Did you know that the true yacht insurance policy is probably the most comprehensive insurance policy you will ever own. Today's yacht insurance is a hybrid of coverage types and philosophies, which have been handed down from the very beginnings of insurance in England, in the sixteenth century.
Sailboat Insurance Checklist
A typical yacht policy comes in two main sections: Section I or A is generally hull and equipment coverage, with Section II or B liability or protection and indemnity (P and I). There are also additional coverage subsections, such as medical payments, personal effects, uninsured boaters and towing. In addition, there are special endorsements which may be added, such as, charter coverage, extended passaging, trip coverage, etc,.
Hull insurance is all risk-direct damage coverage, thus a very broad insuring agreement. However, every policy has exclusions, and these can vary greatly from company to company. You should be aware of what is not covered. Some of the more typical exclusions are: wear and tear; gradual deterioration; damage from insect, marine life, animal, mold; marring, denting and scratching; osmosis and blistering; electrolysis; manufacturer's defects; design defects; damage while chartering; freezing damage.
Some companies have seen fit to include these significant exclusions: damage occurring while the boat is being serviced; damage while the boat is being transported overland more than 50 or 300 miles from home port; latent defects; damage occurring while the boat is being used in conjunction with business, to name a few.
True yacht insurance will include agreed-amount hull coverage. This means that at the time the policy was written, the value of the sailboat is agreed to by all parties, and that is what is paid on a total loss. The true yacht policy also includes replacement-cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries and machinery (engines), which are depreciated. Some companies will also depreciate gelcoatings. These depreciated items can add up to a lot, so know which ones apply to your policy.
Know the warranties in your policy. These covenants, which you agree to with the policy, can include: an of navigation area, lay-up period, private pleasure use and that the boat is seaworthy when leaving port. Should you not abide by these, coverage can be voided.
Protection and indemnity (P and I) insurance is the broadest of all liability for sailboats. This is not an exposure that should be covered by your homeowner's policy or a stripped-down boatowner's liability. Maritime law is unique making it necessary to have coverage for this exposure. Harborworkers and Longshoreman's coverage and Jones Act (crew) coverage can be critical and may not be covered by some companies' boatowner's policies. Uncovered losses in this area could run into hundreds of thousands of dollars. In addition to providing payment of judgments against you, P and I also provides for your defense in admiralty courts.
In today's world of specialists, the marine insurance field is not different. Yacht insurance is a specialty. Concern should, of course, be for the company's solvency. Should an insurance company become insolvent, your loss could be uncovered, or you many not receive any returned premium for the canceled policy.
To receive the best value for your policy, be an informed buyer. Your local agent my be a friend or relative, for example, and do a great job on your other insurance needs, but he or she may not be the best agent to serve your sailboat insurance needs. Ask questions; know what you're buying.
You should realize that it's important for you to be a good risk for the company. Obviously, completion of a safe-boating course or a charter certification from a learn-to-sail program can be a strong indicator of your boathandling and sailing abilities to an insurance company. Fire extinguishers need to be on board. There's no substitute for ownership and the experience it brings. A well-equipped boat with an experienced skipper demand the lowest price. All of these aspects will affect the amount of the premium.
It is also important that the boat be in good condition. If you're buying a used boat that is more than 8 years old, you'll probably need a survey in order to obtain insurance. Insurance carriers will expect proof that any survey repair recommendations have been executed.
Like most sailing gear, when it's needed, the best is never too good. Sailboat insurance is an expense of sailing, so make sure it adequately covers your sailboat.
Michael J. Smith, an avid sailor, is marine vice president with Global Marine Insurance Agency, located in Traverse City, Michigan.
Guidance on Making a Claim
What is the process of making an insurance claim. Here is a quick list of the steps, including a few tips, needed to make a claim on your insurance coverage.
- - M.J.S.
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