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What is P&I- Protection and Indemnity

Protection & indemnity insurance – what is it.

If you own a boat and have an insurance policy, you may have noticed in your policy you have Protection and Liability (P&I).  Has it ever been explained?  We will try to offer a brief explanation and highly encourage you to speak to your agent .

If you look at your policy and you don’t have P&I coverage, please contact a marine Insurance specialist like Gallagher Charter Lakes.  This is a brief overview of P&I.

FOR THE VERY LARGE OCEAN VESSELS

P&I is liability coverage for the boat or ship owner.  Most of the commercial ocean vessels and mega-yachts have their P&I through clubs in a risk sharing pool.  These clubs don’t use standard forms so there could be some variability in the policy.

FOR BOATS COASTAL TO THE U.S. AND INLAND U.S.

For the U.S. P&I market standard forms are common.  (SP-23, SP-38 and American Institute of Marine Underwriters clauses).  P&I is the most broad of the liability marine insurance coverage available.   As typical in most insurance policies, exclusions and conditions apply .  The typical P&I liability covers: Loss of life, injury and illness of crew members, passengers and other third parties, damage to cargo on board the vessel, damage to other floating objects not caused by collision, wreck removal costs, collision liability, damage to fixed objects, repatriation expense, damage to other property, fines and penalties, costs of resisting mutiny or misconduct, quarantine expenses, putting in costs, cargo’s proportion of general average, and defense costs.

In the U.S. these items are often part of your policy:

• Bodily Injury
• Property damage
• Death on the High Seas Act
• Wreck Removal  Maintenance & Cure
• Negligence for unseaworthy vessel

Damage in “Rem” – Defense in the Admiralty Jurisdiction From an exposure standpoint, the most costly is Loss of life, Injury or illness, particularly the death or injury of a crewmember(s).  You should also consider having -  Jones Act and – U.S. Longshoreman’s & Harbor workers coverage if needed, based on your usage of your vessel If your policy only has Watercraft Liability that typically only includes Bodily Injury and Property Damage.  Ask your agent if Watercraft Liability protects you and your assets.  If you have a personal umbrella policy, be sure the underlying limits are sufficient. One thing to remember is this part of the liability coverage pays defense costs and damages.  Both defense costs and damages can escalate quickly in a lawsuit.   Be an Informed consumer of your Insurance policies.   P&I can take some of the fear out of the unknown

Gallagher Charter Lakes - Marine Insurance Specialist

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Yacht Insurance: The Definitive Owner’s Guide

A sailing vessel’s indemnification liability coverage is provided through yacht insurance, and it covers any damage to the yacht’s body, property destruction of others, and private property damage aboard the vessel. This insurance may also cover gas supply, towing, and help if your boat gets stuck, depending on the insurance company.

Understanding The Two Parts of Yacht Insurance

Hull insurance.

Hull insurance is a direct and all-risk insurance policy that covers damage and includes an agreed amount of hull insurance. The amount settlement is done when the policy is drawn up, and the payment is in full in the event of a total loss. In addition, there’s the possibility of replacement costs insurance for partial losses. Still, sails, batteries, canvas outboards, and sometimes outdrives aren’t covered and are instead at risk of depreciation.

Indemnity and protection (P&I)

Protection and indemnity (P&I) insurance provides the most comprehensive insurance coverages for liability. Because maritime law is unique, you must have coverages specifically designed to protect you from risk-taking situations. P&I will cover any judgments against you and pay to defend you in admiralty courts.

What are the factors that can influence your yacht insurance?

Insurers consider many factors when deciding whether to offer a policy.

Almost any vessel can be insured – for a price. You should consider the following to make sure the policy you buy meets your needs:

• Age of the vessel
• Value (make sure you consider depreciation over the years of the value of your yacht)
• Speed/Power
• Type of vessel (Sailing, motor, Inboard, Outboard, utility, cruiser, offshore fishing boat)
• Custom built (boats without serial numbers can be tricky to insure)
• Location of use (which ocean are you planning to locate your boat. Make sure you let your insurance know whenever this changes over the months!)

What does yacht insurance usually cover?

Usually, the yacht insurance covers:

Liability protection: the bare minimum insurance

Property damage liability pays for damage to another person’s property caused by the accident you commit. You are covered if your yacht causes damage to individuals or damages other ships, docks, or buildings. Remember that harm or damage might occur due to direct contact with your boat or events induced by your yacht, such as during heavy wakes. In most cases, boat liability insurance covers you against covered claims and litigation involving settlements and legal expenses. To ensure that you have the right coverage, talk to your advisor regarding your needs and potential dangers.

Hull and machinery coverage

Hull insurance will cover any physical injury to your boat, including motors, trailers and equipment, and even accessories in many instances. Damage from wind and fire are typical claim types.

Uninsured boater coverage

Indemnifies bodily injured passengers of the insured watercraft who suffer injuries due to the uninsured owner of a different vessel.

Search and rescue

The maximum amount is $10,000 for costs that an insured incurs to a government entity like the United States Coast Guard (USCG), which provides emergency assistance and is covered at absolutely no cost.

Marine environmental damage and pollution coverage

This protection is available up to $10,000 in penalties and fines in the event of marine environmental damage as per the policy’s conditions. This coverage is added to the insurance company’s liability and OPA limit.

Agreed value coverage or actual cash value coverage

A cash value policy offers lower coverage than an agreed value insurance policy, however, generally with a lower cost. ACV policies provide coverage up to the value of the vessel. ACV policy would protect up to the price of the market for the boat if there was a complete loss, including depreciation and conditions of the vessel when it suffered the loss.

Crew medical and personal coverage

Reasonable medical and related costs are covered for all onboard passengers leaving or boarding the vessel. These benefits are granted per person instead of per event.

If your vessel gets damaged by accident, collision insurance is an optional insurance policy that covers the cost of fixing and replacing the damaged part with less deductible.

Sinking and wreck removal

Insurance for boats generally can cover sinking. However, there are some critical policy limitations. In general, insurance for boats should protect your boat if it sinks due to any covered risk. The policy could reimburse you for the cost of salvage or removal.

What is usually excluded from yacht insurance policies or comes as an extra?

War coverage

Damages caused by acts of war can turn out to be too great to insure, making the repayment too astronomical to be true.

Hurricane insurance

Your boat insurance provider may be able to pay for damages to your vessel caused by wind and hail from a storm in the event of a hurricane unless stated explicitly in the policy. Contact your boat insurance provider to find out what coverage you have during a storm.

Marine life encounters

Most insurance for boats doesn’t provide coverage for marine-related damage such as sharks, whales, and many other species. If you frequently sail in water full of marine creatures, it is possible to discuss a supplemental insurance policy with your insurance provider.

Insects and mold

The majority of yacht insurance policies do not cover insects and mold. It is essential to take the necessary steps to safeguard yourself against any pests on your vessel. So, this means that you must wash, drain, and dry your boat’s equipment after use.

Toys and PWC onboard

The PWC onboard may need to have a separate insurance policy as it is an expensive purchase.

Negligence or criminal acts

No insurance company is accountable for paying for the illegal actions of other people. Damage or loss due to reckless negligence and incompetence is also not acceptable.

Most insurance coverage for boats won’t cover certain events, such as racing on a yacht. Suppose you plan to use your boat to compete. In that case, you might want to consult your insurance representative about supplemental insurance, precisely the possibility of additional liability insurance if there’s a crash in the course.

Kidnapping and ransom

Because of the high stakes involved – human life and assets such as vessels and cargo — as well as the criminal character and challenging legal context, resolving a hijacking or abduction for ransom is a difficult task. Hence, kidnapping and ransom are not included in yacht insurance.

What do you need to know before picking a yacht insurance policy?

When evaluating physical damage cover, the most significant question is whether the insurance is focused on “agreed value” or “actual cash value” damage payout. If there is a complete loss, most agreed value coverage covers the amount shown on the insurance contract. After depreciation, you will receive compensation.

The actual cash value coverage offers protection up to the vessel’s present market worth at the moment of complete loss, after depreciation and the deductibles.

Although the coverage is smaller in an actual cash value insurance than in agreed value insurance, the policy is generally inexpensive.

The next thing you want to consider while choosing your insurance is the deductible and premium.

The amount you self-insure in the case of a loss is your yacht insurance deductibles. Put another way, it is the amount you spend on claims before your insurance comes in.

The next is premium. Choose insurance that can fit your budget to pay your premium on time without fail. 

Another thing to consider is the Intended cruising area. Some policies put restrictions or have a defined area while cruising. So, choose an insurance policy that suits your cruising area so that in case of mishaps, you can get coverage.

Yacht Insurance Requirements

Is yacht insurance mandatory?

While it’s not usually a legal necessity, it is always a good idea. It’s unlikely to cost much, but it might save you a lot of money in a disaster. Even if you or your captain are the finest sailor on the planet, you must consider what would happen if someone else collides with your yacht.

Changing weather may damage your boat, yet you usually have little control over it. Fortunately, most yacht insurance policies aren’t too costly, and the modest additional cost may provide comfort while cruising on the sea.

Does the bank require insurance while you finance the yacht?

Yes, your bank may require proof of yacht insurance if you want to finance the yacht.

Do ports and marinas need your yacht insurance?

For utilizing their facilities, numerous ports and marinas will need you to have boat insurance.

Does renting the yacht require insurance?

If you intend to rent out your yacht, you must have coverage to safeguard your asset, and yacht insurance can be highly beneficial. If you want to rent your yacht, you must get boat insurance to protect yourself from liability hazards, and the insurance covers the majority of liability concerns.

Read also : The yacht charter experience ladder

How much does a yacht insurance cost?

Usually, yacht insurance costs between 1% and 5% percent of the yacht’s value. For instance, you may spend around $2,500 annually to insure a boat worth $100,000.

However, similar to other types of insurance, the cost of your boat insurance depends on you and your vessel. The higher the value of a boat, the greater the insurance cost. Yacht insurance is often costlier than floating insurance since yachts are more expensive. High-powered boats are riskier. Thus, insurance companies consider the kind of engine (inboard or outboard, amount of horsepower, and so on).

How can I lower my yacht insurance cost?

Here are a few steps that you can take to lower your insurance cost.

Limit the cruising area of your yacht

There are navigational restrictions in marine rules, meaning you may only sail inside a specified region. The premiums will be less the smaller and securer the area is.

Have good training and driving records

Insurance companies are interested in your expertise on the water. The completion of a boating course demonstrates proficiency, which reduces your risk. Most insurance companies would consider boating lessons, but they may even provide a rate reduction. Contact your agent to determine whether safety-related boating classes impact your premium rates.

Lower the liability limits

Most insurance companies will require your credit score to establish suitable premiums. Maintaining a good credit score has several advantages, including cheaper insurance prices. To lower your liability limits, consider working on your credit score.

Pick a higher deductible to reduce the premium of your insurance

A greater deductible implies that the policyholder will be responsible for a percentage of the claim, hence decreasing the occurrence of claims. You choose to pay a part of the claim by raising your deductibles out of your cash, and the company will eagerly reduce your premium.

Choose seasonal insurance during the offseason

Fire, theft, vandalism, and winter storms can all cause significant damage and financial burden. You won’t be insured for any winter tragedy that strikes your yacht during the off-season if you don’t have insurance. You’ll be responsible for possibly astronomical expenditures.

Pick a modern boat rather than an old one

A new yacht will cost less to insure than an older one. This is because older ones are susceptible to acquiring defects, while newer ones are not. Further, you can take several steps to improve your yacht’s safety, contributing to lowering your cost. Like, installing an autonomous fire control system may decrease the danger of fire damage and make you eligible for a premium reduction. Additionally, safety devices like radar, depth finders, first aid kits, GPS, emergency kits, and EPIRBs may reduce the danger.

Our advice to find the best insurance broker at the best cost for a yacht

Avoid using your home and car insurer for yachts above 27”.

Usually, boat insurance is meant for vessels less than 26 feet long. Yachts are generally longer than 27 feet, have far more powerful engines, and cost more than smaller vessels.

Yachts typically go greater distances and deeper seas, transport more passengers, need a crew and have several equipment and personal possessions. These variables result in distinct risk exposures and need particular insurance policies, coverage choices, and deductibles.

Maritime law governs rather than state or federal law in deeper seas, which may be more complex. If your boat has a crew, you might be obliged to have Harbor workers and Longshoreman’s covers.

Partnering with an advisor who knows the worth of your boat and how you intend to use your boat can assist you in getting the necessary coverage for any potential catastrophes. You will also need specific insurance coverage if you own a high-performance boat due to the increased risk.

Pick a trustable company with expertise in marine insurance

You can choose your regular insurance provider to get your marine insurance. There are several maritime governing rules when you decide to sail on the sea or plan to sail overseas. Additionally, it is essential to engage with a provider that has a deep understanding of boat and yacht coverage. This is vital at the time of insurance application and in the severe case of a claim.

Special needs might require custom policies

If you have any special needs, additional coverage choices are available for medical costs, private possessions, the boat’s transportation equipment, and more that may be added to any plan. However, that relies on the type of insurance provider you choose.

Optional coverage extensions:

• Trip disruption
• Private property
• Trailer Coverage
• Towing and Emergency Roadside Service
• Uninsured Watercraft
• Individual Liability

Get an experienced yacht broker to help you navigate policies.

You may have 100 policies in front of you and many lucrative offers claiming several things. Yet, making the right insurance takes time and a better understanding of all the coverage. So, an experienced broker can help you navigate all these policies and select one that fits your budget and particular situation.

The best companies for yacht insurance

Many insurance firms provide boat insurance at affordable prices. Shop around to ensure that you receive the necessary information to make an educated selection. Also, there are several websites that offer evaluations of various insurance providers and are excellent starting points for your study.

Communicate with other sailors; determine which aspects they value and why. You would be in a position to make the most excellent option for your requirements when you analyze the services of various companies.

Being on the ocean is a feeling of serenity, tranquility, and impending new experiences. So, this is an encounter you want to go on forever. Further, your sailing boat is a significant investment. Hence, consider having your luxury boat insured to cherish the best of life and keep your investment safe.

Don’t take chances with your yacht, act now and ensure a safe and worry-free sailing experience

Now that you understand the importance of yacht insurance, don’t wait any longer to protect your valuable asset. Contact us today to get a quote and secure peace of mind on the water. Our team of experts will guide you through the process and help you choose the best coverage for your needs.

Frequently Asked Questions

All ship and yacht owners are obliged to have marine insurance, mainly when the vessels will be utilized for commercial or transit reasons and move people, labor, or goods overseas.

our yacht insurance usually protects your yacht against frequent dangers such as drowning, storm, fire, collisions, and theft. You may also be protected by boat insurance if you accidentally harm somebody or destroy their property. Your coverage may cover the following boat components: machinery, attached equipment, hull.

The exclusions from yacht insurance policies include: criminal actions of others, insect infestations, lack of due diligence on the part of the assured or managers, common wear and tear, loss resulting from delay, and intentional wrongdoing by the captain or crew.

The typical cost of boat coverage is between $200 and $500 per year. However, insurance may cost between 1 and 5 percent of the boat’s worth for a yacht or sailboat. For instance, you may spend around $2,500 annually to insure a boat worth $100,000.

Sailboat owners often spend between $250 and $1,500 annually to protect their yachts. This price varies depending on various criteria, including insurance type and insurance amounts, and sailboats usually are less costly to cover than powerboats.

Annual insurance on the yacht will range at roughly 1.5 percent of the boat’s value. The cost to insure a catamaran depends on hull valuation, location, and the boat’s operation.

The insurance coverage of a mega yacht or a super yacht can be around $240,000.

To reduce the cost of yacht insurance, you can take the following steps: installing safety equipment, demonstrating better boat riding skills by undertaking a boating course, considering your deductibles, limiting your sailing area or working on credit scores.

Hull relates to the vessel’s body. The insurance will cover unexpected damage or loss to the boat anywhere inside the policy’s specified maritime boundaries.

Usually, classic boat insurance is provided by specialized insurance firms who specialize or have experience in protecting classic and antique vessels. For covering your old boat, get a quotation from a specialized insurer and verify that your policy provides the protection you want for a sense of security.

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P&I: Marine Insurance Explained

P&I: Marine Insurance Explained

P&I Insurance is liability insurance for practically all marine liability risks associated with the operation of a vessel, other than that covered under a workers compensation policy and under the collision clause in a hull policy; also referred to as, Protection & Indemnity Insurance.

There is no standard P&I insurance form. Each P&I insurance policy is created with specific terms and conditions for each insured tailored by underwriters based on the nature of the risk and the character and amount of insurance desired by the insured. Additionally note that since P&I insurance policies are essentially a contract of indemnity, the insurer is not obligated to pay unless the insured must actually pay the claim.

In the event of a P&I insurance claim it is important the insurance company is notified as soon as possible so the following can be done:

• offer immediate advice and assistance,
• if necessary, arrange for any damage to be inspected prior to repairs commencing,
• arrange to obtain statements from any relevant witnesses,
• advise on the appointment of salvors if the equipment/ vessel is still in distress.

For P&I claims examples click here .

To learn more about P&I insurance policies and other marine policies contact an ALIGNED Advocate today.

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Insurance for Dummies - A Smart Guide for Yacht Crew

The only item that anybody buys in the hope that they are throwing their money away is insurance. Whoever buys insurance against an eventuality that never happens will see no tangible return but, if a loss occurs or a court summons arrives in the mail, their insurance premiums may turn out to be a smart and relatively low-cost investment.

Yacht owners consider themselves to be smart people, so is buying insurance for a yacht a smart gamble or is it better to take a calculated risk and save the premiums? The latter is often referred to as being ‘self-insured’ which is a misnomer, and a rare choice for obvious reasons. In the event of an incident or a third party claim, the resulting costs may far exceed their capacity to pay.

Protection & Indemnity Coverage: Protecting Third Parties 

For precisely this reason, regulatory authorities may mandate insurance coverage to protect third parties. In the maritime world, this is known as Protection and Indemnity (P&I) coverage.

P&I is an archaic term dating back to the early 1800’s describing insurance cover for shipowners against the loss of, or damage to, their vessels. This protected the shipowner’s assets but it didn’t extend to the losses incurred by third parties who sought redress through the courts. By the middle of that century, case law and legislation gave increasing rights to seafarers, passengers and other parties to seek compensation, so to mitigate potentially catastrophic liabilities, shipowners joined together to form P&I Clubs for mutual protection.

Navigating Superyacht P&I Insurance Claims

In the previous article we looked at handling insurance claims covered by your hull & machinery (H&M) insurance policy, which is where a claim is made for loss or damage to your own yacht. This follow up article looks at what happens when there is a third party involved, which is where your yacht’s protection and indemnity (P&I) cover comes into play. This article discusses the difference between H&M and P&I insurance, what to expect from the surveyors involved and how to react in the event of an incident involving a third party.

Understanding different types of insurance

Above a certain size and value of yacht, insurance cover will be separated into two different types, each with a different purpose and usually each from a different insurer. Whereas H&M cover is intended to cover for losses incurred to the insured yacht (see our article here for more on this) protection and indemnity (P&I) cover addresses claims against your yacht by a third party. Examples of instances in which you would look to your P&I cover might include a collision or allision in which you’ve caused damage to another yacht, environmental damage perhaps as a result of a fuel spill or damaging a protected reef when anchoring, or damage to a shoreside facility (for some strange reason, the bridge master’s cabin in Saint Maarten springs to mind!). P&I cover is provided by specialist insurers known as P&I clubs. As the name suggests, the policy offers protection and indemnity against valid third-party claims. The “club” aspect is interesting, in that it indicates that P&I is usually provided on a mutual basis, in which yacht owners are members of a club which exists solely to provide insurance cover in the event of third-party insurance claims against its members.

Responding to incidents involving third party contact

From our experience, the bulk of our work for P&I clubs involves contact in one way or another, so either a collision (where both vessels are underway) or an allision (where vessel that was struck was stationary) and the bulk of our contact claims concern allision, more often than not involving contact during docking. First off, we’ll looking at what happens when you are the striking party. We’ll then look at what happens when you are on the receiving end.

It’s never a great day if you make contact with another yacht, but it happens, so it’s as well to know what to expect. We’ll use an allision during berthing as an example to work through and start from the point at which any immediate danger is over and both yachts are secured at their berths. Inform your insurance broker. In turn, they will place your insurers on notice of a possible insurance claim, notifying both your P&I club for third party damage and your H&M insurers for any damage to your own yacht. Let the owner’s office know. If you have one, let the DPA at your management company know. Make sure that the incident is recorded in the deck log. Make sure that you’ve noted relevant factors such as weather, sea state, berthing arrangements etc. Take photos and secure any CCTV footage if available or witness videos of the incident. Take photos of damage to both yachts. Take screenshots of ECDIS or ECS showing the incident area and track, if relevant.  Ask any of the crew who witnessed the incident to write down clearly what happened, just in case. If there were possible witnesses ashore, make a note of who they were, again, just in case. You can more than likely expect a call or a visit from the captain of the other yacht. At this stage be very cool calm and collected, admit no liability and simply exchange insurance and contact details. You can expect to receive a Letter of Protest from the other captain at some point. The letter will usually outline the circumstances of the incident and state that they hold your vessel responsible for the damage sustained to their vessel. They may ask you to acknowledge receipt of the Letter of Protest. Before doing so, we would advise sharing it with your insurance broker for them to review, in order to ensure that you are not being asked to sign anything which might in any way constitute an admission of liability. Do not admit to liability unless you have been instructed to do so.

Responding to other types of third party claims

P&I cover isn’t just there for contact between yachts; we’ve worked on claims involving groundings, fuel spills, anchor dragging and anchoring in environmentally sensitive areas, all of which have resulted in claims against the yacht for environmental damage. There’s no pre-determined way in which these different claims unfold, but if you become involved in one, it is likely that your P&I club will appoint a surveyor to assist them. If you are involved in an incident in which there’s any possibility of a third-party claim, you should inform your insurance broker as soon as possible. In turn, they will place your insurers on notice of a possible insurance claim, notifying both your P&I club for third party damage and your H&M insurers as required. They may also look to activate access to legal advice, if this is provided for under your policy. Let the owner’s office know. If you have one, let the DPA at your management company know. Make sure that the incident is recorded in the deck log. Make sure that you’ve noted relevant factors such as weather, sea state. Take photos. Secure any CCTV footage. Take screenshots of ECDIS or ECS showing the incident area and track, if relevant.  Ask any of the crew who witnessed the incident to write down clearly what happened, just in case. Be cautious with what you say to any official or third party, bearing in mind that whatever you say may come back to you in future. Do not admit to liability unless you have been instructed to do so.

Joint surveys

Your P&I club will appoint a surveyor to investigate the claim on their behalf. The third party’s H&M insurers will also appoint a surveyor. It would be normal for the surveyors to arrange a joint survey of the yacht that was struck in order to understand the circumstances of the incident, to agree the extent of damage and, if they can, to agree the means of repair. The surveyors may also make a joint survey of the striking yacht, in order to confirm that the damage seen on the two yachts is consistent with the nature of the alleged incident. This is particularly helpful where there is any uncertainty or inconsistency in the claims made by the two parties, or where there was pre-existing damage as well as casualty related damage located in the same area as the incident damage is located. During these joint surveys, the opposing surveyor may reasonably request certain information which might include the certificate of registry and the certificate of Class, captain’s qualifications. We would agree to these being provided, but for any other requests (eg incident reports, deck log extracts, previous paint survey reports etc.) we would suggest withholding at this stage, until discussed and agreed with the P&I club.

Following the joint survey, each surveyor will report to their respective clients and at this stage we will provide the P&I club with our initial report. This will include a description of the incident and the circumstances leading up to it, a detailed description of the damage sustained by the third-party yacht, an outline of the repairs needed and an initial estimate of repair costs for the third-party yacht, pending receipt of repair quotations. Once they’ve digested our report, it is likely that the claims handler at your P&I club will discuss the claim with your insurance broker in order to discuss coverage. If confirmed, they will then likely make contact with the claims handler at the other yacht’s H&M insurers in order to agree with them how to progress the claim.

Follow up and specialist surveys

At this stage we will advise the P&I club whether or not we think that further surveys will be needed (for instance, once the yacht has been hauled ashore and more detailed inspection is possible) and whether any specialists such as paint consultants will need to be appointed. Where there’s paint damage, we will often recommend the involvement of a specialist paint consultant, especially where the paint is not polishable, or where the paint finish is metallic or a custom colour, or where there are no reasonably viable cutlines, any or all of which could result in the need for significant and costly refinishing. Given the sums potentially involved, advice from a paint specialist is valuable.

Reviewing repair proposals

The surveyors on both sides will remain in contact, arranging any additional inspections as needed and in order to share and review repair quotations, once these are available. As with H&M claims, the P&I club will want to see a few quotes from different repairers in order to ensure that quotes are competitive. Your surveyor will review the quotes provided ensuring that the amounts quoted are fair and reasonable and that the scope of work covered by the quotations is strictly limited to casualty repairs. We’ll report our findings and comments to the P&I club.

Reviewing repair accounts

Once repairs are complete, we will be sent repair accounts to review. As with H&M claims, this is to ensure that the amounts being claimed are fair and reasonable and that the costs claimed are solely related to the agreed scope of repairs. Once they’ve digested our report and accounts review, it is likely that the claims handler at your P&I club will have a further discussion with the claims handler at the other yacht’s H&M insurers in order to settle the claim.

Settlement of P&I claims

In some instances, the P&I club may agree to pay the third-party yacht’s repair costs directly. However, it is also common that the third-party yacht will claim against their own H&M insurance policy and that the H&M insurer will recover their loss from the P&I club in due course.

Advice in the event of a claim

Stay calm. It’s never nice being involved in an incident, and things can get heated when a third party is involved. Do your best to stay cool, calm and professional.

Report the incident quickly to your insurance broker: insurance policies will have a requirement that a possible claim is notified at the earliest possible opportunity. Rely on your broker: a good claims broker will work hard on your behalf. They will understand exactly what protection your policy offers and will act as the intermediary between the owner and your P&I club, representing the Owner’s interests.

Be nice to your surveyor: we’re here to help and assist the insured as well as the P&I club. We deal with complex insurance claims week in week out. There’s not much that we haven’t seen. Be open and honest. We’ll be fair and objective. Our goal is to help the claim run smoothly with the minimum of stress and delay and to assist underwriters to reach a fair and reasonable settlement of the claim.

This is a short review of a very complex subject in which we’ve omitted a lot of detail in order to achieve some clarity. If there are areas that you’d like to understand in greater detail, please do get in touch with us.

If you think that we may be able to help you, please contact us by using the details here .

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To read other articles about various aspects of our work, follow the link here .

Yacht Survey Partners are global specialist superyacht surveyors. We are currently active in the UK, USA, Netherlands, Germany, Italy, France, Spain, Greece, Turkey, Malta, the Caribbean and further afield, undertaking pre purchase surveys, pre sale surveys, condition surveys, insurance damage surveys and providing advice to buyers, owners, family offices, brokers, managers, insurers, lawyers and shipyards. Our surveyors are located in London, Palma, Barcelona, Antibes, Monaco, Genoa, Fort Lauderdale and Hong Kong.

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Yacht Insurance [Complete Guide]

March 11, 2020 11:55 am

For the yacht owner , insurance is a necessity. Superyachts present a unique risk, as the yacht itself is highly valuable, and additionally, the nature of operations onboard requires the crew to be protected. This class of risk is serviced by specialized underwriters, who use contract forms that have been developed explicitly for this market. Previous papers in this series have provided insight into the yacht purchase and charter processes , maritime compliance , and costs of ownership . This next article will outline some of the principle types of insurance for yachts as well as some other “things to think about” for owners considering their options for insurance. 

Property Insurance (Hull & Machinery)

The property value risk is known in maritime insurance parlance as “Hull and Machinery”, often reduced simply to “hull”. 

Hull Insurance – Hull insurance is provided to the value of the yacht and underwriters will look for proof of that value before providing the insurance. Other operational provisions will be expected by the underwriter to be in place as conditions of the policy. Such provisions may include items such as a tender-towing plan, severe weather (hurricane) plan, or a yacht management contract.   

Yacht Insurance Premiums – In years past, there was a parametric relationship between premium and value, which made it easy to estimate premium based on the value and little other information. With the recent spate of heavy losses, however, insurance providers are now taking a much more actuarial view of the risk, reviewing operational and cruising plans prior to providing a premium quote. 

Learn More About:

• • Getting Underwriter Approval
• • Determining Yacht Insurance Premiums
• • Insuring Valuable Items Onboard
• • Warranties + Conditions Precedent

Liability Insurance (Protection & Indemnity)

Liability insurance in marine terms is known as “Protection & Indemnity”, shortened to “P&I”. 

P&I Insurance – P&I insurance in merchant maritime trade is often provided by “mutual” clubs which aggregate risk and provide extremely high (typically $500 million) limits for limited premium. Mutual members are advised that additional “calls” may be required if there is a heavy loss.  For yacht owners, however, P&I club level of coverage (that $500 million) is available on non-mutual, fixed-premium terms and with very small deductibles. 

• • Statutory Insurance Requirements
• • P&I Club Benefits
• • What Liability Insurance Covers

Crew Medical Insurance

Insurance policies are available to provide medical insurance to crew.  Policies may be tailored to the requirements of internationally domiciled crew on yachts that travel internationally or may be specifically designed to meet the needs of a U.S. national crew which stay predominantly in the U.S., meeting the requirements of the Affordable Care Act. 

• • Standards for Crew Employment
• • Yacht Owner Obligations to the MLC

Additional Insurances for Yacht Owners

The hull, P&I and crew medical insurance elements discussed above comprise a basic level of cover which may satisfy most yacht owners.  Additional cover extensions which are specific to certain risks are also available:

Charter Insurance – Owners that offer their yacht to the charter market will want to insure themselves against the contractual risks that arise from the use of the yacht by the charterer. Most underwriters will allow such use up to a limit, but owners are advised to check the terms of their policy.

Freight, Demurrage and Defense (FD&D) –  This coverage responds to approved legal costs of the vessel owner arising out of contract disputes. This is for disputes that fall outside of P&I* (P&I responds to bodily injury and property damage caused by the legal liability of the vessel owner).

Kidnap & Ransom (K&R) –  Widely available and known to persons of high net worth, K&R policies are available as extensions to yacht insurance.

Cyber-Extortion – The new frontier of yacht insurance, cyber-management operational policies and insurance policies are provided to protect owners from associated risks.

• • Legal Expenses Coverage
• • Cyber-Extortion
• • Employment Practices Insurance
• • Yacht Repair + Maintenance Considerations

Insurance Claims

Yacht owners place insurance and pay premiums for a reason, to be made whole in the case of an incident that causes loss. Yacht owners should not be afraid of informing their insurer of a potential claim; the involvement of the insurer’s legal and survey team will very often result in no claim being needed, or at the least will forestall a long and difficult battle of technical repair and ongoing legal involvement. 

In the case of any incident which may become an insurance claim, yacht owners and their representatives will be well-advised to ensure that the insurance is informed, that they are familiar with any loss adjusting surveyor appointed by their insurance, and that, if necessary, they also appoint an independent adjuster who will work alongside the insurance-appointed surveyor to represent the owner’s interests. 

Looking for more details?

Receive the complete Yacht Insurance Guide including:

• • Premiums + Deductibles
• • Underwriter Roles
• • Additional Yacht Insurances

This should not be considered a complete guide. For a better understanding of superyacht services, contact Ben Farnborough . 1

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