Buying Big Boat (Yacht) Insurance
Buying Big Boat (Yacht) Insurance
In my last blog I covered buying insurance for smaller boats (under 27'). This time I'll cover larger boats over 27'.
Large boat (yacht) insurance is at least as complex as home or car insurance. You need an agent who specializes in marine-related risks. We are licensed to sell boat insurance in both North Carolina and Florida, so whether you are cruising Biscayne Bay or Lake Lure, we are equiped to give you the very best service in either state.
What Does The Insurance Cover?
Yacht insurance typically has three main components:
HULL INSURANCE All-risk coverage that includes Agreed Amount coverage of the vessel in the event of a total loss.
REPLACEMENT COST Replacement (new-for-old) coverage on most partial losses, with depreciated coverage for certain items such as sails and canvas, batteries, outboards (and sometimes outdrives).
PROTECTION AND INDEMNITY A very broad form of liability coverage. Maritime law is unique; you need coverage for such things as Harborworkers and Longshoreman's coverage, crew coverage, and your defense in Admiralty Courts.
You'll find that yacht insurance usually includes an itemized list of specific terms and conditions. Read these carefully. Make sure you are protected in the event of a collision with submerged objects or other boats, whether at the dock or at sea.
What's Not Covered?
Yacht policies generally do not cover normal wear and tear, gradual deterioration, marine life, marring, scratches, dents, blistering, electrolysis, animal damage, osmosis, defects in design or manufacture, and ice and freezing.
How Much Insurance Should I Buy?
I recommend you insure your boat for its full purchase price plus the price of any specialized onboard equipment (such as fishing gear or navigation and radio gear), and maybe sales tax as well. You'll have a deductible; on most policies that equals a percentage of the insured value. Most lenders allow a maximum deductible of 2%.
Be very cautious of an agent who offers you a "named special deductible" such as storm damage. That can run you 10% or more. That means that on a $100,000 yacht, you would have to pay the first $10,000 for wind damage.
As with auto insurance, large boat insurance includes standard coverages and deductibles. The following are common:
Medical payments -- no deductible, $5,000 limit
Personal effects -- $250 deductible, $1000 limit
Uninsured boaters liability -- no deductible, $10,000 to $300,000 limit
Towing and assistance -- no deductible, $500 limit
Fishing equipment -- $250 deductible, $1,000 limit
Sometimes your lender will require you to obtain Breach of Warranty coverage, where you warranty (promise) such things as not using your boat during the lay-up period, not using your boat for anything but private pleasure use, or not going beyond your navigational skills. Breach of Warranty coverage protects the lender, since it pays off the balance you owe but nothing more. If you don't have this coverage and you experience a loss, neither you nor the lender will get reimbursed, but you would still be liable to pay off the loan. That could leave you paying off the loan for a boat you could not use.
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