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April 24th 2018. By Rupert Holmes.

Yacht insurance

Insurance is a pretty essential component of owning a boat, our full guide will help you understand what cover you need.

The yacht insurance market is surprisingly competitive one, which means there are a number of providers from which to choose, and which offer good value. In most cases prices are well below those of motor insurance, even when the value of an insured yacht may be several multiples of that of even the most expensive cars.

Nevertheless, it’s still important to compare policies before taking out insurance, so that you understand the terms and conditions of each – otherwise there’s no way of knowing whether you’re comparing like with like. Some policies, for instance, offer a new for old cover, which reimburses the cost of new gear. Others, however, only pay the second-hand or depreciated value of damaged or stolen items, which may be considerably less than the expenditure required to make the boat operational after an incident.

Standard marine policies are generally written to offer a competitively priced product to the bulk of the market. These generally provide exactly what more than 90 per cent of customers are looking for, but in other cases the geographical limits, crewing requirements or other terms may be too restrictive. It’s usually possible to negotiate less restrictive policies, particularly if you have a relevant track record of boating experience. There are also specialist brokers that can cater for more niche requests.

 

While insurance is not a legal requirement in the UK, it makes sense to have cover to protect against damage to your own boat and third party claims.

Territorial limits

Most standard UK yacht policies include continental Europe from Brest to Elbe, but again this can be easily extended to include further destinations. Of course, it’s possible to get cover for world-wide sailing, although only a small number of providers offer this and the norm is to keep them informed of your location and plans, such that the geographical limits on the insurance move with the boat.

Some jurisdictions insist on a translation of the policy so that local officials can confirm it satisfies legal requirements. All insurers should be happy to provide this when necessary, but it’s up to you to ensure you ask for translations in all relevant languages.

Third party, wreck removal and comprehensive risks

Although UK law doesn’t require yachts to have insurance, third party cover is a de facto necessity thanks to the terms of business of mooring operators and the statutory requirements of port authorities. Wreck removal and pollution indemnity is a legal requirement in most countries and is also a requirement of port authorities and mooring providers. It’s included in most third-party policies, but this is not universally the case, so it’s important to check. Comprehensive policies make sense for everything other than low-value craft as they also cover against theft, fire and vandalism, as well as accidental damage to your own craft.

Valuations

If you have a comprehensive policy then there must be a valuation attached to the vessel. In some case this will be the market value, but that is not always reflected in the money and time spent refitting an older boat, or in replacing and modernising equipment and systems. In many cases cover will therefore be for an “agreed value”. This is often the purchase price, plus the cost of refurbishment work and additional equipment. An agreed value may also be determined with the help of a surveyor.

Racing risks

Some standard policies allow taking part in local club racing, or one-off events like the Round the Island Race, though it’s often a requirement to inform your insurer in advance and some will apply a larger excess. An additional premium is often charged for taking part in more mainstream racing. In addition, a higher excess on damage to the rig may apply than for equivalent boats used for cruising and in many cases the full replacement value of rig and sails are not covered.

Other exclusions

Depending on the type of vessel and the experience and qualifications of owner and crew, there are a number of exclusions that may be imposed. These may include limits on single-handed operation, and a minimum number of crew for longer passages. For powerboats, if you want to tow skiers or toys such as donuts it’s again important to confirm that cover is in place for these activities. Again, if a standard policy doesn’t provide what you want in these respects it’s worth talking to the agent to see if the exclusions can be amended.

Personal travel insurance

Boating within territorial waters up to 12 miles from the coast is covered by many travel insurance policies, although some restrict this to situations where boating is incidental to the trip and not its main purpose. If your planned voyages may take you outside the 12-mile limit it’s worth buying travel insurance from a marine insurance company – most have policies that include offshore sailing.

Mitigating risks

Having insurance doesn’t absolve boat owners and skippers of the responsibility to take care of their vessels and minimise the risks to their boats. In essence, you should behave as though the boat was uninsured, and you are at personally at risk of financial loss if the boat is damaged, stolen or lost.

Insurance damage after grounding

A survey is often needed after damage caused by grounding. This 36ft yacht had to have its keel lowered for the reinforcing structure to be repaired.

Surveys

Insurers understandably need to know that the boats they cover are kept in good condition, so they typically require periodic surveys for comprehensively insured craft. These are generally asked for every 5 to 10 years, depending on the insurance company, once a boat reaches somewhere between 15-25 years old. These do not need to be as comprehensive as a pre-purchase survey as cosmetic condition, for instance, is not of less importance, unless a value also needs to be established.

After a major incident a damage survey will be needed to establish the full extent of the work required. The surveyor will then typically work with the boat yard, approving the work done at two or three key stages.

Types of insurer

It can be helpful, particularly if you have unusual requirements, to be aware of what relationship the company you are dealing with has with the ultimate insurer. In the UK there’s a relatively small number of underwriters for leisure yachts, which are spilt into two roughly equally sized groups: some are companies, while others are Lloyd’s syndicates. Almost every marine insurance brand is an agent or sub agent of one of these. In some instances agents are also owned by one of the insurance companies.

Making an insurance claim

As with motor insurance, don’t volunteer to admit blame for any incident. Very often which party is at fault can only be determined at a later stage, once all the facts are known. In addition, it’s important to take all reasonable measures to reduce any further loss, damage or liability arising out the incident.

As with other types of insurance, you should notify your insurers as soon as possible, giving a contact phone number and email address, together with the name and address of any other parties involved and their insurers. Photographs of any damage or other relevant evidence can be extremely helpful, as can detailed contemporaneous notes, which should ideally be made in the vessel’s logbook. If the claim relates to theft, vandalism, explosion or fire the police should also be notified as an incident number will be needed to progress the claim.

Loss adjusters vs loss assessors

It’s vitally important to understand the difference between these two roles. While both perform similar tasks, loss adjusters are engaged by insurers and tend to be paid to adjust claims in one direction – downwards. If you have a large claim it may be worth appointing a loss assessor – these work on your behalf to ensure an equitable and fair deal is reached.

Insurance renewal

Unlike many forms of insurance including household and motor policies that often renew automatically every year, marine insurance is not ‘self-renewing’. It’s therefore important to be pro-active in this respect and not inadvertently allow the policy to lapse.



Rupert Holmes has more than 70,000 miles of offshore cruising and racing experience, in waters ranging from the North Sea to the Southern Ocean and Cape Horn. He writes about all aspects of boat ownership and marine travel, including destinations, seamanship and maintenance, as well as undertaking regular new boat and gear tests. He currently sails around 5,000 miles per year and in the past couple of seasons has cruised from the UK to the Azores, as well as winning his class in the 2014 two-handed Round Britain and Ireland Race. He also owns two yachts, one based in the Mediterranean and the other in the UK.