accident involving a watercraft not owned by the insured. However, this coverage is subject to several exclusions. For instance, if the policyholder transported passengers for a fee, they wouldn't be covered in the event of an accident. The size of the watercraft may also trigger an exclusion. In many cases, coverage is limited to vessels that are less than 26 feet long.

If you ever need to charter a vessel, make sure the vessel owner or operator has liability coverage on the watercraft as well as liquor liability coverage. It's also a good idea to make sure the limits of liability are high enough to realistically cover the cost of an accident.