Understanding your Yacht Insurance Policy
Yacht Insurance
Get help understanding your policy with Shield Specialty Insurance.
Insurance can be tricky and overwhelming for most people. There are so many options out there (e.g. Geico, Allianz, Axa, etc) and they all seem identical. Variations are usually subtle, but can affect your cover. Brokers and agents are however specialized in these risks and have access to the right securities than the ones you may be aware of.
Be wary of boat insurance offered in "all-inclusive" packages (e.g. home insurance). You need to cover marine-specific risks, such as salvage, wreck removal, pollution. The aforementioned policies can exclude such risks and also limit your navigation to coastal waters for example.
Insured value
There are two types of value schemes: “agreed value” and “market value.” An "agreed value" policy covers the boat based on its value as declared when the policy was undertaken. "Market value" policies will only pay up to the actual cash value of the boat at the time it is declared a total or partial loss. You should consider reevaluating the value of your boat every two years and declare a change in value to your insurer. This will shave off some premium and avoid you having a unpleasant surprise when receiving a total loss settlement.
What it covers
Conditions will vary depending on the boat. If your boat is well maintained, most insurers will offer an "all risks" policy, which offers the best protection. In insurance terms “all risk” just means that any risk not expressely excluded in the policy is covered. Typical exclusions include wear and tear, marring, denting, animal damage, manufacturers’ defects, design defects, ice and freezing, osmosis and electrolysis.
Policies are comprised of three basic sections: Hull Insurance, Third Party Liablities, and Ancillary covers. Hull insurance will cover damage to your boat up to the agreed or market value and also cover partial losses. Sails, riggings, outboards and are usually excluded or depreciated. Third Party Liability (or Protection and indemnity (P&I)) will cover any amount your are liable to pay to a third party. Typical examples are collisions, pollutions, injury, wreck removal.
Finally there are Ancillary covers which can be included:
Medical payments
Towage and assistance
War risks
Additional equipments (tender, jet ski, fittings)
Personal effects
Fishing equipment
Uninsured boaters
Hurricane haul out
Cost Factors
The primary determinants include the vessel's value, size, and age, as these factors directly impact the potential financial risk for the insurer. Additionally, the intended use of the yacht, whether for private leisure or commercial purposes, can also affect premiums. High-performance or specialized vessels may incur increased costs due to their unique maintenance and repair requirements. Geographical navigation plays a role, as yachts operating in areas prone to extreme weather conditions or piracy may face higher premiums. The owner's experience and navigational history, as well as the safety and security measures implemented on the yacht, are further considerations.
Possible Discounts
As an assured, you always feel that your premium may be too high. Before even considering negotiating the rate itself, you can consider playing around with the extent of separate covers. There are several ways to reduce your premium:
- 01. Increasing your deductible.
- Since a higher deductible represents a lower risk for the insurer, your premium is naturally lower.
- 02. Lowering some limits
- Certain limits, such as third-party liability, can influence the premium. If you don't think you need EUR 500,000,000 of P&I cover, opt for a EUR 10,000,000 limit.
- 03. Lay-up rate
- If your boat is laid-up during winter, insurers will calculate a prorata lay-up rate, which will reduce your overall premium.
- 03. No Claim Bonus
- Most insurers will offer a No Claim Bonus either payable at the end of the year or already deducted from the called premium, which would be called back at the end of the year if you've had made a claim.
Deductibles
Sometimes called "excess", a policy will determine a percentage of the insured value which will remain your burden in case of a claim. As a general assessment, the deductible rate will be around 1% (i.e. a $200,000 boat would have a $2,000 deductible. Low value boats and high value yachts will stray from this principle, as an insurer will need a minimum deductible but will not charge too high of a deductible. There are also special derogatory deductibles which can be higher (e.g. hurricane deductible) or lower (e.g. personal effects) than the base deductible.
In any case, your broker will most likely be able to negotiate a better deductible without impacting the premium.
Hurricane Plan
Given the unpredictable nature of tropical storms and hurricanes, having a comprehensive and proactive strategy in place is crucial to safeguarding both the vessel and minimizing potential insurance risks. A robust hurricane plan should encompass secure mooring options, evacuation procedures, and contingency measures for potential damages. Insurance providers often look favorably upon yacht owners who demonstrate a commitment to risk mitigation through such plans, potentially leading to more competitive premiums. Yacht owners must consider the vessel's location, the severity of the hurricane-prone region, and the historical weather patterns when crafting their plans.
Risk appetite
- Cruising :
- Worlwide
- Boat Type :
- Monohull, Catamarans and Motorboats
- Value :
- Upwards of 500 000 €
- Use :
- Private, Commercial and Racing
- Restrictions :
- Restrictions may apply depending on local legal requirements.
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