What’s The Real Cost of Boat Ownership?

The cost versus the value of boat ownership

It’s a common saw among boaters that a boat is “a hole in the water that you throw money into.” While it is true that there is more cost to owning a boat than the initial purchase price, it’s cynical to describe a boat that you enjoy as a maritime money pit.

In a 2015 Washington Post article, equities analyst and author Barry Ritholtz blames this mindset on not appreciating the true value of money, which is to provide freedom to make choices that improve the quality of your life. He offers a few considerations for people who are on the fence about buying a boat, including:

• How much are you going to use your boat?
• Will friends and family benefit from your boat purchase?
• What time demands might prevent you from enjoying your boat?

In other words, if you have enough money for a boat, time to enjoy it, and folks to enjoy it with, it is likely to add value to your life. In that case, buying a boat is “simply an option, one that should be considered intelligently.”

So let’s look intelligently at the true cost of boat ownership.

The purchase price of a boat is the smallest expense of boating

Ritholtz pulls no punches when it comes to the purchase price, calling it “the smallest expense of boating.” It’s also one of the few prices that a boater has some control over depending on the boat style that suits your preferences and budget. Jon boats for fishing can start as low as $500 while luxury yachts may cost upwards of $300,000. How much you spend on your boat purchase depends on several factors, including (but not limited to):

• What your budget will permit,
• What boat style appeals to you,
• How you want to spend your time on the water,
• How many passengers you plan to bring online when you’re boating
• Whether you plan to spend time on protected inland waters or offshore.

Boat financing impacts your final purchase price

The size of your loan and down payment, the interest rate you’re able to wrangle, and the length of the loan term will all factor into the initial payment price. Doubling the term of a loan will likely mean a slightly higher interest rate, whereas paying a higher percentage of the value up front can decrease the interest rate. The type of boat and its age may also factor into financing terms.

The cost and guidelines of boat registration and titling vary by state

Most but not all states require boats to be titled upon purchase - California boat insurance and title requirements are different From Florida. On the other hand, you are required by law to register your boat annually if it has a gasoline, diesel, or electric motor. The cost and guidelines of titling and registering your boat may vary by state and by size. The following table provides sample registration fees for a boat between 26’ and 40’ based on geographic regions.

Pro Boat Tips: Not sure where to get that information? The Discover Boating online registration tool redirects to your state’s registration and titling site.

Boat taxes may add an annual cost to your total cost of boat ownership

Depending on where you buy, the state will either levy a sales tax or a use tax that is applied to the purchase price of the vessel. Some states also impose an annual personal property tax to boats, and if you intend to live aboard your boat, you can expect to pay property taxes to the local municipality. While Rhode Island imposes no boat tax, South Carolina boat owners who keep their boats in the state for more than 180 days pay an annual use tax equal to 10.5% of the boat’s assessed value.

Boat insurance protects your investment

If you’re getting the idea that the total cost of boat ownership is fluid, it’ll come as no surprise that boat insurance costs also vary depending on a number of factors, including (but not limited to):

• Insurance coverage type
• Boat type
• Motor
• Condition
• Age
• Use
• Location  

That being said, on average, boat insurance costs between 3─5% of your boat’s value annually. Compare that with the cost of the average boat insurance claim, which hovers around $11,000. Should the worst-case scenario happen, a comprehensive insurance policy will more than pay for itself.

Boat Insurance Tips: Discounts can lower your insurance costs. For example, as a Boat Insurance Company, Ahoy! offers a 5% discount if you pay your policy in full (i.e., annually) as well as a vanishing deductible when you upload photos of your boat via our self-inspection app. We deduct an additional discount for claims-free boaters.

Consider boat storage and marina fees when calculating the total cost of ownership

If you guessed that the cost of boat storage depends, you’d be right. Some can get by on less than $50 per month for a mooring ball in some areas and seasons. However, if you’re using your boat more recreationally, you’ll need to either rent a slip at a marina, which can range from $250 per month to more than $5,000 per season, or pay for indoor rack dry storage, which can be considerably more. Assume you’ll pay at least $50 per foot per month for dry stack storage whereas a slip may cost $15 per foot per month or more than $5,000 per season depending on the area.

If you live in a colder climate, you’ll also have to budget for winter boat storage, either in water or in rack storage. For winter storage you might also consider either shrink wrapping your boat. Shrink wrapping generally costs between $10-15 per foot, according to Discover Boating, so a 21-foot boat might cost $200-300 to cover.

Count on regular maintenance and occasional updates of safety equipment and accessories

Life jackets, flares, and other equipment that make up your boat safety kit will need to be periodically replaced to ensure they’re in good working order. Similarly, electronics may deteriorate or degrade over time, especially if they’re regularly exposed to caustic environments. Your boat, itself, will also need regular TLC to keep it in running order. Boating Scout estimates that new boats cost as much as 2% of the purchase price to maintain each year while annual maintenance costs for used boats are around 10% of the purchase price. You may also wish to budget 5─10% of the boat’s value annually for upgrades to the boat as well as fishing and safety equipment. 

Don’t forget to fuel up

The type of boat you invest in will also determine the price of power. In other words, sailboat fuel is essentially free so long as you can catch a good breeze. Most smaller boats can be fueled up at the same station where you fill up your car, which is often more affordable than the same fuel at a marina. If you’ve invested in a speed boat or a high-end fishing boat, you’ll need to purchase more expensive higher octane gas to ensure optimal performance. 

For the sake of math, let’s compare two real-world examples. A 250 HP powerboat that you take out cruising every week for four hours, averaging 25 GPH, will use 100 gallons of gas. If marine gas is $6.00 per gallon, you’ll pay $600 in fuel for each trip out, or $2,400 a month. For a four-month boating season, your annual fuel cost would be $9,600. On the other hand, a pontoon may be closer to 5 GPH, so the same season would be $1,920.

Protect your boating investment

When it’s all said and done, the total cost of boat ownership is considerably more than the purchase price, but that doesn’t mean your boat is just a hole in the water to throw money into. Ahoy! Insurance was established by avid boaters who happen to be technologists and insurance experts. We understand the expenses associated with boats, and we also understand the value of boat ownership. If your boat brings you joy, brings you out into the world away from the stress of the office, and brings you closer to family and friends, it’s worth the investment. If it’s worth the investment, it’s also worth protecting. That’s why we designed the most comprehensive insurance policy for boaters like you as well as innovative technological tools that let you turn your attention to what really matters: enjoying your investment.

Start building your quote today.