Just Bought a Boat? The Insurance Checklist

The first insurance question for a new boat owner is whether the boat is already covered — and for most boats worth getting excited about, it isn't. Home policies typically extend liability coverage only to small, low-powered craft — commonly boats under roughly 25 horsepower, though the threshold varies by insurer. If yours has a real engine, it needs its own marine policy, and the biggest decision on that policy is the liability limit: $1 million or $2 million.

Here's why that choice matters more than the hull coverage everyone fixates on, plus the eight checks to run before the first launch.

Start with the threshold check#

Every summer, some new owner tows a 90-horsepower bowrider to the lake believing their home policy has it handled, because a neighbour once said "boats are covered under home insurance." The neighbour was describing a canoe.

The truth is narrower: many Canadian home policies automatically extend liability to small watercraft — the exact cut-off varies, but commonly somewhere around 25 horsepower and a modest hull value. Kayaks, canoes, a tin boat with a trolling motor: often fine. Anything you'd tube behind: almost certainly not. One call to your home insurer settles it, and the question is one sentence: "What exactly does my policy say about watercraft — horsepower, length, and value?"

If your boat clears the threshold, you still want the rest of this checklist. If it doesn't — and it probably doesn't — everything below is mandatory.

The new-boat insurance checklist#

The checks people skip are 3 through 8. Here they are in the order they'll hurt you.

The limit decision: who's actually in your boat#

Boat liability has a feature car insurance doesn't emphasize enough: your most likely claimants are people you invited. Friends, their kids, the cousin visiting for the long weekend — they're your passengers, and if a wake jump or a collision injures one of them badly, their lawyer sues the operator and the owner. Friendship doesn't survive contact with a spinal injury's lifetime care costs, and it shouldn't have to — that's what liability insurance is for.

That's the honest case for $2 million over $1 million. A catastrophic injury to one passenger can consume a $1 million limit before the care plan is finished, and everything above the limit is yours personally: home equity, savings, garnishable income. Ask your broker to quote both limits side by side. The gap is usually modest enough that seeing the two numbers ends the debate.

The card in your wallet#

Transport Canada requires anyone operating a powered pleasure craft to carry proof of competency — for most people, the Pleasure Craft Operator Card (PCOC), earned once through an accredited online course and valid for life. Two things new owners miss:

• Everyone who drives needs one. Your spouse, your seventeen-year-old, the friend who "just wants a turn" — the requirement follows the operator, not the owner.
• It matters at claim time. Beyond the fine, an unqualified operator hands your insurer and the other side's lawyer an easy line of attack. Make the card a house rule: no PCOC, no helm.

The rope behind the boat#

Towing is where family boating meets serious physics: a person on a tube can whip well past the boat's own speed, and they land on water that behaves like pavement. Federal small-vessel rules already set conditions — a spotter watching the towed person, a seat on board for everyone being towed, no towing after dark — and following them is both the law and your best evidence of reasonable care.

The insurance check is separate: confirm, in writing, that your policy covers liability to towed persons. Some policies include watersports liability as standard; others limit or exclude it. You do not want to discover which kind you bought while a neighbour's kid is in a Halifax or Kelowna trauma ward.

Lending the boat#

Marine policies generally cover people operating the boat with your permission, but read the conditions: some impose age minimums or experience requirements, some want operators named. And whoever borrows it needs their own proof of competency.

The deeper point: lending the boat is lending your liability limit. The claim goes on your policy, the renewal consequences are yours, and if damages exceed the limit, the lawsuit names the owner — you. Lend to people you'd trust with your car and your chequebook, because functionally that's what's happening.

The marina's paperwork#

Moorage, slip, and winter-storage contracts routinely include insurance clauses — minimum liability limits, proof of insurance on demand, sometimes a requirement to add the marina as an additional insured. These vary by marina, so read yours before signing. Getting this sorted is usually one email to your broker; ignoring it can put you offside a contract you've already signed, which is a bad look if something goes wrong at the dock.

Tell your umbrella about the boat#

If you carry an umbrella policy — or this purchase is the nudge to get one — the boat has to be declared. Umbrellas sit over scheduled underlying policies and typically require each one to carry a minimum limit; many also restrict which watercraft they'll cover by length or horsepower. An undeclared boat can mean the umbrella simply doesn't respond to a marine claim — which is the exact scenario you bought it for.

If you don't have an umbrella yet, a boat is a classic trigger: it typically costs $200–$300 a year for the first $1 million and about $50–$75 per additional million — estimates from typical Canadian broker pricing, not quotes — and it layers over your home, auto, and marine liability at once.

Two phone calls before launch day#

The whole checklist collapses into two conversations: one with your home insurer about the threshold, one with a broker about the marine policy, the limit, and the umbrella. Maybe twenty minutes total, most of it on hold. You spent more time choosing the trailer hitch.