Yacht Insurance

Hull coverage is a main component of watercraft insurance that covers the owner against covered losses resulting from physical damage to the watercraft. There are two options for hull coverage—agreed value (AV) and actual cash value (ACV). The difference between these can be huge, especially regarding total or partial losses. Additionally, always read your policy contract to be familiar with terms, conditions, and exclusions.

Let’s say you suffer a total loss. Agreed value (AV) means the value is not subject to depreciation when a loss occurs. You’ll have hull coverage for the amount shown in your policy.

Actual cash value (ACV) is different. At the time of the total loss, the settlement of the claim is subject to depreciation. Yes, you can purchase ACV coverage in exchange for premium savings, but keep in mind that your loss settlement may also be less than the amount shown in the policy. If complete coverage is important to you, it’s time to speak with that insurance advisor. They will take you through potential scenarios, including replacement cost considerations, and deduce which type of policy is ideal.

Which coverage is ultimately better? An ACV policy means a lower premium—but beware of the depreciation that comes into play at settlement, less any applicable deductible. Under agreed value, the policy pays the entire hull limit minus any applicable deductible for a total loss. We recommend choosing an AV policy for true peace of mind.

In addition to hull coverage, there are other insurance solutions and coverages you may want to consider to address your specific needs:

• Boating Equipment: It’s important to know how your policy separates equipment used for yacht operations. It may be included in the hull limit or be a percentage of the hull value. This will depend on the insurance company providing the coverage.
• Protection and Indemnity (P&I): Also known as Watercraft Liability, this is 3rd-party Bodily Injury (BI) and Property Damage (PD) liability coverage that applies when the insured vessel is involved in a boating accident in which a covered operator is at fault. Indemnity is crucial here.
  • BI coverage pays for medical payments, lost wages, sickness, or death resulting from the accident. This coverage also pays for legal fees and recompense for pain and suffering that may result from the accident. BI responds if you’re found negligent for bodily injury to others.
  • PD coverage pays for damage to other boats, property, and structures. PD responds if you’re found negligent for damage to the property of others.
• Wreck Removal: If your vessel sinks or runs aground, you may be legally required to remove it. This covers the often substantial costs associated with raising and removing the wreckage.
• Crew Coverage: The Jones Act is a federal statute that provides a means for crew members injured by negligence to recover damages. Take care of those who work for you as captain or crew. Should injury occur during their duties, are they covered? Adding crew coverage also protects you, as the vessel owner, if they bring a crew claim forward. This coverage is usually a separate endorsement to your yacht insurance policy, and an additional premium is generally charged based on the total number of crew members. Always refrain from hiring crew unless this important coverage is purchased.
• Towing/Labor: Here, the policy limit is the main focus. Some policies will have an occurrence limit subject to an annual aggregate limit. Is there a maximum limit if you are more than ‘x’ miles offshore? Is towing handled like a claim where you’re reimbursed, or is the company billed on the backend?
• Uninsured Boaters: Uninsured boater coverage is bodily injury coverage for a covered person if your covered vessel is struck by a boater who lacks sufficient liability insurance.