Many of my high net worth clients regard their beautiful, hard-earned superyachts as the “golden ring” of their success. These golden rings can range in value from $3 million to $20 million…or even as high as $1.5 billion. Yes, billion (see Eclipse, owned by Russian businessman Roman Abramovich, with a crew of 70).
So, how do you ensure that your prize possession and the team of experts that you have hired to tend to it are properly protected?
First, seek experience, and then ask a lot of questions. In an information era that can be very confusing, with terms and conditions as long as your arm, you should make sure you have all the facts you need. Watercraft insurance is made even more challenging because it is governed by maritime law.
Let’s begin with the basics for the watercraft. Coverages include physical damage and protection and indemnity (liability). “Physical damage” includes accidental loss or damage to the boat, its machinery, hull, engines and equipment on board.
The “protection and indemnity” section covers your legal obligations to third parties. These issues often arise from bodily injury or loss of life, or damage to someone else’s property. This coverage will also help pay yourlegal defense if you are sued under your boat insurance policy.
Determining what coverage is right for your yacht can be a complicated issue due to the complexity of yacht insurance.
All owners, especially those with larger, more complicated vessels, have different needs and requirements for yacht coverage. Marine insurers providing boat and yacht insurance offer a wide range of coverage suited to theircompany’s level of expertise, underwriting appetite and type of customer they are trying to attract. A good carrier provides options to allow you the flexibility to structure the coverage to suit your risk appetite, be that one that carries higher hull and machinery deductibles or a higher level of liability coverage. Also, always be mindful of cruising limits and navigation restrictions. You want the freedom to cruise where you want, when you want.
Now, let’s discuss the crew and your responsibility for it. Captain and crew liability coverage extends to those individuals serving aboard the insured yacht. If you have paid crew on your yacht, it is paramount that you becovered properly by your insurance carrier in both U.S. and international waters.
Keep in mind, too, that crew members often spend more time on the boat than you do. The carriers that operate in the high net worth arena will often include crew personal property coverage up to $25,000 per crew member. Even more important, if crew members are named insured individuals on your policy, they will be covered for P&I (protection and indemnity) for crew claims under the federal Jones Act. This benefit can be a persuasive perk to a prospective employee.
Clearly, insurance coverage for boats and yachts varies greatly from company to company. Again, ask the questions…“Will this carrier be a resource in the event of sudden and severe weather? Will it be able to recommend safeharbors and facilities to protect the yacht? Will the carrier provide an “all-risk” contract?”
Determining what coverage is right for your yacht can be a complicated issue due to the complexity of yacht insurance. A specialized yacht underwriter and your independent insurance advisor should be consulted to work with you to structure a program that covers yacht and crew members in a way that is unique to your needs.
In the unfortunate event of a claim, a yacht-claims representative that offers unparalleled support will be the help you need to get you back in the water as soon as possible. Happy boating!
This article was originally published in the October/November 2016 issue of Worth.