Insurance is insurance, right? Not with Yachts!

Do you ever find yourself wondering if you can just anchor your boat of the coast somewhere and not get in trouble? Or how you determine if your crew is considered a “Paid Crew” on your insurance policy? Find the answers to these questions and others in this week’s blog post. The questions have been answered by our Novamar President, who is a 30 year veteran in yachting and sailing.

 

All Yacht Policies Are the Same Right?

Wrong!  These are two party contracts that are largely unregulated by state insurance regulators.  In other words yacht insurance companies have a free hand to write exclusionary wording as they see fit.  The coverage, and more importantly, exclusions vary greatly from policy to policy.  Is vessel damage due to hitting a whale covered?  If my boat sinks at the dock due to a through hull failure am I covered?  Can I can loan my boat to a friend and still have coverage?  Is my boat covered for the Agreed Value on the policy or a depreciated amount? 

The answer to all of these questions and many others is the same – maybe yes, maybe no.  It all depends on the policy contract wording.  Call a Novamar Insurance Group representative or your current agent to find out.  Before the loss occurs!

 

Who cares where my boat is moored?

Why do insurance agents ask me for the mooring location of my boat?  They don’t ask me to tell them when I park my car in a different parking lot.  Yacht insurance policies have navigation limits and rates based on areas of navigation.  Premiums vary greatly depending on weather conditions, navigational hazards, and availability of repair facilities in various areas around the U.S. and around the world.  It is important for insurance companies to know how many boats they insure in a given marina and harbor so that they can monitor their exposure in the event of a catastrophe i.e. marina fire or hurricane.  If an insurance company and your agent know where their insured boats are located, they can contact their clients to take precautions prior to an impending storm making landfall AND dispatch catastrophe teams to the site after the storm or fire hits to immediately start settling claims.  

 

What is the “Private Pleasure Warranty” and why is it important?

One of the warranties or provisions in a standard yacht insurance policy is what is commonly referred to as the “Private Pleasure Warranty”.  If a vessel owner accepts remuneration in exchange for being aboard the yacht, it can constitute a violation of the Private Pleasure Warranty resulting in a policy that is null and void.  If a friend brings along snacks, and drinks am I at risk of losing my coverage?  It is best to check with your agent, but generally speaking if a guest brings food, drinks, pays money, or provides any other compensation as a requirement to be aboard your vessel, then your policy is in jeopardy.  Ask a Novamar Insurance Group representative or your current agent BEFORE a loss occurs.

 

Are my crew considered “Paid Crew”?  Does it matter?

Answers; Maybe and yes!  If a yacht owner pays a person to act as captain or help crew the vessel then the vessel owner may have legal obligations under the Jones Act and other federal acts protecting paid crew.  Some policies include incidental crew liability coverage, many do not.  A crew member compensated with airline tickets, hotel rooms, or money, may be considered paid crew entitling him/her to federal benefits.  In admiralty law, a vessel can be sued in rem (in place of) the vessel owner.  Creating ownership entities, charter agreements between parties, etc. does not eliminate this exposure.  Crew liability coverage is not expensive to obtain, but lack of crew liability coverage can be costly.  Call a Novamar Insurance Group representative or your current agent and find out if you are properly covered BEFORE the loss occurs. 

 

Why do I need to purchase Liability Coverage while cruising in Mexican Waters?

The Mexican government requires boat liability coverage to be purchased through a Mexican domiciled insurance company.  Because it has become so easy to cruise between the U.S. and Mexico, we sometimes forget each country has its own laws and customs to follow.  Mexico’s civil liability laws view liability much differently than in the U.S.  When a liability loss occurs, it is important to have a local insurance company adjuster hired by your Mexican insurance company to look out for your interests when dealing with the authorities.  Contact Novamar Insurance Mexico for more information.