Yacht insurance is a policy that covers a sailing boat’s liability in the event of an accident. It covers injuries to other people or damage to their property, as well as damage to your belongings on the boat. Depending on the insurance company, this insurance could also cover the delivery of gas, the towing of your yacht, and help if it gets stuck.
Understanding Yacht Insurance
Some companies focus on making sure old and classic boats are covered. You can choose between a policy with a real cash value or one with an agreed value. The first option is less expensive, but it takes depreciation and market value into account, so your payout will be less. Some policies offer discounts based on how well you know how to drive a boat, if it has safety features, or if it is a hybrid or electric boat. Some companies will also give you a discount on your yacht insurance if you buy insurance for your home or car at the same time.
A boat is a vessel that is less than 197 feet long. A ship is a vessel that is 197 feet or longer. No one agrees on how long a yacht should be, but in general, they are at least 30 feet long. A pleasure boat is a boat that is less than 27 feet long.
Even though there isn’t a one-size-fits-all definition of what a yacht is, we can see that most people agree on a range. So, this general range falls between classes 2 and 3 of the Federal system for classifying boats.
The National Boat Owners Association puts the line between the two at 27 feet for its purposes. Most yacht coverage is broader and more specialized than coverage for pleasure boats because yachts travel farther and face more risks.
The amount you have to pay out of your pocket before your insurance kicks in is called the deductible. It is usually a percentage of the insured value. For example, a boat insured for $100,000 with a 1-percent deductible would have a $1,000 deductible. Most lenders will let you pay up to 2% of the insured value as a deductible.
Normal wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, design defects, ice, and freezing are not usually covered by yacht insurance.
Yacht insurance has two parts
A yacht insurance policy is made up of two main parts.
Hull insurance is a direct damage coverage that covers all risks and an agreed-upon amount of damage to the hull. This amount is set when the policy is made, and if there is a total loss, the full amount will be paid out. There is also coverage for partial losses at the cost of replacement, but sails, canvas, batteries, outboards, and sometimes outdrives are not covered and are instead subject to depreciation.
Safety and compensation (P&I)
Protection and Indemnity (P & I) insurance is the most comprehensive type of liability coverage. Because maritime law is so specific, you need coverage that is made for those risks. 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 reach six figures. P & I will pay for your defense in admiralty courts and cover any judgments against you.