A guide to superyacht insurance
Last updated: 01/09/2016
The most luxurious vessels and expensive objects in the world require the most comprehensive insurance packages available. From tenders, toys and jet skis to crew and guest welfare, insurance needs to be as comprehensive as possible. The maritime environment is a hazardous one and it’s not uncommon to read about luxury yachts sinking, catching fire or failing sea trials; these are just some examples of when insurance is imperative.
What can superyacht insurance cover?
The yacht itself
This includes the actual physical yacht, comprising of coverage for hull, machinery, equipment, fixtures and fittings. Packages can also be provided to ensure any fine art and luxury items are protected.
Typically, insuring the yacht covers most or all items on board, such as:
- Tenders, toys and water sports equipment
- Personal contents including belongings, clothes, food, drink and cash on board
- Other extensions including leased equipment, parts removed, non-emergency towing etc.
All packages should offer liability coverage which insures the owner’s legal liability against third parties, guests and crew.
An important part of an insurance package consists of benefits for the crew; it should include personal accident, medical and salary protection.
Crew and guest personal accidents
A benefit/sum of money in the event that a guest or crew member is injured during their time on the yacht, meaning there is no fault attributed to the yacht.
This is very important coverage, protecting the crew member for emergency medical treatment that is required when away from their country of residence. This can also be extended to include repatriation, air rescue, crew replacement expenses and travel cancellations.
The serious cover
Insurance packages are also designed to cover you against the most serious of possibilities while at sea and every package should cover:
- War risks and piracy
- Career ending insurance for professional yacht captains
- Kidnap and ransom
What can effect a yacht insurance coverage?
The insurance package and costs can be affected by a number of different factors as outlined below:
- Size of the vessel
- Where in the world you intend to cruise
- Number and nationalities of the crew
- Racing risks
- Anticipated works or refurbishments
- Anticipated movement of the vessel by third party carriers
- Finance arrangements
- Pre and/or post survey requirements
Often, a shipyard’s insurance is not capable of dealing with the high value of some of the superyachts available on today’s market. The shipyard may therefore choose to protect itself by requesting a waiver of subrogation from the owner’s yacht insurer.
This means that the client’s insurance company will not be able to hold the shipyard responsible for any losses incurred while the vessel is in their care, and therefore cannot demand payment from the yard for the loss.
When a yacht is held in a shipyard, the yard has an option to transfer its liability for any damages to the boat to the vessel’s owner. This is where a waiver of subrogation comes into play; ‘subrogation’ meaning ‘to substitute’.
The waiver also means that the shipyard doesn’t take any responsibility for the yacht while it is based in the yard – except in cases of gross negligence and/or a wilful act performed by the shipyard.
Insurance companies and experts
Yacht insurance experts calculate endorsements for waivers of subrogation on a case-by-case basis, dependant on factors which include:
- A yacht’s length of stay
- The scope of the refit work
- The shipyard’s professionalism
- The extent of the waiver of subrogation itself
Beware of hidden costs
Financial costs can vary, from no premium being charged to a small percentage charge based on the value of the yacht.
Owners are strongly advised to confirm costs with the shipyard and their yacht insurance provider prior to committing to a refit, therefore avoiding any hidden costs arising after the refit deal has been signed.
It is therefore imperative that the yacht owner discusses the refit plan with their insurer before signing a waiver of subrogation. If not, they could find that their insurance cover is void.
Check the claims instructions on your insurance policy, most Insurers and some brokers, provide a 24 hour emergency response service. The sooner the insurer is informed the sooner they can instruct a specialist to assist you. To help with any claims, you should:
- Notify the insurer after you become aware of the loss
- Keep a log of events
- Preserve the evidence
- Take photos
- Promptly report any theft or malicious damage to the police where the incident occurred
- Take names and contact details for third parties and witnesses
- Be careful who you speak to, distasteful “trial by media” can occur long before the investigation has been completed.
Consulting with yacht insurance companies
It’s well worth consulting an insurance company to ensure everyone involved, whether you are crew, an owner, or even guests, to ensure the yacht has the best possible insurance package possible.