Is your yacht properly protected?
By Frank Baker, Managing Advisor
Navigating the Uncertain Seas of Risk
Owning a yacht provides endless opportunities for exciting adventures on the open seas. Purchasing the wrong yacht insurance, however, might disrupt your course. And when you choose your policy based on price alone, you run the risk of being surprised at your lack of coverage in the wake of a claim. It is, therefore, important to perform due diligence to protect your vessel.
Choose a Marine Specialist
Partner with a broker who has extensive marine experience. Someone with access to the world’s leading marine insurers can ensure your vessel is protected with excellent financial strength, breadth of coverage and fair claims practice.
Review Your Contract
It is crucial that you understand your coverage, to prevent any surprises in the event of a claim. If you are unclear about something, ask your insurance advisor to explain your options.
All Risk vs. Named Peril
All risk coverage is more comprehensive and puts the burden on the insurance company to prove the peril causing the damage is not excluded. Named peril covers only specific perils, with the burden on the insured to prove one of the named perils caused the loss.
If your vessel sinks due to wear and tear or corrosion, your entire loss might be excluded unless you have consequential loss coverage. This coverage is offered only by a few insurers but protects your vessel in the event of a fire, sinking or collision—even if the cause of loss is excluded.
What happens if the engine on your yacht breaks down, but not from wear and tear or lack of maintenance? Many insurers exclude mechanical breakdown regardless of the cause. Make sure your policy includes this coverage.
Review your itinerary annually with your captain and insurance broker to ensure that your navigational limits meet your needs. Some policies include coverage for unintentional navigation beyond policy limits.
High net worth insurance companies generally will not provide umbrella coverage for your yacht, and the umbrella does not cover crew members. You should have liability coverage that is at least higher than the hull value and matches the liability limits on your personal umbrella.
Toys, Tender and Towed Watercraft
Depending on the policy, JetLev Aquaflyers, Seabobs, diving compressors and submersibles may be excluded from your hull and liability coverage. These items must be addressed and an endorsement added to the policy to provide coverage. If you tow additional watercraft, make the insurer aware and establish a towing plan. Every policy differs in its limitations.
Named Operator Warranties
Your insurance coverage may specifically name who may operate a high-speed vessel. Every policy varies regarding limitations like nighttime towing and the installation of a GPS tracking system.
Consider Risk Management Beyond Standard Insurance
A Severe Weather Plan. Develop a plan of action to secure your vessel in the marina or take your boat to a previously identified hurricane hole.
First Aid Training and Response Planning
Your crew should be up to date on training as well as the vessel response plan in the event of a crisis. Training should also include role-playing.
Ensure there is time between trips for normal and routine maintenance. Systems should be scheduled for care at various intervals.
From stem to stern, purchasing proper yacht insurance will give you peace of mind that you and your investment are fully protected. Using good judgment and taking proper precautions is the best way to avoid accidents.