Your luxury motor yacht is a big investment. Like any large investment, you want to do everything you can to protect it. Besides safety and security measures, that means insurance.
To understand how to best insure your yacht, you need to understand your risks. There are certain risks of yacht ownership that all yacht owners will have in common. There are other more specific risks that may be tied to where your yacht is kept and how she is used. For example, if you dock your yacht in an area that faces winter freeze, or hurricanes, you will have different insurance needs than a yacht owner who docks in gentler climates.
A qualified yacht broker can help you asses your particular risk, and advise you on apropos yacht insurance coverage.
What Kinds of Yacht Insurance Do I need?
First of all you need to separate your yacht insurance from your homeowners insurance, or any other umbrella type policy, and insure your yacht separately. Most such all-encompassing policies fail to take into account the specific marine risks and scenarios such as: the costs of salvage, sea-towing, piracy, environmental impacts, etc.
Also, even if such policies include something for boat ownership, it is usually limited to smaller boats, and boats used only on inland waterways. Rarely do they include the complexities of the kinds of insurance required for an ocean going luxury yacht.
In many ways yacht insurance is a lot like a combination of home owners insurance and auto insurance. A typical yacht insurance policy will cover your liability if someone is hurt or injured on or by your boat. As far as loss and damage coverage to the vessel itself, you will likely have the choice of two types of insurances for loss, between “agreed value” or “cash value” in a total loss.
Factoring in depreciation is what sets the two types apart. An “agreed value” policy covers the boat based on what it was worth when the policy was actually written. This type of policy costs more upfront, and throughout the life or your boat, but no depreciation is assessed if your boat is declared a total loss.
“Actual cash value” factors in depreciation, and will only pay you what your boat is worth at the time of loss. Such policies cost less up front and throughout the life of your boat.
Similar to your auto insurance policy, yacht insurance will typically include coverage for bodily injury that your boat may cause to others, and property damage caused by your boat to docks, harbors, environmental features, or other boats. Similar to “collision” insurance on your motor vehicle, you will also be covered for physical damage to your boat should you hit something or run aground. You can also purchase “comprehensive” coverage against fire, theft, vandalism, floods and hurricanes. You can purchase additional insurances for personal property for any gear, or expensive “water toys” you keep on board, uninsured boater insurance, sea-towing insurance, even insurance against acts of piracy.
Yacht insurance – usually applied to ocean going vessels of 27ft or more – as opposed to “boat” insurance, will need to be broader and more specialized because yachts travel farther and have exposures to more unique risks.
It is crucial that you have your yacht insured to include the geographical areas you intend to travel. Be sure to discuss this with your insurance agent or yacht broker. You do not want to find yourself with a problem in waters that wind up beyond the “navigational limits” of your policy. You may have the option of purchasing specific insurance for a specific voyage that is beyond the policy’s written limits.
How to Purchase the Right Yacht Insurance Policy
As when buying any kind of insurance, shop around for the policy that best suits your needs and budget. Ask your captain, and/or owners of similar yachts who they use.
AM Best is an independent research firm that rates insurance companies, based on the carrier’s financial strength. Check their listings for “A” rated companies.
You can also check the website of your State’s Department of Insurance or other insurance regulatory agency.
Like all things, when it comes to owning your luxury motor yacht, your yacht broker, or can be instrumental in removing the hassles of purchasing yacht insurance. Your yacht broker will likely have a good relationship with a reliable yacht insurer, will know you and your boat, and your yachting habits, so together with a yacht insurance pro, they can help develop a yacht insurance plan that fits your lifestyle and budget.
Understanding the complexities of motor yacht ownership can be hard. If you would like to benefit from our expertise in these areas, or if you have any questions or comments about this blog post, do not hesitate to contact our Sales Specialists, or call us at (855) 318-6328.