As mentioned earlier, it depends where you live. I know in Canada, it is not illegal to exceed the 'recommended' max HP. Insurance companies may balk, but if it is stated in the policy that the engine is bigger and they accept your money, they would have a hard time denying coverage later.
33 yrs ago I remember a guy trying to buy a used 225 V6 Mercury to install on a Vanguard Banshee(a flip of the Glastron GT150. James Bond jump boat) Which was rated for 90hp. My dealer, when he found out what the guy wanted it for, refused to sell it to him. A couple of days later, a call came from another dealer who wanted the engine wholesaled to him. Sue enough the guy found someone willing to sell it, but refused to install it. The GT150s and flips, were often seen with 115s, 135s, 140s, and inline 150s. they were scary to drive with the 3 biggest engines.
Myself had an 15 Invader, a Flip of the Crestliner Cruisader 550. It was rated at 90, I test drove it with a 90 Merc and then bought the same boat from the dealer with a 140 Evinrude. Later, I aquired a Crestliner Cruisader 550, I removed the crank rated Merc 90 that came on it, and replaced it with prop rated Merc 115. My underwriter was aware of the swap and never had a concern.
