Marine Insurance

Generally "boats" are considered to be 26 feet and smaller, and "yachts" are 27 feet and larger. Yacht coverage tends to be broader and more specialized because larger boats travel further and have more unique exposures. Boat insurance varies by boat length and type, by the cost of the boat and the level of coverage you want. Consult your insurance broker for quotes or compare rates online. Some smaller boats may be insured as a rider on a homeowner's policy but the coverage may not be as good as what you get with a stand-alone marine policy.

On a recreational marine policy the liability coverage is called protection and indemnity. In addition to paying for damage you may cause to other boats and properties, it provides coverage for legal costs, wreck removal, salvage fees, and pollution damage caused by the boat.

There are two main sections 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 possible exceptions for sails, canvas, batteries, and outboard motors and sometimes outdrives, which are depreciated. PROTECTION & INDEMNITY insurance is the broadest of all liability coverage, and because maritime law is unique, you will need coverage designed for those exposures. Besides providing payment of judgments against you, P&I also provides for your legal defence in court.

Exclusions on a yacht policy generally 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.

Yacht policies contain clauses called warranties that are contractual promises. They describe conditions that the boat owner must do, or must not do during the term of the policy. For example, a private pleasure warranty states the boat must not be used for commercial purposes. A fire extinguisher warranty states the boat owner must comply with applicable regulations regarding fire extinguishers on board. Warranties are very important because if they are breached the policy is considered null and void from the moment the breach occurs. In addition to the above warranties the policy will have navigation area limits. It is important to understand the warranties in your policy and to adhere to them at all times.

Insurance companies ask for a survey once a boat reaches a certain age. These surveys are prepared by independent surveyors and are used to verify the condition, seaworthiness and the value of the boat. Surveys also protect boat owners by identifying safety and maintenance problems. If you are considering a boat over 10 years old, ask your insurance broker if a marine survey is required.

If your policy contains a private pleasure warranty, then hiring the boat for charters invalidates your policy. Some insurance companies will add temporary charter coverage for an additional premium. If the boat is going to be chartered on a regular basis, a commercial policy is recommended.