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Yacht insurance: What every owner should know

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22/03/2022

Although most owners know the importance of a yacht or boat insurance policy, the terms and conditions can be challenging to fully comprehend. Ensuring your yacht is appropriately insured means being clear on what a policy covers and excludes. 

What is yacht insurance?

Normally, owners would want or require protection against the following:

  • Loss of, or damage to, their own property (i.e. the boat);
  • Liabilities to third parties

Therefore, a typical yacht insurance policy, such as Marsh YachtCover, will have two basic sections:

Section 1: Hull and Machinery (H&M)

This section covers loss or damage to the boat and its machinery — including the hull, engines, sails, personal property, and equipment necessary to operate the boat.

Marsh YachtCover typically uses an "All Risks" wording, which provides cover against all perils to which the yacht may be exposed, with the exception of some named exclusions.

The most common causes of loss include:

  • Perils of the sea (e.g. grounding, stranding, heavy weather damage, capsizing or sinking)
  • Contact and collisions (e.g. with other vessels or docks)
  • Fire and explosion
  • Accidental damage (e.g. during loading, discharging or moving stores, gear, equipment)
  • Theft or vandalism
  • Like all insurances, yacht insurance will only pay for a loss if the loss is “fortuitous” — meaning that the loss must be accidental in some sense and not certain to occur. Therefore, insurers exclude: Loss caused by inherent vice or ordinary wear and tear.
  • Loss caused by willful misconduct of the assured.

The number and type of exclusions differ from insurer to insurer. Check your full policy wording to ensure you have the coverage you require.

Tip: Check that your insurance policy extends to cover the yacht when stored on land, and whilst in transit on the road by trailer.

Section 2: Protection and Indemnity (P&I)

This section covers legal obligations to other parties — such as bodily injury, loss of life, pollution, or damage to a third-party property — while the boat is operating or under your ownership. Liabilities include:

  • Third-party property damage: including loss or damage to any other boat, harbour, or dock caused by your boat.
  • Wreck removal: the cost of raising, removing and destruction of the wreck if legally required.
  • Bodily injury: claims for loss of life, personal injury, and illness of guests onboard.
  • Pollution: including cost of clean-up, prevention measures, and third-party liabilities involving an accidental discharge.
  • Legal costs: including the cost of correspondents, lawyers, surveyors, and experts required to handle any claim or legal defence.

You can also extend your liability coverage to include watersports. 

Additional Coverage Features

Marsh YachtCover typically includes other coverage features that enhance your level of protection, such as:

  • Medical Payments
    Covers reasonable medical expenses for all on-board, boarding, or leaving the insured boat on a per person basis. This may include the cost of an ambulance, treatment, and hospital charges.
  • Emergency Assistance
    Pays for the costs incurred when emergency assistance is required, even if you and your yacht are not in immediate danger, such as towing a yacht stranded at sea.
  • Uninsured Boater Coverage
    Pays for bodily injury to persons aboard the yacht who are injured by an uninsured owner or operator of another yacht.
  • Bottom Inspection
    Pays for reasonable costs incurred for boat inspection after grounding, stranding, or striking a submerged object even if no damage is found, without application of any deductible. 
  • Marine Habitat
    Pays for damages that you are legally obliged to pay if you cause damage to marine habitat through physical contact with the yacht, such as dropping anchor onto a protected coral reef.

In addition, Marsh YachtCover offers optional cover depending on your needs and requirements:

  • Boat Show and Demonstration Coverage
    Covers the boat while exhibited during recognised boat shows, sea trials, and while the yacht is being navigated for demonstration purposes.
  • Personal Accident Coverage
    Unlike coverage under the P&I section, this is a no-fault product that can provide accidental death or permanent disablement benefits for insured persons, including the individual yacht owner, whether or not the accident is related to the yacht itself.
  • Crew Liability
    Liabilities to crew are excluded under typical yacht insurances. Therefore, if you employ crew you will need to purchase a standalone yacht liability insurance for a limit of up to US$500 million. This can also be extended to include Personal Accident Coverage for them, as described above. 

Protect with Marsh YachtCover

Marsh YachtCover provides comprehensive yacht insurance coverage for yachts valued above US$500,000 and up to a maximum of US$18 million and is supported by a team of experienced brokers and claims specialists who have served over 700 owners across Asia. Contact us to receive a quotation today.

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Author

Chris Coupland

Senior Vice President, Marine Leader, Singapore