What Is Yacht Insurance?
Let me explain yacht insurance directly to you: it's an insurance policy that gives indemnity liability coverage for your sailing vessel. This means it covers liability for bodily injury or damage to others' property, as well as damage to personal property on the yacht. Depending on the provider, you might also get coverage for gas delivery, towing, and help if your yacht gets stranded.
Key Takeaways
Here's what you need to know right away: yacht insurance provides indemnity liability coverage for a sailing vessel. It breaks down into two main parts—hull insurance and protection and indemnity (P&I) insurance. While there's no strict legal length that defines a yacht versus a pleasure boat, it's generally agreed to be between 27 and 30 feet.
Understanding Yacht Insurance
If you're looking into this, understand that some companies focus on covering antique and classic boats. You can pick between an actual cash value policy, which is cheaper but accounts for depreciation and market value leading to lower payouts, or an agreed value policy. Policies might offer discounts based on your boating education, safety features on the yacht, or if it's a hybrid or electric model. Some insurers even bundle it with your home or car insurance for a lower rate.
To clarify sizes, boats are vessels under 197 feet, while ships are 197 feet or longer. Yachts don't have a fixed length, but they're typically at least 30 feet. Anything under 27 feet is usually a pleasure boat. Though there's no standard definition, the general range fits into class 2 and class 3 of the Federal boat classification system. For its part, the National Boat Owners Association sets the line at 27 feet. Yacht coverage is broader and more specialized than for pleasure boats because larger vessels travel farther and face bigger risks.
Important Aspects
One key point I want to stress: yacht insurance is broader and more specialized than pleasure boat coverage, since yachts can sail farther and encounter greater risks. Your deductible—the amount you pay out of pocket before insurance starts—is typically a percentage of the insured value. For example, a 1% deductible on a $100,000 insured yacht means you pay $1,000 first. Most lenders cap deductibles at 2% of the insured value.
Keep in mind that yacht insurance generally doesn't cover wear and tear, gradual deterioration, marine life damage, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, design defects, or ice and freezing.
Two Parts of Yacht Insurance
Yacht insurance has two principal sections, and I'll break them down for you.
Hull Insurance
Hull insurance is all-risk, direct damage coverage with an agreed amount settled when the policy is written. In a total loss, you get the full amount paid out. For partial losses, there's replacement cost coverage, but items like sails, canvas, batteries, outboards, and sometimes outdrives are subject to depreciation and not fully covered.
Protection and Indemnity (P&I)
Protection and indemnity (P&I) insurance offers the broadest liability coverage, tailored to maritime law's specifics. It includes longshore and harbor workers’ coverage and Jones Act coverage for your yacht’s crew, which is crucial because losses here can reach six figures. P&I covers judgments against you and pays for your defense in admiralty courts.
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