With close proximity to many inland waterways, as well as the Great Lakes, it’s not surprising Michigan earned the title the “Great Lake State.” If you live in Michigan and plan to get a new boat, there’s one important thing you need to consider—boat insurance. Is boat insurance required in Michigan?
Boat insurance is not required in Michigan. However, if you finance your boat, you will need to get insurance so that the bank will get their money back if you get in an accident. Even if you don’t finance your boat, getting insurance is recommended to cover any potential damage costs.
Boat insurance might be optional in Michigan, but it doesn’t mean that you don’t need it. If you’re seriously considering getting coverage, read on to learn what to consider before buying boat insurance.
Is Boat Insurance Required in Michigan?
Is boat insurance required in Michigan? As mentioned earlier, it’s true that the Michigan government does not require you to obtain boat insurance. It’s also true that if you finance your boat, the lender will need you to have boat insurance. And once the boat is fully paid off, you do not have to renew your insurance.
I do, however, recommend getting boat insurance if you are not financing. Many marinas in Michigan require insurance. Insurance is also fairly affordable given the value in peace of mind you will receive.
Considerations Before Buying Boat Insurance
1. Do Comparison Shopping
Like with most of your purchases, it’s important to research and shop around to get the best coverage options, features, and rates for your money. This can be daunting and time-consuming. A reputable insurance agent might be able to simplify the process by doing comparison shopping for you.
Reminders when finding the right boat insurance agent:
- Ask for referrals from people you trust.
- Choose your top two or three agents. Check if their license meets the state’s requirements and is up to date.
- Take your time interviewing each one. It can be a bit tiring, but securing the right agent could mean your boat is better protected.
2. Know the Total Coverage You Need
You have many insurance options out there. It’s important to know what you need, so you won’t be stuck paying for useless insurance coverage.
Insurance costs are affected by different factors, such as:
- Boat value and pricing
- Boat age, features, size, and type
- Motor horsepower, size, and type (inboard or outboard)
- How you’re using it (towing, racing, leisure sailing, etc.)
- Increasing number of boat owners
- Navigation areas
- Your boat ownership experience
- Your overall driving record
- Your age and gender
- The company you buy your insurance from
- Storage location (i.e., boat stored in a disaster-prone area is more likely to get damaged)
3. Know Your Boat Insurance Company
If you’re overwhelmed by so many choices, start with the top insurance companies. The Markel Corporation, Allstate, Progressive, United Marine Underwriters, and State Farm are just some of them.
When doing your research, be sure to consider whether the insurance provider has the product that best fits your needs as well as legal and contractual obligations. Also, consider and note down the answers to these two questions:
- What’s an acceptable risk exposure level for you?
- What coverage factors are important to you and/or your loved ones?
4. Agreed Value vs. Cash Value—Which to Choose?
In an agreed value policy, you and an insurance company will determine the value of your boat upfront. This simply means that the insurance company will pay the amount stated on the policy in case of a total covered loss.
The amount you get from a cash value policy depends on the current market value of your boat if there’s a total loss (meaning, repair costs exceed the actual cash value of your boat). Unlike the agreed value policy, this will factor in your boat’s physical depreciation and condition at the time of the loss. The downside is this type of policy usually offers less coverage but at a lower cost.
Which of the two is better? Most of the time, your insurance agent will suggest an agreed value policy if you have a newly bought or old-model boat. But as your boat continues to age, you want to save on premiums. Thus, switching to a cash value policy becomes a practical option.
If none of these two fit your needs, you have a third option: the Total Replacement Cost policy. The great thing about this is the insurer agrees to replace your boat with a new one of a similar make and model.
However, there’s a catch—your boat should be new (around two to three years old) to qualify for this policy. After three years, your boat insurance policy will switch to an agreed value policy or an actual cash value policy.
See the below video to learn some other info on Michigan boat insurance coverage options:
How Much Is the Boat Insurance in Michigan?
The cost of boat insurance differs for each company and the types of clients they cater to. You might be asked some basic questions, such as details about you and your boat and the amount of coverage you want to purchase, which affect the cost of your insurance.
Luckily, boat insurance is usually more affordable in Michigan and other non-coastal states (also called landlocked states). One reason for the lower policy costs in Michigan is due to the length of their boating season, which tends to be a year-round activity. On average, the cost of boat insurance in Michigan is between $75 and $500 every year. 
Does the Cost Cover Both the Owner and Passengers in an Accident?
In most cases, it does. Check the liability portion of your boat insurance policy. However, if you’re using your boat for tow sports (wakeboarding, kite surfing, water skiing, etc.), your insurer might not cover passengers being pulled behind your boat.
There are instances when an insurance company offers boaters discounts, including:
- Passing approved boat safety courses − These courses will not only teach you valuable safety skills, but they may also net you an insurance discount. To get the best discount from your insurance company, speak with your agent before signing up for a course. Check out the site of the National Association of State Boating Law Administration to know the available boat courses.
- Setting sail in freshwater − A boat used in saltwater can wear out faster than a boat used in freshwater due to the salt build-up, which causes corrosion over time. That’s why freshwater boats should have lower premiums than saltwater boats.
- Having a good driving record − Insurance companies normally go through your DMV records to see if you have previous reckless driving arrests or DUIs. For insurance companies, a good car driver is also a good boater.
- Good credit score − Your insurer will pull your credit score to determine your premium. Before deciding on an insurance policy, be sure to ask your insurer how pulling your credit score will impact your credit and whether all boat insurance companies use credit scoring as a factor to set your premium.
- Multi-policy discounts − If you purchased other insurance policies (home, auto, life, etc.), you could qualify for a multi-policy discount. The amount you save varies for every insurance company. For instance, Allstate offers up to a 20 percent discount if you combine your boat insurance with its homeowner’s policy.
- Lay-up cover − This refers to the time you didn’t use your boat, like during the winter months or when it’s laid-up ashore. Whatever it is, boat insurance companies usually give a discount on the premium for this type of case. For a boat to be considered laid up, it shouldn’t be navigated, winterized (not ready for immediate use), and not used as a home.
What Boat Insurance Covers
Insurance companies offer a wide variety of coverage to match your needs, including their preference on who and what to insure based on their risk assessment. Here’s a quick look at the types of coverage that companies include in their boat insurance policies:
A basic Michigan boat insurance policy will protect from accidents that injure others and damage their property. This type of coverage will spare you from shelling out a significant amount of money to cover the associated costs. It could also help pay up for certain damages to your boat while it was in use or during transportation.
This is a must-have in your insurance policy because it protects your boat, whether it’s on land or water. This could help pay for the repair of your boat if you cause an accident that damages your boat, another person’s boat or property, and other structures (like a dock). Or, if your boat gets stolen, this may help cover the costs of replacing it.
Uninsured or Underinsured Boat Coverage
The great thing about this type of coverage is that you still get paid if you have an accident in the water caused by someone with little to no liability insurance. It’s not your job to demand compensation from the other person’s insurance company. Your insurance company will do that for you. Plus, your insurance company can pay you for the damages caused by the accident.
Conclusion – Is Boat Insurance Required in Michigan?
Based on numbers from the US Coast Guard, in 2016, Michigan had the fourth-highest number of boating-related fatalities in the entire United States.  During the same year, out of the 125 recreational boating accidents, 60 people were injured, and 38 people died.
So, is boat insurance required in Michigan? It’s not legally required by the State of Michigan, but it doesn’t mean that you won’t need it.