Most homeowner policies offer some basic protection against loss of watercraft, but the coverage is usually inadequate. Homeowner coverage of your watercraft is typically limited to $1,000 and coverage for certain perils is not included. Liability coverage for your watercraft is generally not included under your homeowners policy. Because the property and liability coverages under your homeowners policy are so limited, most watercraft owners find it necessary to insure their watercraft under one of three basic types of watercraft policies available:

• Outboard Motor and Boat Insurance: This is a basic boat policy that is written under the all risk inland marine floater that was an outgrowth of Ocean Marine Insurance. The policy covers physical damage to boats. Losses are paid on the actual cash value of the boat.
• Boat owners/Watercraft Package Policies: This comprehensive policy covers property, liability and medical payment coverage. This is typically for boats under 30 feet with a cash value of $25,000 or less. Most perils are covered including vandalism, malicious mischief, liability losses and even medical expenses if you or your guests are injured while on board. Under most policies, the boat trailer is also covered against physical loss or damage. Losses are paid on an actual cash value basis which means you are paid the actual cost to repair or replace the property (less the deductible) with no deduction for depreciation up to the limits you choose.
• Personal Yacht Policy: This policy, like the Ocean Marine Insurance, is written on boats that exceed the limits of the Boat owners/Watercraft policy noted above.

Typical coverage is written on an open peril basis; meaning perils are not listed specifically in the policy. Most policies include fire, explosion, leakage and damage from 'perils of the sea'. These usually include unusual wind, unusual wave action, lightning, collision and sinking. Be sure to thoroughly read you policy so you understand the peril coverage.