What Is Yacht Insurance?
A yacht, it’s fair to say, is a luxury item and so particularly in need of protection. Yacht insurance is an insurance policy that provides indemnity liability coverage for a sailing vessel. It includes liability coverage for bodily injury or damage to the property of others and damage to personal property on the vessel. Depending on the insurance provider, this insurance could also include gas delivery, towing, and assistance if your yacht gets stranded.
- Yacht insurance provides indemnity liability coverage for a sailing vessel.
- It has two principal parts: hull insurance and protection and indemnity (P&I) insurance.
- While there is no legal agreed upon length that separates a yacht from a pleasure boat, generally it is considered to be somewhere between 27 and 30 feet.
Understanding Yacht Insurance
Some companies specialize in providing coverage for antique and classic boats. You can choose between an actual cash value or agreed value policy. The former is cheaper but factors in depreciation and market value, so your payout will be less.1 2 Some policies include discounts based on your boating education, safety features, and whether you have a hybrid or electric boat. Some companies also offer a package deal that decreases the rate on a yacht insurance policy if you purchase additional policies, such as for your home or car.3
Boats are defined as vessels under 197 feet long, while ships are 197 feet long or longer. While there is no agreed upon length for a yacht, generally they are considered to be at least 30 feet long. A vessel under that size is a pleasure boat.4 For its own purposes, the National Boat Owners Association marks the dividing line at 27 feet. Most yacht coverage is broader and more specialized than pleasure boat coverage, because larger vessels travel farther and are exposed to greater risks.2
Yacht insurance is broader and more specialized than pleasure boat coverage, due to the fact that a yacht can sail farther and thus runs greater risks.
A yacht insurance deductible, the amount of money you must pay out of your own pocket before your insurance kicks in, is usually a percentage of the insured value. A 1% deductible, for example, means that a boat insured for $100,000 would have a $1,000 deductible. Most lenders allow a maximum deductible of 2% of the insured value.5
Generally, yacht insurance coverage does not include wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, defects in design, and ice and freezing.6
Two Parts of Yacht Insurance
There are two principal sections of a yacht insurance policy.
Hull insurance is an all-risk, direct damage coverage that includes an agreed amount of hull coverage. That amount is settled on when the policy is written, and in the case of a total loss it will be paid out in full.7 In addition, there is replacement cost coverage on partial losses, though sails, canvas, batteries, outboards, and sometimes outdrives are not include and instead are subject to depreciation.8
Protection and indemnity (P&I)
Protection and indemnity (P&I) insurance is the broadest of all liability coverages, and because maritime law is particular, you will need coverages that are designed for those exposures. Longshore and harbor workers’ coverage and Jones Act coverage (for the yacht’s crew) are included and important, because your losses in these areas could run into six figures. P&I will cover any judgements against you and also pays for your defense in admiralty courts.8 9
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