Unit 1 was towing a water devise when a fire started near the right side of the engine near a battery. Operator was towing a tube that was being ridden by his son's girl friend. As Operator was entering springs cove in front of springs park landing he stated that the engine seemed to hesitate. Just before he heard a small "pop" near the back of the boat. The engine cut off and he and the others immediately noticed smoke coming under the engine cover on the right side. Operator and his son grabbed the two b1 fire extinguishers that he had onboard and attempted to extinguish the now fire coming from the same location and smoke that was now coming from the starboard side of the boat past the console up to the fuse box. The fire continued to spread until all subjects had to jump from the boat with type ii pfd's and swim to shore. All four subjects were picked up by another boater and taken to springs park dock where the owner of the boat was watching the events take place. Ems and fire had been notified amd arrived aounr 8:15 pm. R/o was notified  at 8:07pm and arrived on scene at 8:40pm just as strong storms were hitting the area. All victims were checked and released by ems. Ems advised r/o that when they arrived the boat was still burning in the middle of the cove but had been moved by the strong winds until it was out of sight. R/o and Operator returned the next morning to attempt to locate the boat which was found approximately 400 yards due east of the landing against the shore but was still floating. The boat was towed back to the landing where it was trailerd and photos were taken. After an inspection of the boat, battery near the right side of the engine was flipped over with the terminals against other metal parts around the engine. This is the location that the smoke was first seen and then fire soon started before spreading to the rest of  the boat. The smoke and fire spread up the starboard side seem to follow the electrical wiring which led to the fuse box. All the evidence seems to show the battery turning on its side caused a short which caused the fire. The boat was a complete loss. The owner of the boat advised r/o that she had purchased the boat in april of 2011 for 1800.00 and had never transfered the title of registration. the owner was charged with failing to transfer the watercraft title.