Yacht Insurance is a Must
Author: Don Seibert
There are many issues to consider when insuring a recreational yacht. Many people view yachting as a fun sport and don’t consider there to be enough risks associated with yachting to make insuring the yacht very important.
First of all, do you need to be reminded that we live in a litigious world? Even though a friend or ‘guest’ on board your yacht for the day may be very chummy, that would likely change if they or their child were to be injured while on a yachting voyage on your yacht. Wherever you go, accidents can happen and yachting is certainly no exception. And, when faced with enormous medical bills, it is normal for people to seek recovery from others, even though they may not have been ‘at fault’. You simply should not have a recreational yacht without, at a minimum, a basic liability policy.
Most banks and marine finance companies require that yachts covered under their financing are adequately insured. Likewise, you need to have this coverage for the protection of your other assets. If you are found to be at fault for a drowning or loss of a limb, your entire financial future, and that of your family, can be ruined. It is simply not worth the risk.
Insurance on a yacht is similar to insurance on an automobile. There is coverage for your yacht, coverage for the liability you have for persons in your yacht as well as others who light be damaged by your yacht or your actions regarding your yacht. And, just like your car, the premiums are dependent on the dollar value of the coverage limits that you select.
Consider how you plan to use your yacht. Will you be trailering it from lake to lake to enjoy a variety of voyages? If so, you will also need to consider coverage while the yacht is in tow. You need to check out this coverage in light of your auto insurance and what is covered by that policy in the event of an auto accident while towing the yacht.
If you will be storing the yacht in your garage or at your dock, there are other considerations. For example, if you only use the yacht during the summer season, many insurers allow you to declare a ’storage only’ coverage for that time of the year when the yacht is not being used. You would need to notify the insurance company at the start of the season and then again at the end of the season. This will have a direct effect on your premiums and it will ensure that you are not paying premiums for liability coverages while there is virtually no risk involved.
While your yacht may very well be covered under your homeowner’s policy while stored in your garage, you may have to declare it on a supplemental schedule to cover it. If you store your yacht in a marina or other commercial yacht storage facility, they will normally require you to demonstrate proof of insurance prior to storing your yacht. The marina’s insurance will cover any negligence or damage to your yacht that results from the marina’s liability, but it very likely will not cover your yacht in the event of a flood, fire, hurricane, tornado or other act of God. You must have insurance coverage for this sort of exposure. There were many thousands of yachts damaged or destroyed by hurricanes Katrina and Rita on the Gulf Coat in 2005. A large number of the yachtowners were shocked to learn that their yachts were not covered by the marina’s insurance policy. Those that had their yachts in storage without coverage for storage suffered a complete loss!
In 10 years in the marina business, I have unfortunately seen several drownings, swimmers run over by a yachter’s propeller, broken limbs and backs and 50 or so sunken yachts. Most of this was a result of somebody’s negligence. Many of these yachters failed to have insurance coverage! Unfortunately, there is no legal requirement to do so. The risks can be huge.
Yacht insurance can be obtained from several sources. Many people choose to add their yacht onto their homeowner’s policy and the umbrella insurance provided thereon. That is certainly better than not having insurance. Marine insurance may, in fact, prove to be a better buy. It certainly pays to do your homework. When there are problems, the marine insurers are considerably more conversant in the marine issues than the adjusters of the standard property & casualty commercial insurer.
It is surely advisable to take one of the safe yachting courses offered by the U. S. Coast Guard or the U. S. Power Squadron. I would encourage your whole family to take the course and think about the safety issues when around your yacht. Also be certain hat you have the proper number and type of Personal Floatation Devices (PFD’s) for the crew of your yacht as well as the other safety equipment that’s appropriate and required by law. Just like in your car, be sure you have a designated driver along if you intend to consume alcohol while on your voyage! The sun and spray tend to exacerbate the absorption of alcohol into your bloodstream and many states now enforce a �BUI” yachting Under the Influence law.
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