Yacht Insurance Explained: Are You Actually Covered?

What every yacht owner should understand before something goes wrong.

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Most yacht owners have insurance.

The more interesting question is whether they actually understand what they have bought.

A policy might sit quietly in a drawer or inbox for years, renewed each season without much thought. Then something changes. You fit lithium batteries. You decide to sail single-handed. You leave the yacht on a mooring through the winter. You head across Biscay, enter a race, charter the boat, or start planning an Atlantic crossing.

Or, rather more dramatically, the yacht catches fire.

Suddenly, the small print becomes considerably more interesting.

In the latest Berthon International Podcast, Sophie Kemp sits down with Marcel Herrera, CEO of CompareYachtInsurance.com, to strip yacht insurance back to what owners actually need to understand.

Marcel knows the subject from both sides. Before his career in marine insurance, he was a professional yacht racer, and he and Sophie first met while studying navigation and maritime science at Plymouth. His subsequent insurance career has taken him through Lloyd’s brokers, MGAs and syndicates, giving him an unusual combination of practical sailing experience and knowledge of the international insurance market.

And one of the first points he makes is important: yacht insurance isn’t car insurance.

There is no such thing as a standard yacht

A car insurer can work with enormous datasets containing thousands of near-identical vehicles and drivers.

Yachts are different. The boat, its value, construction, age, equipment, cruising area and intended use all matter. So do the experience and qualifications of the person behind the wheel or holding the tiller.

As Marcel explains, each boat and customer represents an individual risk. That makes providing an insurer with good information about the yacht, your experience and what you intend to do with it particularly important.

It also means comparing yacht insurance purely by price can miss the point.

Two policies may both insure the same yacht, but what happens when you make a claim can depend on the wording behind them.

What does “all risks” actually mean?

One of the fundamental distinctions Marcel discusses is between named-perils and all-risks policies.

With named perils, the policy specifies the events it covers. An all-risks policy starts from a broader position, subject to its exclusions. Marcel describes all-risks cover as the “golden standard”, but that doesn’t mean everything imaginable is automatically covered.

Wear and tear, corrosion, osmosis and latent defects are among the areas where exclusions or specific wording may become important.

Then there is the value of the yacht itself.

An agreed fixed value policy can establish in advance what will be paid in the event of a total loss. But the figure shouldn’t necessarily be left untouched year after year.

Marcel points to the extraordinary boat market during Covid, when values of some craft, including RIBs, rose significantly. Major work can change the equation too. New standing rigging, expensive equipment or a lithium battery installation can all alter the yacht and potentially its value.

In other words, the yacht you insured three years ago may not really be the yacht sitting in the marina today.

Changed something? Tell your insurer.

This is perhaps one of the simplest lessons from the conversation.

If something significant changes, talk to the insurer.

Lithium batteries are a good example. Retrofitting a lithium system isn’t simply a matter of replacing one battery chemistry with another. Some policies may have requirements around installation methods, professional installers or applicable standards.

The same principle applies to how the yacht is used.

Some policies may restrict or exclude solo sailing. Racing may need specific cover. Chartering introduces another set of considerations, particularly if the yacht is being offered for bareboat charter. Even allowing friends to use the boat can depend on the wording of the policy.

The assumption that “I’ve got yacht insurance, therefore I’m insured whenever I’m on my yacht” is precisely where things become dangerous.

How far are you actually allowed to sail?

Cruising grounds are another area where assumptions can become expensive.

Marcel explains that a typical UK policy might cover UK waters or a wider geographical area such as Brest to the Elbe. Head further south and the insurance market starts changing.

Biscay. Gibraltar. The Canaries. An Atlantic crossing. The Caribbean.

As the cruising becomes more ambitious, the number of insurers comfortable with the risk can reduce. Go to places such as Svalbard, the Arctic or Antarctic waters and Marcel says the number of comfortable insurers can be counted “on one hand.”

His advice is refreshingly straightforward: if you’re planning a serious cruise, don’t tell the insurer the week before you leave.

Give them the two or three-year plan.

That also allows questions to be answered before they become problems. What happens if bad weather forces you outside your agreed cruising area? Some policies may allow 48 hours, others 72, and others may not contain the same provision at all. Marcel’s experience is that insurers are generally pragmatic when a skipper is genuinely acting to protect the vessel, but the wording still matters.

Can you buy too much yacht?

Possibly.

One of the more interesting parts of the discussion concerns the person being insured rather than the boat.

Marcel argues that experience should be the important measure, but experience is difficult for an insurer to quantify. Qualifications provide something tangible.

Someone with a Yachtmaster Ocean qualification and 30,000 miles behind them presents a very different picture from somebody stepping aboard with a Powerboat Level 2 certificate.

The jump from a 30-foot boat to a 60-footer can therefore matter. With larger motor yachts in particular, an insurer may want a professional captain or commercially qualified skipper aboard. Sailing yachts can sometimes offer greater flexibility where an owner can demonstrate suitable experience and qualifications.

Interestingly, Marcel also notes that gaining qualifications can sometimes reduce the premium sufficiently for the cost of the training to pay itself back over several years.

So Yachtmaster training might improve your sailing and eventually buy its own drinks.

Then something goes wrong

This is where insurance stops just being some paperwork.

Claims can range from comparatively minor losses such as phones and tablets to lightning strikes, fires and yachts sinking.

Marcel’s first piece of advice is simple: call the insurer.

Depending on the incident, insurers can bring in claims teams, surveyors, loss adjusters and specialists such as electricians or riggers to establish what happened and determine the scale of the damage.

He also uses a phrase that sounds alarming until he explains it:

“Act as if you’re uninsured.”

It doesn’t mean assuming the policy is worthless. It means that in an emergency you should take sensible action to protect life and prevent further damage rather than standing on the pontoon wondering whether the insurer has approved it.

Call the Coastguard, RNLI or emergency services if required. Protect the yacht where possible. Mitigate the loss. Then get the insurer involved.

Afterwards comes the investigation.

Surveyors can establish the facts, cause and scale of a loss. Loss adjusters then consider those facts in relation to the policy. Marcel uses the example of an incorrectly installed lithium system leading to thermal runaway and a fire. Establishing the proximate cause of the loss can be critical to determining how the policy responds.

And despite the horror stories surrounding insurance claims, not every claim disappears into a six-month administrative abyss. Marcel says straightforward claims can sometimes be settled within hours or days. Longer cases are generally those where questions remain around the cause, coverage or cost of repair.

The boat that sailed away without its crew

There are, inevitably, stranger stories. Marcel recalls one claim involving people who ended up needing rescue while their boat continued off into the distance without them.

The problem? The kill cord hadn’t been used or properly understood. The occupants were rescued by the local equivalent of the RNLI. Their boat, meanwhile, continued its voyage alone.

Insurance can apparently cover many things. Human ingenuity remains a separate problem.

The future may be watching your bilge

Yacht insurance is also changing.

Smart monitoring systems can already provide information about battery condition, bilge activity, shore power, location and other aspects of a yacht’s operation. Marcel says two insurers on his company’s panel already offer monitoring devices, with some insurers using the technology to reduce premiums or as part of their requirements.

The obvious next step is usage-based insurance.

If a yacht spends months ashore or is only used occasionally, should its owner pay the same premium as somebody sailing constantly?

Marcel believes the market is moving in that direction.

It raises interesting questions about privacy and how much data owners are comfortable sharing, but it also points towards an insurance market capable of understanding how yachts are actually being used rather than relying solely on broad assumptions.

Three things to check

Towards the end of the conversation, Marcel brings the subject back to three practical areas owners should examine: the exclusions in the policy, the cruising areas and activities it actually covers, and what alternatives are available when renewal comes around.

It is also worth asking whether the policy still reflects how you use the yacht today, and whether an insurer is likely to require an updated survey, rig inspection or replacement of ageing equipment.

Because ultimately the important question isn’t whether you have an insurance certificate. It’s whether the policy behind it matches your yacht, your experience and what you actually intend to do with her.

And that’s something worth discovering before the mast comes down, the batteries start smoking, or your boat disappears over the horizon without you.

Listen to Yacht Insurance Explained: Are You Actually Covered? with Sophie Kemp and Marcel Herrera on the Berthon Podcast, available on YouTube, Spotify and Apple Podcasts.

For further information contact sophie.kemp@berthon.co.uk. Visit https://compareyachtinsurance.com/.

About Sophie Kemp | Meet the Berthon Sales Group