By the Mercer Agency team · 6 min read· Boats & personal watercraft
Michigan has more than 800,000 registered watercraft. Every year, most of those boat and personal watercraft (PWC) owners pull their vessels out of storage, do a quick check, and head to the water, often without giving their insurance policy a second thought.
That’s understandable. But it’s also where coverage gaps tend to live.
The good news: most gaps are easy to close once you know they’re there. Here’s what we look for when we review a watercraft policy with a Michigan boat owner.
Does Michigan require boat insurance?
No. Michigan law does not require boat insurance for any vessel. That surprises a lot of people, and it has real consequences on the water, because it means the person next to you at the dock may have no coverage at all.
Many marinas require proof of liability coverage for a slip rental, and any lender financing your boat will require physical damage coverage. But if you own your boat outright and keep it on a trailer, nothing in state law compels you to carry a policy.
GOOD TO KNOW
Your homeowners policy probably doesn’t cover your boat the way you think it does. Most policies cap watercraft coverage at $1,000–$1,500 and address only basic theft, not physical damage on the water, on-water liability, or towing. Any boat with meaningful horsepower or value needs its own dedicated watercraft policy.
Six coverages worth a second look
These are the gaps that come up most often when we sit down with a Michigan boat owner and go through their existing policy together.
COVERAGE 1
Agreed value vs. actual cash value
This is the most important question to ask about any boat policy, and most owners have never been asked it. An actual cash value (ACV) policy pays out your boat’s depreciated market value at the time of a total loss, not what it would cost to replace it. An agreed value policy locks in a payout amount upfront, with no depreciation deduction at claim time. For newer boats and upgraded vessels, the premium difference between the two is usually modest. The difference in claims can be thousands of dollars.
COVERAGE 2
Uninsured boater protection
Because Michigan doesn’t require boat insurance, a significant share of vessels on any given lake carry no coverage. If an uninsured boater hits you and injures you or destroys your boat, you have no recourse against their policy, because there isn’t one. Uninsured boater coverage is the watercraft equivalent of the uninsured motorist (UM) protection on your auto policy. Without it, your only option after such an accident is a lawsuit against someone who may have nothing to collect.
COVERAGE 3
Fuel spill and pollution liability
If your vessel sinks or is badly damaged and leaks fuel or oil into the water, federal law, specifically the Oil Pollution Act of 1990, makes you personally responsible for the cleanup. The statutory liability limit currently exceeds $900,000. Many standard boat policies either exclude this coverage entirely or cap it well below your actual exposure. You want to see fuel spill and pollution liability named explicitly in your policy, not assumed.
COVERAGE 4
On-water towing and emergency assistance
Running out of fuel, a dead battery, or a mechanical failure a few miles offshore is more common than most boaters expect, especially on Michigan’s large inland lakes and the Great Lakes. Your auto roadside assistance plan doesn’t follow you onto the water. On-water towing rates can reach $150–$400 per hour or more. Most carriers offer this as an inexpensive endorsement. It’s consistently the coverage people wish they had the first time they need it.
COVERAGE 5
Personal effects and gear
Your fishing rods, reels, fish finders, coolers, wetsuits, and water sports equipment are personal property, and most boat policies don’t cover them automatically. A homeowners policy may offer some help, but coverage is typically capped and often applies only while items are on your property. A personal effects endorsement on your watercraft policy closes this gap cleanly. It’s especially valuable for bass boat owners who carry thousands of dollars in electronics and tackle on board.
COVERAGE 6
Navigation territory limits
Many standard boat policies restrict coverage to a defined navigation area — often inland waters within a set radius of your home state. Michigan boaters who venture onto the Great Lakes, the St. Lawrence Seaway, or across into Canadian waters may find their coverage doesn’t follow them. Michigan also has policy-specific risks, hidden submerged objects, ice damage, and winter storage requirements that not every carrier addresses by default. It’s worth knowing exactly where your coverage begins and ends before you go.
DID YOU KNOW?
Anyone born after July 1, 1996 must complete a boating safety course to legally operate a motorized vessel in Michigan. Most watercraft carriers also offer a discount for completing a recognized course, two good reasons to get it done before you launch.
A note on personal watercraft
Jet skis, Sea-Doos, and Waverunners are personal watercraft (PWC), and insurers treat them differently from traditional boats. PWCs are typically rated as higher-risk because of their speed and maneuverability, so they usually require their own policy or a specific endorsement rather than being automatically bundled with your boat coverage. If you have both a boat and a PWC, don’t assume one policy covers both without checking the declarations page.
Michigan also has specific rules for PWC operators: children under 14 may not operate a personal watercraft under any circumstances. Riders 14–15 may operate only if they hold a boating safety certificate and a parent or guardian is present on the water.
What to do before you launch
Pull out your current watercraft policy and look for four things specifically: how total losses are valued (agreed value or ACV), whether uninsured boater coverage is included, what your navigation territory limits are, and whether fuel spill liability is named. If the policy language isn’t clear, that’s a reasonable time to call us.
We compare carriers, explain the fine print, and find coverage that actually fits how you use your boat. A review takes about 15 minutes. There’s no pressure and no obligation, just a clear picture before you’re out on the water.
Before you launch this season, let’s make sure your policy is ready for the water.
