If your yacht is longer than 8 meters then it is mandatory to take out yacht insurance. Insurance for yachts less than 26 feet in length is technically called boat insurance, but larger yachts require individual insurance due to the increased values and range of requirements. However, the general principles of both yacht insurance and boat insurance are similar.
There are two main reasons to purchase yacht insurance. Firstly, to protect your financial investment against damage, theft, fire or any other event that could cause total or partial loss of your precious vessel. Secondly, if another person or yacht is injured or damaged by your yacht, financial compensation will be paid by your yacht’s insurer.
What are the most important elements to look out for when insuring your yacht?
Comprehensive Coverage – There are three main insurance policies for your yacht; physical damage, for example collision, fire and vandalism or theft. With some policies you can make a choice from this. If you choose not to take out one or more of these insurance policies, you will bear all risk in the unfortunate event that such an event occurs. This can also lead to problems if you have insurance for damage, but the actual damage is a combination of collision and fire. So, on reflection, the vast majority of yacht owners wisely insure themselves against all risks through comprehensive yacht insurance.
Home Mooring – Many policies ask where your boat is normally docked. It is vital to be truthful and accurate about this when applying for marine insurance for your yacht. You can keep your yacht moored in a dock or marina, or it can spend its time in a tidal mooring, but either way, you need to be honest so that in the event of an accident, you are well covered by your boat insurance.
Third Party Liability – In the unfortunate event that your yacht is damaged, stolen or completely burnt 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 do not have that option. You must reach into your own pocket to issue a refund. This is where the third part of your yacht’s insurance goes, so that you do not have to pay out personally. Even though there isn’t an overarching requirement for insurance coverage, there are plenty of places where it’s needed – an example is in most docks, marinas, and harbors where a minimum insurance is required, perhaps $2 million.
Coverage by Location – Make sure you understand where your insurance policy covers your yacht. Most yacht insurance companies are fairly generous with their definition of cruising area, but make sure you read and clearly understand all restrictions. The range can always be increased if needed, but some additional premiums may be required. The location is also an important consideration for the non-sailing part of your insurance. An example is when the yacht is docked, either in winter or for repairs and maintenance. Another example is if your yacht has to be transported by road.
Insurance Value – When determining the value of your yacht for marine insurance purposes there are two main options. The first is by an agreed figure written in the policy document. The second is through appreciation. In the latter case, the value is determined by a ship surveyor after the loss of a yacht. A pre-agreed amount in your policy provides more certainty in the event of damage; a second advantage is that, because the amount is agreed in advance, a settlement can be executed more quickly.
Lay-up Period – It is a ‘feature’ of some yacht insurance policies that you do not sail at certain times of the year in some locations to avoid extreme weather and at others to avoid the deep winter months. Please review your policy closely to verify any requirements for an imposed period.
How easy is it to file a claim? – Yacht insurance is only as good as your ability to claim it in the event of an incident. Talk to fellow sailors in your harbour, marina or sailing club. Use their experiences to check out the insurance companies and brokers to use or avoid so you’ll find that filing a claim is easy if it ever needs to be.