Yacht insurance – how to protect your wealth

yacht-insurance

Media coverage of the multi-million pound fire-damaged and total loss yachts – The One and Barbie – has been in overdrive, compounded by further stories of yachts being mysteriously destroyed in various marinas across the world. From an owner’s perspective the reports must be alarming, but from an insurance viewpoint the incidents and frequency are considered very unusual. What the reports do indicate is that owning a yacht can be an unpredictable experience, and a random event, usually beyond your control, can destroy your asset and/or impose a liability on you. Should the insurance policy be inadequate, your personal capital is at risk.

You have commissioned your new yacht, are in the processing of buying, or being asked to renew your insurance, and you are considering insurance. It always surprises me as to how many clients leave the insurance provision to last, when in fact it should be at the forefront of any yacht decision. Consider the value of the hull, machinery and fittings. Your use of the yacht, the crew and guest welfare, third party liabilities, protecting charter revenue, ‘toys’, and of course the high value personal items which accompany you whilst on the yacht. All at risk.

So what should you look for in an insurer? They should be financially secure, specialists in their market segment (insurers have differing risk appetites for types, values and sizes of yachts), and they must be able to demonstrate exemplary claims service on a global basis. Look for an insurer who maintains an expert network of marine surveyors, centrally enhanced by experienced claims professionals, available to support the client and network at any time, and consider, should you be operating the yacht in more remote and easily accessible locations, how this impacts the claims service. You also need to understand what is not covered by the policy. For example check war risks, and for the more competitive clients, whether cover for super-yacht racing regattas is included.

In contrast what does an insurer want to know about you and your yacht? They want to see a professionally managed and well-maintained vessel, with a competent and experienced crew, and the underlying paperwork. Disclose a recent survey, that the yacht is moored in an appropriate location, and cruises in safe waters, and there is documentary evidence of planned maintenance (a clean and tidy engine room always helps!) and service schedules are adhered to. They expect the yacht and its contents, liabilities and revenues to be fully insured, and are concerned when the Increased Values policy extension is disproportionately used to reduce premiums. Critically they want you to demonstrate that the crew is selected because they are professional, competent, experienced, and qualified. Last minute decisions concerning any of these factors cause insurers to speculate just how well organized and maintained the vessel will actually be.

There are areas where insurers face challenges to keep pace with yacht developments. The hydrofoil innovations of The America’s Cup, ‘toys’ including submersibles and jet-packs, and for the more adventurous exploration yachts which can travel to, and remain for long periods, in some fairly inhospitable and remote locations.

We always advocate to our clients full disclosure when placing your insurance. Your personal assets and wealth are otherwise at risk.

Contribution from Ian Hoy – Underwriter Marine UK – Beazley, a specialist marine insurer

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Darryl Parker
Darryl Parker

ACII Chartered Insurer
Portcullis Private Client and Insurance Advisor to Oracle Capital Group

+44 (0) 207 725 6960

info@orcap.co.uk