Boat Dealer Insurance: Protecting Clients From Liabilities During Test Rides

Test rides and on-water demos help close sales, making them necessary for boat dealers in a growing and increasingly competitive industry. At the same time, these activities present key risk exposures that require proper boat dealer insurance. Tailored boat dealer insurance can cover these elevated liabilities while supporting a seamless sales experience.

Having the right boat dealer insurance in place is essential when everyday sales activities lead to unexpected accidents or claims. Without proper coverage, even a minor incident can result in significant financial loss, legal complications, or damage to the dealership’s reputation.

Why Test Rides Are High-Risk

Demo rides may seem routine, but they expose boat dealers to several serious risks. A customer unfamiliar with vessel handling can easily get injured during a trial run. Even experienced staff can face unexpected issues, from mechanical failure to sudden weather changes, leading to vessel damage or collisions with other boats.

These incidents often happen quickly and without warning, turning a sales opportunity into a costly liability. If the dealership is uninsured or underinsured, a single claim could result in significant out-of-pocket expenses and legal exposures. Comprehensive coverage tailored to these risks is a business essential.

What Boat Dealer Insurance Should Cover

Boat dealer insurance should include several core coverages to address the risks involved in sales, demos, and day-to-day operations:

• Protection and indemnity (P&I): Covers liability for bodily injury or property damage arising from the operation of vessels during demos or transport
• General liability: Applies to slip-and-fall incidents, property damage at the dealership, or injuries occurring in non-water-related areas
• Marine garage liability: Combines elements of general liability and auto coverage, protecting against claims tied to boat repairs, storage, or handling on land or near the water.

Merrimac Marine customizes boat dealers’ insurance to address demo-related exposures with precision and flexibility.

Who’s Legally Responsible on the Water

Liability during a customer test ride can fall on the dealer, the employee operating the vessel, or even the customer, depending on the circumstances and the policy terms. Without clearly defined roles and responsibilities in the insurance coverage, fault can be disputed and costly.

Agents must carefully review and clarify the liability language in boat dealers’ insurance policies. Vague or incomplete wording can leave clients exposed in the event of injury, damage, or third-party claims. A thorough understanding of how liability is assigned helps avoid major coverage gaps.

Coverage Beyond the Vessel Itself

Test rides often involve the use of dealership-owned demo boats, docks, and piers, all of which carry physical and liability risks. Staff participating in the test process should also be covered under workers’ compensation and liability extensions to protect against injury or claims.

Agents should also consider business income coverage, which can help replace lost revenue if a demo-related incident sidelines key vessels or facilities. Without this protection, even a short disruption could strain operations and hurt the bottom line.

Tailored Boat Dealer Insurance Helps Dealers Thrive

Offering on-water demos becomes far less risky when the right boat dealer insurance is in place to address potential exposures. Comprehensive boat dealer insurance can cover demo vessels, staff, docks, and customer liability. 

Merrimac Marine designs boat dealer insurance programs that help reduce risk, protect operations, and support long-term client relationships. Connect with us to build coverage that fits your client’s demo strategy.

About Merrimac Marine Insurance

At Merrimac Marine, we are dedicated to providing insurance for the marine industry to protect your clients’ businesses and assets. For more information about our products and programs, contact our specialists today at (800) 681-1998.