If your yacht is over 26 feet long then it is a requirement for you to have a yacht insurance policy in force. Insurance for yachts that are less than 26 feet long is technically referred to as boat insurance, but for larger yachts, individual insurance policies are needed because of the increased values and the range of requirements. However, the general principles of both yacht insurance and boat insurance types are similar.
There are two key reasons for having yacht insurance. First is to protect your financial investment against damage, theft, fire, or any other event which could cause complete or partial loss of your treasured vessel. Secondly, if another person or yacht is injured or damaged by your yacht then a financial remedy will be paid out by your yacht’s insurer.
Which are the key elements you need to examine when insuring your yacht?
Comprehensive Coverage – There are three main areas of insurance for your yacht; physical damage, e.g. collision, fire and vandalism or theft. Some policies allow you to make a selection amongst these. If you chose not to take one or more of these insurance types then you are assuming all the risk in the unfortunate case that such an event occurs. Also that can lead to problems if you have insured for damage, but the actual damage is a combination of collision and fire. So, on reflection, the vast majority of yacht owners sensibly insure against all risks through a comprehensive yacht insurance policy.
Home Mooring Location – Many policies ask where your boat is normally moored. It is vital to be truthful and accurate about this when you are applying for marine boat insurance for your yacht. You may keep your yacht moored in a dock or marina, or it may spend its time in a tidal mooring, but either way you must be honest so you will be properly covered by your boat insurance in the event of an accident.
Third-Party Liability – In the unfortunate event that your yacht gets damaged, stolen, or totally burned out, you always have the choice of doing nothing and simply accepting your loss. However, if you or your yacht injure another person or cause damage to their property, you won’t have that option. You must reach into your own pocket to make restitution. This is where the third party part of your yacht’s insurance policy will come into effect so you do not have to pay out personally. Even though there is not an overarching requirement for insurance cover there are plenty of localities where it is necessary – an example is in most docks, marinas and harbors where a minimum insurance is required, perhaps $ 2 million.
Coverage by Location – Take care to understand where your insurance policy provides cover for your yacht. Most yacht insurance companies are fairly generous with their definition of sailing area, but make sure you read and clearly understand any limitations. The range can always be increased if necessary, but some additional premiums may be required. The location is an important consideration with the non-sailing portion of your insurance as well. One example is when the yacht is stored dockside, either over winter or for repairs and maintenance. Another example is if your yacht is to be transported by road.
Insurance Value – When determining your yacht’s value for marine insurance purposes there are two principal options. The first is by an agreed-on figure written into the policy document. The second is by valuation. In the latter case, the value is determined by a marine surveyor after a yacht’s loss. Having a pre-agreed figure in your policy brings greater certainty in the event of a claim; a second advantage is that, as the figure is agreed in advance, a settlement can be more speedily executed.
Laid-Up Period – It is a ‘feature’ of some yacht insurances that you do not sail at certain times of year in some locations to avoid extreme weather and in others to avoid the deep winter months. Examine your policy closely to verify any laid-up period requirements.
How easy is it to make a claim? – A yacht insurance policy is only as good as your ability to make claims from it in the event of an incident. Talk to fellow yachtsmen and yachtswomen at your dock, marina or sailing club. Use their experiences to check out the insurance companies and brokers that are best to use, or avoid, so that you will find submitting a claim is easy if it is ever required.