Important Considerations for Insuring your Yacht

Owning a yacht can provide countless opportunities for adventure, fun, and relaxation on the water. However, owning one also comes with a significant responsibility to protect your investment, the safety of other boaters on the water, and ensure the well-being of your passengers.

Like any other vessel, a boat or yacht must carry insurance if it is under the terms of a financed agreement. However, it is also important to have insurance when you own the vessel outright to protect yourself and your property from the costs associated with damage in various circumstances and situations. Effective insurance policies should safeguard the owner from various natural and man-made threats. These can include the following:
  • Collision
  • Theft
  • Sinking
  • Damage to other vessels
  • Damage to the environment
  • Natural disasters
  • The cost of salvage and recovery
Yacht insurance can also provide liability coverage in case of accidents or injuries that occur onboard, covering the vessel itself as well as the passengers and crew.

In extreme cases, insurance can even protect against the expenses and damage caused by piracy or sabotage. Although these may seem like unnecessary additions, some policies may include them by default.

No matter how big or small the vessel is, read on for important things to consider when shopping for yacht coverage.

Understand the Types of Coverage Available

There are different levels of boat and yacht insurance—some of which include liability-only, hurricane-exclusion, and full coverage.

  • Liability-only insurance covers injuries that occur to others while on board your yacht as well as damage to their property. Full coverage insurance provides both hull and liability protection and is typically required if you have a mortgage on your yacht.
  • Hurricane-exclusion policies are not recommended, but if you keep your vessel in a facility capable of withstanding hurricane-force winds, you may be willing to accept that risk.
A policy designed to protect a yacht may also include replacement cost (new for old) coverage on partial losses, with certain exceptions for items that depreciate, such as sails, canvas, or lower units of outboard engines.

For boats and yachts, Protection and Indemnity (P&I) insurance provides the greatest degree of security. Maritime law is unique, so yacht owners need coverage designed for those very different threats and hazards. P&I insurance may also provide for the cost of defense in admiralty courts and payment of any judgments. Other coverage due to the Longshore and Harbor Workers' Compensation Act (LHWCA) and Jones Act can also be relevant, as lack thereof could potentially cost a yacht owner hundreds of thousands of dollars.

Understand Coverage Options

Yacht insurance policies can vary greatly in their coverage options and limitations. Some policies may only cover damage to the vessel itself, while others may also provide liability coverage for injuries or damages caused by the yacht. Other policies may not cover some natural disasters common to a specific area, so if the vessel is moved from one location to another, the yacht’s coverage may need to change. Therefore, it is critical to review the available coverage options and the limitations of each policy before making a purchase.

Verify any Marina or Storage Facility Requirements

Marinas, shipyards, and storage facilities can also have coverage requirements designed to protect the marina itself and the other vessels in the facility. Most marinas providing long-term dock or storage options will not only ask for proof of an active policy but will require a copy of the insurance card or other documentation to keep on file. In addition, any vessel owner going to a new marina or moving between marinas should ask if coverage requirements need to be adjusted.

Consider Whether Additional Coverage is Necessary

Other coverage options may or may not be essential to have, depending on the location of the vessel, whether or not it carries a loan, or if it is cruising outside of the United States.

Additional coverage can include the following:

  • Specialized coverage: pays for specific items such as expensive navigation equipment
  • Salvage: pays to recover and remove a sunken vessel
  • Consequential damage: covers loss due to wear and tear rather than an accident
  • Towing: since towing a broken-down vessel can cost $400 per hour or more, this coverage can be worth it
  • Cruising extension: covers your vessel while in or outside of a geographic area

Prepare any Documentation and Information Ahead of Time

A little forethought can make the process of shopping for and comparing yacht insurance policies easier for all involved, and having the proper documentation on hand will make it easier and faster to get coverage for the vessel.

For older vessels, a current survey by a certified marine surveyor is necessary. Like a home inspection, a boat or yacht survey is a report generated from a thorough assessment and inventory detailing any current problems, potential failures, missing components, damage, or wear and tear. A survey will provide the insurer with proof that the vessel is seaworthy and is not in immediate threat of catching on fire, sinking, or any other major loss. The survey will also report on issues that could lead to significant repairs later, such as small leaks or missing screws where water intrusion can lead to a much bigger problem.

During a survey, it will also help to have items such as the bill of sale for other equipment or boats like a dinghy or personal watercraft to show their value. However, a good survey performed by a certified professional should also include an inventory of onboard equipment that can positively or negatively affect the vessel’s value.

Choose the Right Insurance Provider

When it’s time to shop for insurance for any vessel, it is a good idea to research and review the companies that can provide the level of coverage needed before committing to any policy or contract.

Insurance is something that seems unnecessary—until something happens, and it suddenly isn’t. Therefore, feeling confident the company protecting your investment will stand behind their policy and be sure any loss is minimalized or avoided altogether is crucial for peace of mind.

At Newcoast, we have been providing tailored coverage that fits our client’s needs and covers the unique requirements of their boat or yacht for more than 20 years. We strive to provide smart, affordable options from our vast network of top carriers, and with offices across the United States and Europe, our experienced team members do their best to make the process easy and fast.

Contact Newcoast today and let us provide you with the right policy tailored to meet all your insurance needs.
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