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.
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.
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!
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!
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.
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.
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.