Getting Your Yacht Ready for Charter
Many owners consider chartering their private superyacht a great way to generate revenue from an asset that would otherwise lie untapped most of the time. Chartering is indeed a comfortable way to reduce the running costs of owning a yacht but it does not come completely without pitfalls.
From an insurance point of view, preparing for charter should not be a challenging task. Generally an email or phone call to us is enough to start the process. As chartering means an increase in risk, generally insurers will apply an additional or higher premium to your current policies in order to include the commercial activities. Here it is important to disclose the circumstances under which the charter activity will be carried out: bareboat or skippered, cruising area, deductible and number of guests will be key information we will require to assess the risk and provide the new terms.
Once the new conditions and premiums have been disclosed to and approved by the insured, the extension can be placed very quickly so as to not delay the charter activities.
However, there are also other issues the yacht owner or operator will have to take into consideration. Here are a few questions owners and captains should ask themselves when it comes to chartering:
Do I need to comply with any local requirements?
In the Balearics, for example, owners need to obtain a local charter license if they plan to board guests on the islands. Most regions in Spain will also require an additional accident policy.
Do my crew have the necessary qualifications?
The qualifications required on commercial vessels are not necessarily the same as on private yachts. Make sure you comply with the flag state rules and any local requirements that may apply.
Do I comply with labour regulations on commercial vessels?
This depends on the flag state and the gross tonnage of the vessel. Most flag states have already ratified the MLC 2006 and others, in addition, have national crew welfare regulations via social security schemes.
Will my yacht compete in any superyacht racing events?
If yes, make sure your insurer has been informed. Racing is not included on all yacht Insurance policies and an additional premium may fall due. It is also important to clarify how the guests and race crew are categorized (crew or guests) and insured.
Is the security deposit commensurate with the deductible I have on my policy?
Make sure that the security deposit stated on the Charter contract is in line with the deductible you have on your hull policy. Here a shortfall can quickly turn a profitable charter into a loss. Should your charterers not be willing to accept the deductible, speak with your insurance provider, it is often the case that a reduced deductible can be agreed for an additional premium.
Do I need a local tax representative?
By conducting business in a foreign country, local taxes and duties may fall due. Make sure you are aware of the implications before engaging in charter activities abroad. Here charter agents will be able to assist.
Are the clauses on my charter contract in line with the cover of my yacht insurance in terms of: accident insurance, personal effects, emergency accommodation etc.?
Make sure you do not surpass the limits of cover of your insurance policy with regards to cover for the personal effects guests may bring onboard, their individual value, compensation in the event of an accident onboard and alternative accommodation should the yacht have an incident.