Learn the key parts of a boat insurance policy.

Most coverages in a boat insurance policy come with a deductible, and all coverages are subject to limits. It's important to know what these terms mean and how they work if you need to file a claim.

Boat insurance deductibles

The amount of money you agree to pay to help repair or replace your boat if you have a claim covered by your policy is called a deductible.

For example, a boat operator damages her watercraft in an accident, and it will cost $5,000 to repair. If she has a $500 deductible, she will pay $500 and insurance will pay the remaining $4,500.

The bottom line is that choosing a higher deductible means you might pay less for your insurance premium now, but you could also end up paying more out of pocket later if you have an accident.

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Boat insurance coverage limits

If you have an accident claim covered by your Allstate policy, Allstate will pay for damages up to that coverage's limit.

For example, a boat operator causes an accident in which someone is injured. The case goes to trial and there is a verdict of $57,000 to compensate the person who was injured. In this situation, if the boat operator has $50,000 per person limit for liability, he will pay $7,000. If he has $100,000 per person limit, he won't have to pay anything.

In summary, a higher limit means you might pay more for your insurance premium now, but it could help protect you from having to pay other people's damages later.