Jeff Goldstein: Personal, Business, and Life Insurance Broker, Toronto, Ontario

Insuring Your Yacht - Frequently Asked Questions

What is the difference between insuring a boat and a yacht?

In general, watercraft up to 26 feet in length are considered "boats" where as a "yacht" would be 27 feet in length or greater. As larger boats travel further, they have more unique exposures and therefore coverage is generally more specialized.

What should I consider when looking for a yacht policy?

When insuring your yacht, there are two main categories to consider. The first is Hull Insurance, which pertains to direct damage coverage as a broad insuring agreement. At the time the policy is created, all parties will need to agree on the value of the vessel (how much will be paid in the event of a total loss). This is referred to as Agreed Amount hull coverage. Ideally the policy will also include replacement cost coverage for partial losses. This will generally exclude items such as canvas, sails, batteries and outboards.

The second category to consider is Protection & Indemnity Insurance, which is a broad type of liability coverage. Maritime law is unique, and coverages designed to address risks in that arena can be crucial in the event of a loss. A thorough P&I policy will be able to provide payment of judgement against you and also provide funds for your defense in Admiralty (maritime) Courts. If you are unsure what laws and / or acts may be significant in your area, be sure to address this with your personal insurance company when working through the details of a policy.

What would not be covered in a policy?

Exclusions on a yacht policy generally include wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer's defects, defects in design, and ice and freezing.

What value should I insure my yacht for?

You should insure your yacht and / or boat for the retail purchase price you paid for it plus any additional equipments (contents). Taxes is optional.

What is a normal deductible?

In most cases a yacht insurance policy deductible will be a percentage of the total insured value. This means for example that a vessel insured for a total of $200,000 might have a 1% deductible totalling $2,000. In this case, this is the minimum amount a policy holder would be required to pay towards a loss before the insurer will pay a claim. When forming a policy, ask your personal insurance broker to about any "named special deductibles", which may stipulate a higher percentage for specific types of damage (such as storm damage).

What is Breach of Warranty?

Breach of Warranty coverage, or a Breach of Warranty clause, is intended to protect the interests of a lienholder in your boat or yacht. This would apply if you are leasing, renting, or still making regular payments towards a vessel and certain rules are stipulated by the lessor in the warranty - such as not going outside certain navigational limits or only using your boat for private pleasure etc. If you do not have Breach of Warranty coverage and experience a loss while in breach of these rules, you would not be eligible to make a claim. Neither yourself or the lender would receive any payment in this situation and you may end up making payments for a boat you are unable to use. Review this option with your personal insurance company if you think you may be a risk in this way, or if you do not yet own your yacht outright.