What is marine insurance?

Ocean marine insurance covers ships and what they carry on oceans and inland waters: the cargo, the vessel itself, the money the vessel earns, and the owner's liability. Triple-I, the Insurance Information Institute, explains that marine insurance applies to products carried over water, whereas inland marine handles goods travelling over land by truck or rail, or stored briefly in a warehouse.

If you own a boat, your policy will typically come in two parts. Chubb describes them as cover for physical damage plus cover for liability. You may also hear liability called Protection & Indemnity.

There are several varieties, and each one guards something different:

• Boatowners cover: This pays if your boat, motor or trailer is damaged, and if you injure someone or damage their property. Insurers file it under a category called inland marine, so you may see that name.
• Cargo insurance: This protects against product losses while goods move overseas and while they sit in warehouses before or after.
• Hull and machinery: This pays for damage to a vessel's hull (its main body), machinery and gear caused by a collision or another danger at sea.
• Protection and indemnity: Frequently sold alongside hull insurance, it shields owners from liability for property damage and bodily injury.
• Bumbershoot: An extra layer of cover, often bought by shipyards and ports, for liability, collisions and salvage costs.

Marine cargo cover ends when goods continue by rail or truck, so you would need a separate inland marine policy for that part of the journey.

When comparing quotes, look at what each policy covers, how a total loss would be valued and how much you would pay toward a claim.

When insuring a boat, ask if the policy includes both physical damage and liability sections.

Ask, too, how a total loss would be settled. Chubb notes that agreed value policies usually pay the figure stated in the policy itself. With actual cash value (ACV), the payout is what the boat is worth on the market today after depreciation, so age and wear bring the payout down.

Insurers look at things like these when setting your price, according to Chubb:

• The boat's value, length, and age
• The kind of boat and the engines it has
• Where it is moored and where it sails
• Your own experience and past claims
• The deductible you pick

A deductible is what you pay out of pocket before the insurer covers a claim. Physical damage deductibles usually begin near 1% of insured value and may climb as high as 5%.

Chubb says vessel owners can be liable for oil-pollution cleanup under the Oil Pollution Act of 1990 and cites a statutory limit of $939,800. If you own a vessel, ask your insurer whether your policy covers oil-pollution cleanup liability and what limits apply.