Boat Insurance Explained
Do I need boat insurance?
As a boat owner, it’s likely you know a fair bit about boats but what about when it comes to the insurance? Insurance is about protecting yourself against the unexpected. You will have no doubt made a sizeable investment in purchasing your boat, damage it without insurance in place and you may find yourself financially unable to repair or replace it.
Insurance provides you with the peace of mind of knowing that you are protected from the financial costs resulting from an accident. So how do you choose the right insurance policy for your boat?
There is a general misconception that all insurance policies are the same – they are not! With over 100,000 sailing yachts and motor boats of all sizes on cover throughout the world here at Pantaenius we understand the insurance needs of boat owners.
We will help you to understand your boat insurance and what questions you should ask when seeking insurance.
Never sail without it
Liability insurance covers your legal liabilities due to your negligence should you cause damage to third party property or cause injury to, or death of another person. The majority of, but by no means all, policies include liability to third parties with the hull insurance. There are a handful of insurance providers that will offer Third Party Liability insurance on its own. If separate from the Hull Insurance, claims on the one policy should not affect the premium or conditions on the other. Whilst not mandatory, almost all marinas require yachts to have Third Party Liability insurance.
In marine insurance, liability is not always easily determined. It is necessary to demonstrate negligence to the extent that a court of law would be able to attribute legal liability. Of course, this does not mean that all claims for liability would or should get to court! But it does mean that, even though someone else’s boat or property may have been damaged, or someone may have been injured, in an accident involving your boat, it may not legally be your liability.
The Pantaenius Third Party Liability policy is very comprehensive, and it includes cover for watersports. It not only covers the liabilities of the owner, but also the liabilities of anyone else using the yacht with his permission, or engaged in watersports activities from the yacht. For example, if you are out with some friends and towing one of them on waterskies, your liability to them is insured, but so also is their liability to anyone they may hit in the water. And the good news is, watersports cover is automatically included without additional premium, and includes SCUBA activities, as long as properly supervised and equipped.
More than just an asset: Hull Insurance
Hull insurance covers you for damage to your own boat and is one of the main types of marine insurance policies available. It covers a broad range of damage to a yacht’s hull, machinery and equipment. The cover needed depends on your intended use of the vessel, for example; Charter? Racing? Period in-commission? Cruising area? Explaining the intended use of the vessel to insurers enables the provision of the right coverage. For motor yacht’s it is important to consider what cover is available for the engines and/or whether there are any limitations on the speed of your vessel.You should also consider whether you want to have cover for Personal Effects, Trailers and/or Cradles.
Pantaenius offers market leading all risks hull cover, on an Agreed Fixed Value basis. An ‘all-risks’ policy covers loss or damage to the insured property, unless the loss or damage is caused by something which is specifically excluded. Simply put something is covered unless one of the exclusions in the terms and conditions applies or is specifically noted on your policy schedule.
With an Agreed Fixed Value policy, the value of the yacht is agreed between insured and insurer right from the start and that’s what is covered in the event of a total loss. Some insurance providers will only offer market value or in some cases they may even reserve the right to replace the entire yacht with another of a similar age and condition. If this isn’t what you want from an insurance provider, don’t sign up to the policy.
It’s also important to consider what your contribution may be when it comes to a partial loss. The commonest example of a contribution, and the one we are probably most familiar with, is that of an excess (sometimes referred to as a deductible). The excess can vary from insurer to insurer – not just in the amount, but also in the way it is applied – so if you are comparing two policies, one possibly with a higher excess than the other, look also to see what type of claims it does or does not apply to. Some insurers will apply it to all claims except total loss; other insurers don’t apply it to some types of partial loss claims (for example fire or theft).
The only way you will know how good your insurance is, is if you need to make a claim. The vast majority of insurers will settle valid claims without any argument. However, if the premium charged wasn’t equitable could this lead to less generous claims handling? Choosing an insurance provider with an excellent claims reputation is therefore an important consideration.
Check the smallprint
You should familiarise yourself with any policy exclusions before purchasing a policy. Insurance is to protect you against the unexpected, so policies generally exclude things that can be anticipated or prevented. Significant exclusions often include (but are not limited to) wear and tear, gradual deterioration, faulty parts or lack of maintenance. If something is likely to fail due to its age or condition, replacement should be considered.
An important question to ask is, if a part fails due to wear and tear or fault, is the resulting damage excluded, or only the part that failed? Is that clear in the wording? Consider the consequences.
What is expected of you
There are several responsibilities that fall to you, as the boat owner, in the event of a claim. The two most important are: notification and mitigation.
Many policyholders fail to report a loss immediately to their insurance company. Early notification will allow your insurance provider to provide the most appropriate advice and if necessary, their approval before proceeding with repairs. It is also important to remember that you may have to report certain incidents, which may give rise to a claim, to the relevant government authority (e.g. Police or Coastguard) immediately.
You have an obligation to act as 'a prudent uninsured person', which means to behave as you would do if you did not have insurance in place, in order to avoid a loss occurring or to minimise the costs involved. If you are unfortunate enough to suffer damage, you have an obligation as a policy holder to 'mitigate the loss' which means to take reasonable necessary steps to prevent the damaged items from deteriorating; administering first aid to an engine which had been immersed in salt water would be good example of this.
Get the best service
You only really test insurance when you claim. As we all know sailing isn’t a 9-5 pastime and should an emergency happen, you will want to have 24/7 support on hand to ensure immediate and relevant advice day or night and whilst most insurance providers offer such assistance, it is not always provided in-house or on a 24/7 basis. It is also worth checking whether the claims management can access the right support internationally.
Pantaenius for example, has over 35,000 trusted ‘partners’ around the world, meaning we’re well placed to provide the best support, no matter where you are cruising.
When choosing an insurance provider you may wish to consider the customer service offered. Will you receive the service you need in the administration of your policy? Will you be able to talk to a ‘person’ rather than a ‘call centre’? How knowledgeable are the employees who will handle my policy?