The base homeowners form keeps liability coverage for small, low-powered craft and excludes larger or high-powered boats, using horsepower and sailboat length as the dividing lines. A canoe, a small sailboat or a low-powered outboard boat usually stays covered. A high-powered inboard speedboat is the clear excluded case, which is why its owner needs an endorsement or a separate boat policy. (The exact thresholds vary by edition; see the Inland Marine chapter.)
The watercraft endorsement extends personal liability and medical payments to others to watercraft that the base form excludes. It is a Section II change only:
it adds nothing for physical damage to the boat itself (no hull coverage)
it does not change the separate motor vehicle exclusion
it has no effect on any duty to register the boat
Typical covered claims: a passenger hurt by the insured's careless boat handling, a neighbor's dock damaged when the boat strikes it, another boat's hull damaged in a collision the insured causes. A standard limit: under ISO's endorsement, the coverages do not apply while the boat is in a prearranged or organized race, speed contest or other competition (sailboats and predicted log cruises are excepted).