Two weeks ago the sun set on the annual Monaco Yacht Show where the world’s royalty, rich and famous had been sharing cocktails on the decks of some of the most beautiful and expensive privately owned vessels ever built. There were over 33,000 visitors to the show. Interestingly though and closer to home, the Southampton Boat Show had closed the week before with some 120,000 visitors. Surrounded by water, it is no surprise that many of us in the UK still feel the pull of the sea and love being by, on or in it.
Owning a boat or a yacht is something that many of us perhaps aspire to but like all substantial investments needs some careful thought and commitment. Most owners would agree that it’s not always plain sailing but can bring some wonderful rewards and pleasure. Just like the car on your driveway you’ll want to protect your investment (although unlike your car, marine insurance is not necessarily mandatory) but getting the right cover for a boat is rather more complex and marine insurance law introduces pitfalls into which the uninformed can easily fall.
The requirement for sound insurance advice from an insurer or adviser who understands marine insurance is a given but equally is the need for a properly tailored policy (or possibly policies) which will meet the specific needs of that particular owner and that particular vessel.
Broadly speaking, there will always be at least two essential parts to a marine policy: Physical damage, sometimes referred to as Hull and Machinery; and liability.
The physical damage section covers accidental loss or damage to the boat and its machinery. This not only covers the hull and the engine(s), but also the sails and other equipment on board that are required to operate the boat. Sounds straightforward but is less so when you consider weather-related perils such as wind, rain, hail, lightning and wave action; fire; loss or damage caused by theft or vandalism; and collisions with docks, submerged or floating objects or other boats. Cover also needs to continue to cover your boat while it is stored on land, or while you transport your boat over land by trailer. It must cover the activities the boat will be used for and where it will be used so the fine print of exclusion clauses needs careful consideration. Cheaper policies may also only cover the residual value of a loss (known as Actual Cash Value) rather than cost of replacement.
The liability section, sometimes referred to as Protection & Indemnity, covers your legal obligations to third parties. This legal liability can arise from bodily injury or loss of life, or damage to someone else’s property, as a result of the ownership or operation of your boat. Liability coverage also helps pay for your legal defence if you are sued for a liability that may be covered under your boat insurance policy. You also need to consider passengers and cover if you loan or charter the boat to a friend, colleague or client. Maritime law may also place a responsibility on the owner for salvage in the event of an accident and the ecological clear up of oil and fuel leakage.
These are just the main two areas; there may well be other requirements for insurance for example for crew or even piracy! The bottom line is to get proper advice having carefully thought through your own specific requirements. As always, full disclosure is a cardinal rule to ensure peace of mind that you and your boat are covered. Whilst you may not be aware of all the factors involved in getting the right personal marine insurance a broker will so get in touch!