Yacht Insurance.pdf

An Introduction to the Underwriting
of Yachts & Pleasure Craft
by Dr Nicholas G. Berketis
ATHENS UNIVERSITY OF ECONOMICS AND BUSINESS,
MSc in International Shipping, Finance and Management 1

The Underwriting of Yachts &
Pleasure Craft
 Definitions
 Insurance Conditions
 Underwriting Guidelines

Definitions of Yachts
 17th Century: small sailing vessel used for carrying
passengers;
 18th / 19th Centuries: light sailing or steam vessel
used either for pleasure or for racing;
 Today: private pleasure and / or sporting activities.

Insurance Conditions
 Institute Yacht Clauses 1/11/85 and ancillary clauses
 Note: Except when an Insurer insists, it is not
compulsory to use the Institute Yacht Clauses
1/11/85

Clause 2 – In Commission and Laid up
 Vessel is free to navigate
 Laid up: Vessel is covered while laid up out of
commission

Clause 3 – Navigating and Charter
Hire Warranties
 Navigating limits are restricted
 If beyond navigating limits: Assured to promptly
inform the Insurer
 Vessel only used for private pleasure purposes
unless specially agreed by Underwriters

Clause 5 – Speed Warranty
 Warranted designed speed limited to 17
knots
 Should Underwriters agree to delete the
above warranty: cover according to Clause
19 (Speedboat)

Clause 9 – Perils (1 / 3)
 Not an “All Risks” cover
 Only named perils are covered

This insurance covers loss of or damage to the vessel
caused by:
 Perils of the seas, rivers, lakes or other navigable waters
 Fire
 Jettison
 Piracy
 Contacts with dock or harbour equipment/installation, land
conveyance, aicrafts or similar objects falling therefrom
 Earthquake, volcanic eruption or lightning

 https://youtu.be/pZ9zeQu39EQ
 https://youtu.be/0l5C7gQZSOA

Provided not resulted from want of due
diligence by the Assured, Owners or Managers
 Accidents in loading, discharging, moving
gear etc.
 Explosions
 Malicious acts
 Theft of entire vessel (securely locked),
theft of machinery / gear / equipment
following forcible entry

Clause 10 – Exclusions (1 / 3)
 Outboard motor dropping off or falling overboard
 Generally accepted
 Ship’s boat exceeding 17 knots
 Can be covered (clause 19 apply)
 Ship’s boat not permanently marked with name of
parent vessel

 Motor and connections (damage due to heavy
weather)
 Machinery Damage Extension Clause (Cl. 332)
 Sails and protective covers
 Limited cover granted (clause 10.4)
 Sails, masts, spars or standing and running rigging
whilst racing
 Limited cover granted (clause 10.5)
 Racing Risk Extension Clause (Cl. 330)

 Personal Effects
 Personal Effects Clause (Cl. 333)
 Consumable stores, fishing gear or moorings
 Sheathing or repairs thereto
 Limited cover granted (Clause 10.8)
 Loss and expenditure to remedy in faulty design or
cost incurred by betterment / alteration in design of
construction

Clause 11 – Liabilities to Third
Parties (1 / 5)
This clause only to apply when a sum is stated
for this purpose in the Schedule to the policy
 TPL insurance is not compulsory (except in
some countries)

Liabilities to Third Parties ( 2 / 5)
Cover for legal liability only in respect of:
 loss / damage to any other vessel or property
whatsoever
 loss of life, personal injury or illness
 removal of wreck / cargo
 legal costs

Liabilities to Third Parties (3 / 5)
 Separated from H&M cover;
 Claims are recoverable in addition to any
other claims even in addition to a total loss;
 Loss must be added to any other partial loss
claims.

EXCLUSIONS:
 accident and/or illness covered under Workmen’s
Compensation or Employer’s Liability
 any boat belonging to the vessel with a maximum
designed speed of 17 knots (unless specifically
covered)
 punitive or exemplary damages

EXCLUSIONS:
11.6.3Water skiing or aquaplanning
11.6.4Sportsactivities
Can be reinstated:
 Water-Skiers Liabilities Clause
MSc in International Shipping, Finance and Management
23

Underwriting Guidelines
INFORMATIONREQUESTED:
1. Name of Assured;
2. Name & type & year of built of yacht insured;
3. Subject matter insured (H&M etc, TPL, etc.);
4. Sum Insured and Insured Value;
5. Times and date of attachment and termination;
6. Navigation limits agreed with the Insurer;
7. Period of lay-up if any agreed with the Insurer;
8. Clauses that form part of the contract;
9. Any other conditions, additional clauses or warranties agreed and/or by
the Insurers;
10. Always apply a deductible;
11. Split of Sum Insured (Hull, engines, tenders and equipment);
12. TPL cover not to exceed twice the Sum Insured for H&M
13. Recent survey;
14. Statistics (premium / losses) over a 5 year period.

Sources
Hudson, Geoffrey N., Madge, Tim & Sturges,
Keith, (2012), “Marine Insurance Clauses”, Fifth
Ed., Informa Law

Yacht Insurance.pdf

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