Yacht Insurance Guide

A typical programme combines hull and machinery, liability, crew-related cover and optional extensions. Exactly what is covered, excluded and conditioned is set out in the policy wording, schedule and endorsements.

Covers physical loss of or damage to the yacht, her machinery and equipment, subject to the policy's perils, exclusions and deductibles. Wear and tear and gradual deterioration are usually excluded.

Covers legal liabilities to third parties: collision with another vessel, damage to berths, pollution, wreck removal, injury to guests and others. Larger yachts may place this through a P&I club or a P&I-style policy with set limits.

Crew injury, illness, repatriation and employer liabilities may sit within liability cover or a separate crew policy. Crew contracts, the flag and the Maritime Labour Convention can affect what is required.

Tenders, chase boats and toys such as jet skis or seabobs usually need to be declared, sometimes with conditions on who may operate them. Liability for guests using toys deserves particular attention.

Helicopters and submersibles are normally insured under specialist policies. Check how those policies interact with the yacht's hull and liability cover.

Valuable contents are often excluded or limited under the yacht policy and insured separately under fine-art or contents cover, with conditions on display, humidity and security aboard.

War, strikes, terrorism and piracy are commonly excluded from standard cover and bought back separately, sometimes with area-specific conditions.

Many marine wordings limit or exclude cyber-related loss. Ask how cyber events affecting navigation or onboard systems are treated.

Charter use must be declared before it begins. It can change liability limits, crew requirements and premium. Private use cover does not automatically extend to paying guests.

Policies set the cruising area. Leaving it without agreement can prejudice cover. Extensions for specific voyages or regions are usually available by arrangement.

Lay-up periods may carry conditions and different premium. During refit, responsibilities between the owner's policy and the yard's liability should be clarified before work begins.

Insurers may require a condition and valuation survey, particularly for older yachts, new policies or after a claim. Recommendations may need to be completed by a deadline.

Yacht policies often use an agreed value set at inception. It should reflect a realistic replacement or market value; over- or under-insuring both have consequences.

A deductible is the amount the owner bears on each claim. Different deductibles may apply to different covers or perils.

Actual and constructive total loss are typically settled on the agreed value, subject to the policy terms. Lender interests are paid according to the loss-payee arrangements.

Lenders usually require minimum covers, the lender noted as loss payee or the policy assigned, and notice before cancellation. Their requirements must be met before funds are released.

Owners must give insurers a fair presentation of the risk. Changes in use, cruising area, crew, management, ownership or flag are typically material and should be notified before they happen.

Failure to comply with a policy term can materially prejudice cover. The consequence depends on the wording and governing law, so owners should notify their insurance broker before changing the yacht's use, cruising area, crew, management, flag or other material risk characteristics.

For policies governed by UK law, the Insurance Act 2015 changed certain rules on warranties, fair presentation and remedies. Not every yacht policy is governed by English law, which is why wording and governing law both matter.

Notify the insurer promptly through your broker, protect the yacht from further loss, keep records and avoid admitting liability. A surveyor or adjuster appointed by the insurer may assess the loss.

Renewal is a chance to review values, use, cruising area and changes during the year. Disclose anything that has changed.

Insurance normally does not transfer automatically with the yacht. The buyer arranges new cover from the moment of transfer.

A flag change is a material change. Insurers, lenders and the new registry should be aligned so cover continues without interruption.

During construction the yard typically carries builder's risk cover. The owner's policy should start at delivery, including the delivery voyage, with the build contract setting where risk passes.

Brief a broker early, share the survey, align lender requirements and bind cover to start at closing so there is no gap. Plan cover for any delivery voyage.