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As we approach the boating season with all of its enjoyment and excitement AMU would like to discuss in some detail the nature of yacht insurance coverage and some of the more standard coverages provided by the marine insurance community today. This first article will deal with the Hull and Machinery aspect followed by Protection and Indemnity in the second article.

When we speak of a yacht we mean: a motoryacht, a sailboat, craft, cruiser, schooner, or similar vessel including it’s sails, machinery, furniture and other equipment normally required for its operation and maintenance.

A yacht will range from a canoe, small sailing dinghy to a large ocean-going yacht and will generally be used for private pleasure purposes for which there is a specialized insurance market.

Hull Coverage

Insurance on yachts has traditionally been written by Marine Insurance specialists, but this is not true today. Generally considered in the broad classification of yachts are those yachts that are either powered by inboard motors, inboard-outboard motors, outboard motors or sailboats with or without auxiliary power. The yacht in generally written on an All Risks basis.

The Hull Insurance provided by a yacht policy applies to a specified vessel, including the hull, spars, sails, machinery, furniture, and other equipment normally required for its operation or maintenance and the yacht’s tender and outboard motor. The yacht is covered everywhere within the stipulated navigational limits, whether ashore or afloat. Generally, the policy warrants that the yacht will be laid up during a certain non-navigational period, but the coverage is in effect the year-around.

Hull Insurance will cover accidental direct physical loss or damage to the insured property from any cause. This includes physical damage that is caused directly from any defect in the yacht that could not have been discovered by a reasonably thorough inspection, but does not include the cost of repairing or replacing any defective part.

Hull Insurance includes the following areas:

1. Perils of the sea, such as:
   1. Collision.
   2. Heavy weather (for example, windstorms and hurricanes).
   3. Stranding, striking rocks, reefs, shoals or running aground (including the expense of refloating the vessel).
   4. Sinking from a peril insured against.
2. Fire or Lightening;
3. Theft of the entire yacht; theft of equipment where there is an appearance of visible evidence of forcible entry (no coverage for mysterious disappearance of equipment);
4. Jettison, the deliberate throwing overboard of machinery or equipment in order to save the yacht in peril;
5. Barratry of master or mariners (wrongful act committed by the master or members of the crew without knowledge or consent of the owner);
6. And all other like perils, losses and misfortunes that have or will come to the hurt, detriment or damage to the insured yacht (a broad insuring clause which, although undefined in the policy, has meant in the courts other perils connected with the above named perils);

In addition, there are other certain named perils where there has been no “want of due diligence” by the owner or manager of the yacht and where perils are contemplated by the yacht policy:

a) Accidents in loading, discharging or in taking on fuel, or handling stores and fittings, or in hauling, launching or in going on or off mooring locations;
b) Onshore hazards of windstorm, tornado, hurricane, earthquake, floods, collapse of buildings or other structures including collapse of shoring, blocking or staging;
c) Contact with aircraft (including articles falling therefrom) or with any land conveyance;
d) Explosion, bursting of boilers, breakage of shafts or any latent defect in the machinery or hull (excluding the cost and expense of repairing or replacing the defective part);
e) Negligence of master, mariners, engineers or pilots.

The policy also covers removable equipment belonging to the yacht which is temporarily taken off the yacht and stored on shore. During such storage, the equipment is covered against the same perils named in the policy. The amount on the hull is decreased by the amount covered on shore.

In addition to the losses to the hull and equipment and the coverage under collision, the company will also pay salvage charges not exceeding the amount of insurance on the hull and equipment.

The policy will normally not cover loss or damage from any of the following causes:

1. a lack of reasonable care in the maintenance or operation of the yacht, or the intentional misuse of the yacht;
2. wear and tear, weathering and deterioration, inherent vice, insects, vermin, raccoons, marine life, mould, corrosion, marring, denting, or scratching;
3. any defect in the design of the yacht;
4. mechanical breakdown;
5. freezing;
6. ice.

And generally the policy will not cover losses resulting from:

1. theft of an outboard motor unless it is securely locked to the yacht and/or tender by a motor lock or equally efficient theft deterrent mechanism in addition to its normal method of attachment;
2. the cost of repairing or replacing the metallic flake finish on the yacht unless otherwise agreed by the company.

We hope the above was of value and look forward to commenting in our next Journal on Protection & Indemnity cover.

The Mariner’s Smile

Notice in an office: “Would the person who took the step ladder yesterday please bring it back or further steps will be taken.”

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Peter J. Taylor, President. Underwriters and Intermediaries in Ocean and Air Cargo, Inland Transit, Transit Liabilities, Marine Liabilities, Commercial Hull, Yachts and Hovercraft.

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