Top boating dangers? Fraud and theft

By Bankrate.com

A pleasure boat often is glibly described as "a hole in the water you pour money into" -- a basic truth regarding maintenance and repair that can become much worse if you don't keep your investment safe. Boats are vulnerable to a number of hazards, such as fire, natural disaster and accidents.

But those dangers are minor compared with theft.

According to the National Insurance Crime Bureau, around 1,000 watercraft are stolen each month in the United States. Florida and California are the leaders in boat thefts.

And it's usually not big, high-ticket boats that thieves set their sights on. In fact, says Frank Scafidi, spokesman for the crime bureau, most stolen craft are less than 20 feet in length.

"People should look after their watercraft as they would their car," says Scafidi. But often that's easier said than done. Many people spend a boatload of money on a boat and then park it where they don't see it for days, weeks or months on end.

It may be impossible to keep your boat totally free of danger, but you can minimize the risks by taking precautions when buying and maintaining a boat.

You get what you pay for

First, make sure you're not buying a stolen boat. States have their own boating agencies and keep track of their own boat data, so it can be difficult to track a stolen boat that has crossed state lines. However, there are some red flags you can watch for.

Any boat that was manufactured in the U.S. or imported into the U.S. since 1972 must have a unique hull identification number, or HIN, permanently affixed to it. Similar to a vehicle identification number, this 12-digit number serves to identify the craft by its manufacturer's identification code, the boat's serial number, the date the boat was certified and its model year. Even if you build your own boat, you'll have to get a HIN from your state boating agency.

Unfortunately, there's no national database of HINs, making it nearly impossible to track previous owners through the number alone. You should, however, make sure the boat's number matches the number on the registration. And if the HIN on the boat looks like it has been altered, or if any digits are obscured even partially, stay away.

You can use the pay service Boatfax, the watercraft equivalent of Carfax, to check a craft's history for theft or damage reports.

Before buying a boat, ask to see as much paperwork as possible from the current owner, including registration certificates and repair invoices. You want to see a history of ownership. If a seller has had a boat for only a couple of months, there's cause for concern. Also give the state titling agency a call to see if the HIN and registration number match the seller's name and address. If the seller doesn't have the title or ownership papers, don't buy the boat.

Even though all states require boats to be registered before being operated, some states, such as Alabama, don't require titling before registration, which makes it easier for thieves to get around the title issue.

Protect your investment

Once you get your boat, consider insuring it. Although few, if any, states require boats to be insured, unlike automobiles, it's a good idea if you have anything more than a minimal investment in it. However, if you have a loan with the boat as collateral, the lender usually will require you to keep the boat insured.

If you have a small sailboat, you might be able to get limited coverage for property damage under your homeowners policy, but the protection likely extends only to the boat itself and does not cover fishing or diving gear, or services such as towing and fuel-spill cleanups. If you want liability coverage, or if you have a powerboat that is worth a great deal of money, you'll need a separate boat insurance policy.

Video: Test your insurance knowledge

The cost of insuring your boat can run the gamut, as it takes into account such factors as the boat owner's experience, the type of boat being insured, its value, where it's stored, where it's used and how it's used. For example, insurance will be higher if you live in Florida than if you live on the Great Lakes, because the boating season is longer in Florida and the risk of hurricanes and theft is greater.

You can get boat insurance from most general insurance companies, but it's a good idea to talk to a marine insurance agent, says Bill Glass, director of marketing for the National Boat Owners Association. You should also consider dealing with an independent agent who can offer you insurance options, rather than someone who sells insurance for just one company.

Continued: 'Agreed value' vs. 'cash value'

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