DON'T BE UNDERWATER WITH YOUR INSURANCE
What should I look for in a yacht policy?
There are two main section s of a yacht policy. Hull insurance is all risk direct damage coverage that creates a very broad insuring agreement. It will include agreed amount hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss.
A true yacht policy also includes replacement cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries, outboards and sometimes outdrives, which are depreciated. Protection and indemnity insurance is the broadest of all liability coverages, and because maritime law is unique, you will need coverages that are designed for those exposures. Such things as Harborworkers and Longshoreman's coverage and Jones Act (crew) coverage can be critical, as an uncovered loss in this area could run into hundreds of thousands of dollars. Besides providing payment of judgments against you, P&I also provides for your defense in Admiralty Courts.
What is a normal deductible?
A yacht policy usually carries a percentage of the insured value deductible, for instance a 1%, deductible means a boat insured for $100,000 would have a $1,000 deductible. Most lenders allow a maximum deductible of 2% of the insured value. Beware of "named special deductibles" such as storm damage of 10% or more.
What are some of the other standard coverages I can expect?
These standard coverages have standard deductibles and average limits:
- Medical payments, $10,000 limit
- $5,000 limit personal effects, $250 deductible
- $500,000 limit uninsured boaters liability, no deductible
- $1,000 to $3,000 limit Towing and assistance, no deductible
- $1,000 limit Fishing equipment, $250 deductible
- $1,000 Hurricane haul out coverage. Small percentage of limit as deductible. Hurricane warning must be posted by NOA. Payment made to move boat to safe location, haul out or make special preparations to withstand storm.
What is Breach of Warranty?
That is coverage that primarily protects the lienholder's interest in your boat, paying off the balance owed but nothing more. If you breach the warranties in the policy, such as promising not to go outside your navigational limits, not to use your boat during the lay-up period, not to use your boat for anything but private pleasure use, and you do NOT have this coverage and experience a loss, you don't get paid for that loss and neither does the lender. You could end up making payments on a boat you cannot use.