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  • Writer's pictureNautic Nomad

Navigating the World of Yacht Insurance

Updated: Nov 1, 2019

Do You Really Need Yacht Insurance?

A yacht can offer a number of great experiences, from creating family memories, hosting lavish events, to simply sailing at your heart’s desire.

However, there’s a good chance your yacht is also expensive. Protecting such an asset becomes vital — especially if you don’t want to cover the whole cost of replacement in the event of a disaster.

Taking care of your ship is always important, and yacht insurance can be one of the ways you protect your seafaring vessel. Although it will mean an added cost, your yacht insurance doesn’t have to break the bank. Here’s what you need to know to get the best coverage for the best price.

Understand General Types of Insurance Coverage & Add-Ons

When evaluating a yacht insurance policy, it’s important to know what types of coverage you have access to, and what they do. It should be noted that yacht insurance is specifically meant for yachts and differs from standard boat insurance. Yachts fall within a different vessel class, mainly due to their length. The risks and facets of the yacht class define yacht insurance.

Liability Coverage

Yachts are larger than what we consider boats, so their size and the way they are navigated can come with a different type of risk. Liability coverage protects you in the event someone is hurt while using your yacht, including guests, captain, and crew. Interestingly, it also offers liability protect in the event someone brings suit against you under the Jones Actif applicable.

Salvage Liability

If your vessel sinks, you’re legally responsible for the cost of retrieving it. Salvage liability coverage on your yacht insurance can help you handle some of the expenses related to this situation.

Physical Damage Coverage

Yacht insurance also offers coverage for physical damage to the vessel. When choosing your coverage, though, you need to be careful that you understand what you’re getting. There are two main types of coverage:

  1. Agreed Value:All damages are covered, except for those to sails, canvas covers, cushions, outboard motors, or other items that can be specified. You don’t have to worry about market value or depreciation, leading to a potentially larger settlement in the event of a claim.

  2. Actual Cash Value:You’ll pay less for this type of insurance, but you might end up with a smaller settlement because depreciation and market value come into play. The longer you have your yacht, the smaller your payout will be when you make a claim.

Add-Ons to Yacht Coverage

You can also choose different add-ons to your coverage. These additions can reduce the out-of-pocket expenses that come in different situations:

  1. Medical payments

  2. Towing and assistance

  3. Personal property

  4. Uninsured boater

All of these are situations where your standard yacht insurance might not kick in. However, adding them to your policy can provide you a way to make claims if, for example, you have personal property damaged on the yacht, or if an uninsured boater causes harm.

What Factors Into The Cost?

As you research your options and work with an agent to secure the right yacht coverage, it’s important to understand what can impact the cost of your policy.

Some things to keep in mind include:

  1. Commercial vs. personal use: Using the yacht for commercial purposes will likely lead to a higher premium than if you plan to use it only for personal excursions.

  2. Vessel type: It’s vital that you’re clear about your vessel as a yacht. There’s a difference between boat classification and yacht classification, and this impacts the cost. If you aren’t clear that you’ve got a yacht, the coverage might be cheaper — but it might be insufficient. You could also get into trouble later.

  3. Age of yacht: Realize that the older your yacht is, the less coverage you might need, so you could get a break in premiums.

  4. Speed: The power and speed of your yacht makes a difference. Risk is important to any type of insurance, so the faster the speed, or the greater the power, the more your coverage might cost because that increases the chance of a wreck.

  5. Area of operation: Where you plan to take the yacht, keep it, and where you live all matter with your yacht insurance cost. Be clear about these items and discuss the impact with your agent.

  6. Condition: Whether your yacht is kept in good condition matters. If you are up-to-date on maintenance and repairs, you may see lower rates.

The amount of coverage and the deductible you choose can also impact the cost of your yacht insurance. Carefully consider your options and make sure you’re getting adequate coverage before you accept a quote.

Bottom Line

Even though yacht insurance adds to the overall cost of ownership, the reality is that it can be worth the price. Consider what you’d have to pay to recover your yacht and replace it without help from insurance.

Be an educated consumer. If you understand the factors that influence the cost of yacht coverage, know what you need, and as long as you shop around and look for the best policy for your situation, it’s possible to get a good deal.

By Andrew from LendEDU, a consumer education website and personal finance resource.



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