A guide to superyacht insurance cover and claims
Last updated: 14/11/2017
As some of the most luxurious and expensive vessels in the world, superyachts require some of the most comprehensive insurance policies on the market.
From crew and guest welfare to cover for tenders and toys, superyacht insurance needs to protect from a wide range of unfortunate potential eventualities as the maritime environment is certainly a hazardous one. With this in mind, Yachting Pages looks deeper into superyacht insurance cover and claims.
What does superyacht insurance cover?
There is no one-size-fits-all policy when it comes to superyacht insurance: Cover will instead vary on a case-by-case basis, according to the selected insurance provider and the extent of the chosen policy. Each can typically be tailored to protect everything from the yacht itself, to the crew and luxury furnishings on board, but every package should cover:
- War risks and piracy
- Kidnap and ransom
- Career-ending insurance for professional yacht captains
The type of insurance policy required and its costs will be affected by a number of different factors:
- The size, age and type of vessel – motor or sailing yacht
- The speed or power of the vessel
- The value of the vessel
- Where in the world she will 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
Insuring the yacht itself: Yacht hull insurance
Taking out superyacht hull insurance is to insure the yacht itself. Often an optional policy that some wealthy owners choose to opt out of in favour of self-insuring, hull insurance comprises of cover for the yacht’s hull, machinery, equipment and fixtures and fittings on board. Packages can also often be tailored to ensure any fine art and luxury items are protected.
Insuring the yacht typically covers most or all items on board, such as:
- Tenders, toys and water-sports equipment
- Audio-visual and entertainment systems
- Furniture and antiques
- Provisions, such as food, drink, linens and supplies
- Personal contents, including belongings, clothes and cash
- Other extensions including leased equipment, parts removed, non-emergency towing, etc.
Insuring guests, crew and third parties
A modern-day superyacht owner will have to ensure that they are protecting, and are protected from, claims by, and on behalf of guests, crew and third parties involved with the yacht.
P&I liability insurance
All yacht insurance packages should offer liability insurance coverage, or P&I (Protection and Indemnity), as standard to insure the owner’s legal liability against third parties, guests and crew.
Maria Karlsson, president and broker at Superyacht Insurance Group, advised that this is mandatory cover that’s offered as a separate insurance policy through the many P&I Clubs worldwide. Alternatively, hull and P&I insurance can be combined into one policy, as is more common in the U.S.
P&I coverage is relatively inexpensive compared to hull insurance since it’s offered by the P&I Clubs that operate as non-profit organisations.
Crew and guest welfare
Any good marine insurance policy should consist of benefits for the guests and crew, including personal accident, medical cover and salary protection, in the event that someone is injured or taken ill during their time on the yacht. Maria advised that the yacht's P&I Insurance is not crew health/medical insurance and shouldn't be treated as such.
Superyacht shipyard insurance
Another important part of superyacht insurance is shipyard cover to protect the yacht as and when it is entering refit, maintenance, repair and/or conversion.
Waivers of subrogation
Often, a shipyard’s insurance policy 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 before any works are carried out.
This means that the client and their insurance company will not be able to hold the shipyard responsible for any losses or damages incurred while the vessel is in the shipyard’s care; with it’s signing, the shipyard takes no responsibility for the yacht while it is based in the yard, except in cases of gross negligence and/or a wilful act.
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’.
Financial costs for this protection 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 its insurance provider prior to committing to works to avoid any hidden costs arising after the refit deal has been signed.
Simon Winter of Simon Winter Marine advised that it’s therefore imperative that whoever signs the yard’s contract has made the contract available to the insurers for approval. If not, they could find that their insurance cover is void.
Yacht insurance experts calculate endorsements for waivers of subrogation on a case-by-case basis, dependant on factors such as:
- The yacht’s length of stay in the yard
- The scope of the refit work to be undertaken
- The shipyard’s perceived level of professionalism
- The extent of the waiver of subrogation itself
Yacht insurance claims
In the unfortunate event that an owner needs to make a claim against their superyacht insurance policy, it’s best practice to notify the insurer and/or broker of the claim as soon as possible. Most provide a 24-hour emergency response service, and the sooner the insurer is informed, the sooner a specialist can be instructed to assist.
To help with any claims, claimants are recommended to:
- Preserve the yacht as best as possible to help diminishing the claim
- Keep a log of events leading to the damage or loss
- Take photographs and preserve additional evidence
- Promptly report any theft or malicious damage to the police where the incident occurred
- Take names and contact details for third parties and witnesses
In the eventuality of any damage or theft, owners and their crew should work to keep the details and involved parties private, as distasteful ‘trial by media’ can often occur in such high-profile events, long before the investigation has been completed.
Simon Winter advised, “With the current succession of high profile losses in the superyacht sector, it has never been a more important time to ensure an effective line of communication is established and maintained with your broker and insurer.
“Making sure your insurers are kept up-to-date with movements of the vessel, planned yard maintenance or refit, named windstorm plans or arrangements, proposed marketing for sale of the vessel etc. will reduce the possibility of claims being declined or adjusted and prolonging the claims process, which can be stressful enough in itself.
“As such, insurance policies should not be judged on price alone; managing a serious casualty can place huge demands on all involved, so instead consider using an insurance broker who has specialist knowledge in this area, plus a worldwide network of relationships that may prove invaluable in the event of a claim. A broker with experience of a typical claim supply chain from salvors to surveyors, can assist tremendously in helping to achieve a successful or satisfactory outcome for both owner and insurer.”
Consulting with insurance companies
When compiling any yacht insurance policy, it’s always advisable to consult a trusted insurance company or independent broker to ensure the yacht has the best possible insurance package possible.
Maria advised the use of a reputable independent insurance broker who can provide clients with multiple quotes and coverage options for review and comparison, since coverage and premiums vary so much from provider to provider.