Tel:   954-523-6867

W.R. Hodgens Marine Insurance, Inc.

Yacht Insurance FAQs

frequently asked Yacht Insurance questions

Find below Frequently Asked Questions by yacht owners of W.R. Hodgens Marine Insurance, Inc. and the answers. Click the hand to see the answers. Contact Us with any questions you might have.

Yacht Insurance Questions
There is no such thing as a standard yacht insurance policy.
Due to the nature of this kind of insurance, where yachts are mobile and can travel between states and even between countries, there are many policy forms and many differences in the coverage. We strongly suggest you purchase a policy underwritten only with major A rated US or Surplus Lines Companies that are approved to write in the US and are well known companies.
Also it is a good idea to place this coverage with an agent that specializes in yacht insurance to make sure you have all the proper coverage you will need.
Read the policy and if needed, have your legal representation read the policy and advise you so you know exactly what is covered and what your responsibilities are. Pay special attention to the area in the policy that outlines exclusions to coverage that all polices have in the policy wording.
Call you agent with any questions or better still email any questions so you can have a written record of correspondence. No one ever made mistake contacting your agent with questions, that is what we are here for! It is most important to maintain your vessel diligently and keep all records and receipts for haul outs and any work done aboard. Understand that your insurance company will expect your boat to be seaworthy and read the wear and tear and gradual deterioration sections of your policy. Losses that occur because of a lack of maintenance or no maintenance over a period of time, can result in a company declining to pay a claim.

Yacht Insurance for Motor Yachts and Sailboats

The Letter of Compliance is specifically for recommendations made on the survey by the surveyor.
The underwriters will request a signed Letter of Compliance to confirm that all survey recommendations listed on the survey have either been complied with or corrected.
In some cases the company will require these items to be completed prior to any use of the yacht OR as agreed by the company per your request.
If you are not going to do a survey item, or do it at a later time, please make sure you NOTE this on the Letter of Compliance so we can secure the company's agreement.
Probably not, as most companies will not insure a vessel for more than the current market value that is in a purchase survey.
It depends on the company but almost all companies want to insure for the amount you paid for a vessel, at least for the first year. Discuss with your insurance agent at the beginning when you are seeking coverage and explain all the details.
Insurance companies are in the indemnity business, which means if you have a total loss, they will pay an amount to 'make you whole" or "even" from where your started. In the above situation, if you make $200,000 on a vessel after a loss, the companies see this as a "moral hazard" which is a polite way of saying they don't want you to be in a position to make money on a loss above your purchase price. In such a case you may be lax in making sure a loss doesn't not happen!

Yacht Insurance for Cruising Sailboats

The vast majority of boat /yacht insurance policies are Agreed Value policies, which means in a total covered loss, the insurance company will always pay the full amount of the hull value on the policy, less any applicable deductibles.
The other kind of policy offered is an ACV or Actual Cash Value policy. This policy does not guarantee the amount of payment in a covered total loss, and you and your insurance company have a conversation as to what they will pay you, after the loss. Obviously, this is not a great policy form and we do not offer this kind of policy at our agency.
However, even agreed value polices sometimes will have a depreciation schedule that will reduce the amount the company will pay for items used in the repair of a vessel in a partial loss/repair situation. The thinking here is that if you buy a new Tender and Outboard for 10k and it is lost 6 years later, the company does not want to buy you a brand new tender and outboard, when the value of a 6 year old tender and outboard was far less. Most of our client will agree with this thinking, but on the other hand, depreciating other items, like struts and shafts, masts and spars etc. up to 80%, can mean a policy owner may have to pay a substantial amount of money in the repair of the yacht.
Some companies have NO depreciation on any items and some have up to 80%, so please review your policy and quotes as this is well worth noting!
Depends on the age of the yacht. If fairly new, the company may accept an in-water survey. If older probably not. Also, if the boat was hauled and bottom maintenance was completed in the last 12 months, you may be able to provide receipts to the company and an in-water survey.
The survey must be done by an accredited marine surveyor. If in the US, by a Nams or Sams surveyor (both on the internet with lists of surveyors in your area) or if outside the US by a Lloyds or other accredited surveyor. Any question, send the surveyors credentials to us, the insurance agent and get them approved by the company prior to hiring the surveyor.

Yacht Insurance for Home Waters

Not at all. We have many older wood vessels insured. As long as you have a good survey on the vessel the fact she is wood does not preclude you from getting good insurance on your wood vessel. We actually have a 1930 wood motoryacht insured!
Usually not a problem, as long as this was done by an accredited marine surveyor, the company will almost always accept it. They may ask the surveyor to do a brief re-inspection on the vessel to make sure of no incidents that may have occurred in the last 4 months but you should be good to go.
The two types of charters often used for non Coast Guard inspected vessels, like most yachts, are bareboat and/ or captained charter policies, the latter of which are often called 6-pack charters because the Coast Guard regulations usually allow up to 6 guests aboard a non inspected vessel.
Bareboat charters agreements and insurance policies are most often used for sailing vessels as with this type of charter the vessel is actually turned over to the charter and there is no captain aboard. With your 48 Hatteras LRC you can offer your vessel as a bareboat but it would be prudent to consider the potential for damage or abuse to your engines if an operator does not care or know how to keep the engines in the proper RPM's zone.
Captained or 6-Pack charters require a licensed captain to be aboard at all times during the charters, and most companies require approval of the captain's resume prior to operation. This assumes that you, the owner, do not have a 6 Pack license. If you do have a 6 –Pack US Coast Guard license, and are approved to operate the vessel while under charter by the company, you do not need any other licensed captain.
One important factor to remember is that if you have any paid crew aboard the boat, as captain, mate or deckhand, you must advise us so we can add the proper coverage for them. Due to the Jones Act, paid crew are employees and you have some exposure if they become injured or sick aboard the vessel. We add paid crew liability coverage to cover this area of your liability.
An audio gauge is a method of determining if any plating on a steel or aluminum yacht has deteriorated or wasted away over time. This is usually required on older steel and aluminum vessels to determine if any problems in the hull plating. The audio gauge is a hand held electronic instrument that will record the thickness of the plating.
You can save money on the premium with an ACV policy but you get what you pay for!
In a total loss, you and the company with the ACV policy will have to agree on what your vessel is really worth and how much they are going to pay you. Not a great position to be in I am sure you will agree. An agreed value policy always pays the full amount of the hull value as listed on the Declaration page less any applicable deductions. So, you are sure of your insured amount.
We have several yacht insurance companies that will provide an annual policy that will include Transatlantic and Transpacific navigation. They require up to date surveys including an up to date rigging inspection for sailing vessels. Crew requirements are a minimum of three experienced sailors aboard that have prior blue water experience.
A breach of warranty clause provides payment to the bank for a mortgage amount that is placed on the boat, in the event that the owner voids or breaches the policy through an action or non action.
For instance, you have a boat with a hull value of $2,000,000 and a mortgage of $1,700,000 held by the bank. Your policy states your navigation limit is Florida and Bahamas only. You forget this and take the boat to Cuba, where you have an engine failure and wind up on the beach in Cuba and the boat is a total loss. In this case, the breach of warranty clause would provide for the bank to be paid the $1,700,000 outstanding mortgage. There would probably be no coverage for you for the balance of the hull amount as you voided the policy navigation limits.
A survey letter of compliance is a form that you sign and provide the yacht insurance company that confirms that any survey recommendations on the survey have been repaired or replaced. This is a very important document as if you have a loss or claim from a survey item that has not been addressed, the claim could be denied by the insurance company. If you are not going to do a survey item, you must note it on the compliance form and make sure the company approves non repair of this item.
Some companies will quote with a certain minimum amount of premium that is due for a policy that is cancelled early. Most of the time the minimum earned premium is 25% of the total premium or, three months of coverage.
Trimirans are very difficult to insure. We have one or two companies that may offer a quote for them. On the other hand we have many companies that are happy to offer insurance for Catamarans and we have many insured.
Surplus Lines Companies are approved but non admitted companies that are allowed by the Florida Insurance Department to offer insurance in the state of Florida. Many surplus lines companies are very large world wide companies like Lloyds of London or Great Lakes UK. They are A rated and offer very competitive quotes in areas of insurance that US or non surplus lines companies do not want to write. We as agents add Florida taxes and fees to these quotes as these must be sent in to the state by law. Admitted carriers like Progressive and Chubb already pay fees to the state directly and nothing is added to these quotes.