Yacht insurance is a type of insurance that exists to provide liability for a sailing vessel in the event of an insured event. Coverage under this insurance policy covers liability for bodily injury or property damage to third parties, as well as damage to personal property on board. Coverage can also be extended to include services such as gas delivery, towing and assistance if the yacht runs aground.
What is Yacht Insurance
Yacht insurance policy allows the client to protect the vessel, its passengers and other vessels on the water. The idea of insurance is to return the client to his original financial position, before he has suffered losses. Financial losses can be related to damage to the boat, a third party claim for damage to their ship, or in the worst case, damage to passengers.
A yacht insurance policy may be contracted for an actual cash value of the vessel or may provide for an agreed value coverage. The first option is more budgetary, but it should be remembered that when receiving an insurer payment, depreciation and market value are taken into account, so the payment itself may be less. Agreed value policies cover all damage except for sails, outboard motors, canvas covers, cushions, or other specified items. They do not reflect depreciation or market value, which means that in the event of a claim, the customer will receive more compensation.
Conditions for some insurance policies may be more favorable due to lower risks. For example, qualifications in the field of boat management and significant experience in it, technical characteristics and age of the boat that affect its safety can serve as the basis for a good discount from the insurance company. Additional insurance policies, for example, for the client's home and other property, purchased in combination with a yacht insurance policy, can significantly reduce the insurance rate for the latter, and are called multiline insurance.
Yacht Insurance features
Usually boats are up to 197 feet long, ships - from 197 feet. There is no set length for yachts, but the default is 30 feet. A vessel is considered a pleasure boat if it is less than 27 feet in length.
There is no specific set yacht size, however, there is still a range related to the class of the Federal boat classification system (numbers 2 and 3). Because large vessels travel longer distances, they are at greater risk, which is why insurance coverage for yachts is much broader and more specialized than for pleasure crafts.
Quite often, a yacht insurance policy may have a deductible, which means the amount of money that the client must pay himself before the insurance takes effect. As an example, if the yacht is insured for $1,000,000 and the contract provides for a deductible of 2%, then such a deductible will be $20,000. In most cases, insurance companies provide for a maximum deductible of 2% of the insured value, but a deductible of 1% can be found in yacht insurance contracts most commonly.
Definitely, all yacht insurance policies have exceptions. Thus, the boat owner is responsible for the boat maintenance, so normal wear and tear is often ruled out by yacht policy. Other exceptions may include gradual wear and tear, weathering, insects, mold, animals and other marine life. The type of exclusion of physical damage depends on a particular insurance company and may vary from company to company, so it is necessary to carefully compare the conditions of different companies in order to avoid surprises.
Yacht Insurance components
There are two main sections of a yacht insurance policy.
Hull insurance. Yacht hull insurance covers physical damage to a boat caused by various perils. This insurance might cover all risks, such as accidental loss or damage to boats used for commercial purposes and salvage costs. However, the most common dangers are: perils of the sea, fire, explosion, theft, piracy, jettison, earthquake, volcanic eruption, and physical damage caused by negligence of the master, officers, crew or pilots.
When concluding an insurance contract, the amount of coverage for direct damage is established and agreed upon, which will be paid in full in the event of a total loss. If the loss is not total, but partial, the coverage is carried out at the replacement cost. Items such as sails, tarps, batteries, outboard motors, and outboard motors in some cases, are not covered and are subject to depreciation.
Protection and indemnity (P&I). Since maritime law is a rather specific area of law that governs a wide range of possible maritime disputes, the broadest type of liability insurance should be provided to take into account all the perceived risks. Protection and indemnification (P&I) insurance is such a type of liability coverage.
This insurance typically covers the full range of third party risks for shipowners and charterers, including human claims, marine accidents, cargo liability, pollution and wreck disposal. P&I insurance is mandatory for all shipowners who use their vessel for commercial or transport purposes, or when carrying passengers, workers or cargo in international waters.
Yacht crew are insured according to the Jones Act. Shore and harbor workers’ are also included in the insurance coverage of the P&I insurance. Any legal costs and defense in admiralty courts are also covered.