Yacht Insurance Policy

Property damage caused by boating accidents totaled approximately $46 million in 2018. Although no one wants to be involved in an accident, boating can be a risky activity. Yacht insurance policy can help you protect property, liability, and lives.

Does the Law Require You to Have Yacht Insurance Policy?

In the U.S., people are required by law to hold car insurance for their automobiles. It covers you in the face of an accident or other loss. Insurance protects you from paying large sums of money out of pocket for damage, theft, and other incidents.

But not all states require you to hold insurance for a boat. Therefore, how do you know when you should purchase this type of coverage?

Although you may not be legally required to take out yacht insurance, your bank may mandate it if you take out a loan for your boat. Your boat serves as collateral for the loan. The bank wants to make sure the yacht covered in case of an accident. 

Some lenders mandate an insurance policy on your vessel if you don’t purchase it yourself. When that happens, the insurance policy is often costly. 

Finally, most marinas require yachts that dock there to hold insurance. You’ll have to check with each marina to determine the liability requirements. Some marinas request themselves listed as an additional insured. 

You may be under the impression that your homeowner’s insurance policy covers your boat. Although homeowner’s insurance may provide some coverage, it is often not enough to protect you if there were a real emergency. A homeowner’s insurance policy is not enough to satisfy the coverage requirements of a lender or a marina.

If your boat is new or expensive, you’ll probably want comprehensive yacht insurance. As with auto insurance, you need to adapt the coverage to your needs. An older boat may not need the same limits for physical damage as a newer, more expensive model might.

Types of Yacht Insurance

 A yacht insurance policy typically covers physical damage and liability.

Physical Damage Coverage

Your insurance policy may protect you financially if your vessel, equipment or machinery obtains physical damage or loss to the:

 • Hull

 • Engines

 • Sails

 • Personal property on board

 • Fuel tanks

 • Batteries

 • Anchors

 • Onboard safety equipment

Every policy is different, and you have to scrutinize the details. Your policy determines coverage for damage and potential accidents. The most comprehensive policies offer all-risk coverage. These cover all causes of damage and loss unless the policy expressly excludes them.

The most common types of perils that insurance companies cover include:

 • Weather-related incidents, such as storms

 • Fire

 • Theft

 • Vandalism

 • Collisions

 • Lightning

 • Sinking

Liability Coverage

Liability insurance is often called protection and indemnity insurance. It pays for your legal obligations if you are responsible for a loss. Liability insurance may be called into play when your boat damages someone else’s property. 

You can damage another boat via contact, such as a collision. However, your boat can also cause wakes that indirectly destroy property and other boats. 

Liability coverage helps to pay for bodily injury to yourself, guests on your boat, or other people. It pays for some of your costs if someone sues you for actions when operating your yacht that your insurance policy covers.

Some of the liability risks that yacht insurance usually covers include:

 • Fuel spill liability

 • Protection from uninsured boaters

 • Medical payments

 • Legal defense

What to Look for in Yacht Insurance

It may be evident that you need yacht insurance to cover activities that are related to operating your vessel in the water. But it would be best if you also considered protecting your yacht when it’s on land. 

How safe is your boat at the dock? Could it be at risk of damage from severe weather during a hurricane or flood? What happens if you are involved in an accident while transporting your yacht with a trailer?

You may want your insurance to cover these incidents so that you have peace of mind no matter how you’re using your boat.

You should also find out how the insurance policy handles personal items on the boat. Will it cover your scuba gear if it gets stolen or lost? 

Many yacht owners choose towing coverage. This assists if you break down on the water. It may also cover you if you need roadside assistance while your boat is on a trailer.

You’ll have to read the fine print when choosing any yacht insurance policy. For example, some providers cover fuel spills no matter what. Others only include them if they occurred as part of a covered loss.

 Working with an experienced insurance broker can help ensure that you get the right coverage for your needs.

How Much Does Yacht Insurance Cost?

The price of yacht insurance varies based on several factors. First, you’ll need to determine how much coverage you need. The coverage depends on the requirements of your marina or lender. Other factors are the boat’s value, size, and age.

Many yacht insurance policies are custom, which means that you only have to pay for what you need.

The price of yacht insurance also depends on whether you take out an agreed value or actual cash value policy. For an agreed value policy, you set the coverage value of the vessel when you take out the insurance. The provider pays out the pre-determined cost if you experience a total loss.

An actual cash value policy offers less coverage than an agreed value policy. It safeguards you up to the present market value of the yacht in case of a total loss. If you have an older boat, you might want to opt for this option, which provides less coverage but is cheaper than agreed value insurance.

You might also be able to reduce the cost of yacht insurance by taking a boater safety course. Some insurers reduce your premiums when you have extra safety features on your yacht.

Contact me today with any questions regarding your yacht insurance.