What is a security deposit? What is a deductible? Does paying a security deposit mean that the boat I'm renting isn't insured?
Updated on: 26/05/2025A security deposit is a sum of money that the renter must pay to the rental company (i.e., the boat operator or owner) at the start of the charter period. It is intended to cover the cost of repairs that the rental company is responsible for, in the event that you, the renter, return the boat damaged at the end of the charter period.
All the boats we rent are fully insured by their owners. Fully insured, yes, but fully insured MINUS A DEDUCTIBLE, which remains the owner’s responsibility in the event of any incident. It is therefore standard practice for the owner to ask you to provide a security deposit covering this deductible amount (usually between 1,000 and 5,000 USD).
Useful definitions
Incident: any event at sea involving repair costs (e.g., grounding, collision during a maneuver, accident against a rock after the anchor slips, etc.). Damage not related to a marine incident is not considered a claim by the boat’s insurance (e.g., burning a cushion with a Cigarette, clogging the toilet, accidentally stepping on a porthole, stolen dinghy, etc.) and will not be covered.
Deductible: the amount remaining the responsibility of the insured for each claim covered by the insurance. If there are multiple claims, there will be multiple deductibles: for example, grounding followed by a poor maneuver in port. As a reminder, the insured is the boat renter.
If you have an incident during a charter, and the damage is less than the insurance deductible, the boat owner cannot file an insurance claim. They will therefore deduct a portion of your security deposit to cover the repairs. If, however ,the damage exceeds the deductible amount, our partner boat owner will retain your entire security deposit and file an insurance claim to be reimbursed for the remainder. So, even if you sink a boat worth 300,000 USD, if your deposit is 3,000 USD, you will only be liable for up to 3,000 USD—and thankfully so!
If you have multiple incidents during the same charter, the charter company may seek additional compensation from you beyond the security deposit . Example: You deposited a USD4,000 security deposit, and the deductible is considered to be USD4,000. You damage the transom plate during a maneuver (USD3,000 in repairs), then two days later, you touch the seabed (USD 10,000 in repairs). So, you’ve had two incidents. For incident 1, the rental company will bill you USD 3,000 (they won’t file an insurance claim because the amount is less than the deductible per incident). For incident 2, they will file an insurance claim, but 4,000 USD (= the deductible) will remain their responsibility, so they will logically pass this cost on to you. In total, they will ask you to pay 7,000 USD, even if your security deposit is only 4,000 USD.
Please note: if you rent a boat and hire a skipper, you remain the legal charterer of the boat. You will therefore be liable for it and will normally be required to provide a security deposit.
Please note: on the rental company’s insurance policy, the deductible is determined PER CLAIM. If there are multiple claims during a cruise, then there are multiple deductibles. The rental company may therefore ask you to pay more than your security deposit if you damage the boat on multiple occasions.
If you purchase a damage waiver insurance policy, you are covered for the first incident that occurs (not for the second).