Marine and boat insurance: what it covers and who sells it

What marine and boat insurance is and who needs it

Boat insurance covers a recreational vessel, its motor, trailer and equipment, and the owner's liability for injury or damage to others. It is bought for trailer boats, personal watercraft, yachts and cruisers. Commercial marine insurance is a separate field. It covers working vessels, charter boats, cargo and marine businesses.

For most recreational boats, insurance is not required by law, but there are exceptions and conditions:

  • NSW: the NSW Government states that third party insurance is not compulsory to register a vessel.
  • Queensland: all ships over 15 metres must carry insurance for pollution clean-up, salvage and wreck removal. For a recreational ship over 15 metres and under 35 metres, Maritime Safety Queensland sets the amounts at $250,000 for pollution clean-up and $10 million for salvage and wreck removal. Visiting ships must comply too.
  • Western Australia: the Department of Transport requires proof of $10 million third party liability insurance to use a boat pen or mooring at a facility it manages.

Private marinas, yacht clubs and race organisers commonly set their own liability requirements. Lenders usually expect a financed boat to be insured.

What is usually covered, and common exclusions

A recreational policy can cover:

  • accidental damage, storm, fire, sinking and theft of the hull, motor, trailer and gear
  • damage while the boat is towed or stored
  • legal liability to other people, including passengers and skiers under some policies
  • salvage and wreck removal costs
  • racing risks for yachts, as an option.

Common exclusions and conditions:

  • wear and tear, corrosion, osmosis, rot and vermin
  • mechanical or electrical breakdown
  • a boat that was not seaworthy or not properly maintained
  • a skipper without the required licence
  • use outside the navigation limits named in the policy
  • charter, hire or other commercial use, unless declared
  • theft of an unsecured trailer or outboard
  • mooring and cyclone season conditions that were not followed.

How it is sold, and when a broker is the usual route

  • Direct insurers: several general insurers and boating specialists sell policies for trailer boats and personal watercraft online or by phone.
  • Underwriting agencies: specialist marine agencies write pleasure craft and commercial hull cover on behalf of insurers, including Lloyd's underwriters. Some sell direct and some only through brokers.
  • Brokers: marine brokers place larger and unusual risks.

Most small trailer boats are insured directly. A broker is the usual route for:

  • larger yachts and cruisers
  • older timber or ferro-cement vessels
  • liveaboards
  • boats kept on swing moorings in cyclone areas
  • offshore passages and racing
  • anything used commercially, including charter and cargo.

Check a broker or agency on the ASIC professional registers.

What makes boat cover hard or expensive to get

  • Age and construction. Insurers often ask for an out-of-water survey on older boats.
  • Where the boat is kept. Cyclone regions and exposed moorings cost more and may carry lay-up conditions.
  • High-powered engines and personal watercraft.
  • Limited skipper experience on the type or size of vessel.
  • Past claims.
  • Living aboard, or use far offshore.

When you apply, answer the insurer's questions accurately, including where the boat is kept and who will skipper it. A private boat policy is normally a consumer contract. The duty is to take reasonable care not to make a misrepresentation.

Questions to ask before buying

  • Is the boat insured for agreed value or market value?
  • What are the navigation limits?
  • Is the liability limit enough for my marina, club or state requirement?
  • Are salvage, wreck removal and pollution clean-up covered?
  • What must I do before a cyclone or severe storm warning?
  • Is the motor covered at replacement cost, and up to what age?
  • Is racing covered, including sails and rigging?
  • Is a survey needed, and who pays for it?

Where to complain

Complain to the insurer first, in writing, and ask for its internal complaints process. Insurers generally have 30 calendar days to respond. Complain to the broker about the broker's own service.

If the complaint is not resolved, go to the Australian Financial Complaints Authority (AFCA), which is free. AFCA's rules do not cover every commercial policy, so ask whether a commercial marine dispute is eligible. Call 1800 931 678.

Find a licensed broker

Browse businesses licensed to arrange general insurance in your city, or search every state.

Sources

Last checked: 2026-10-06

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