This month, the experts at Admiral Marine Limited, an insurance broker based in England, offer their tips on what to consider when you are looking for boat insurance. Admiral insures large sailing and motor yachts, blue-water cruisers, and racers in the Caribbean, Northern Europe, the Mediterranean, and Southeast Asia. I have asked them to direct their comments to the average, private pleasure boater. Charter boat captains, and those who plan to use their boat for commercial purposes, should contact Admiral directly for commercial insurance information.
When you are thinking about buying a boat there are many things to consider. I am sure that if insurance makes it on to your list at all, it will be consigned to the bottom! However, the insurance policy you buy will not only protect your boat, but also your liabilities to other sailors. Rather than a “necessary evil” it could be a “godsend” in today’s litigious world.
What do you need to look for in a European Yacht Policy? You need to contact a company that has proven track record of insuring sailors and paying claims – one with a long-standing presence in the Caribbean. Establishing a relationship with an insurance company is vital; you are investing in protection for yourself and your boat – do not compromise on this. Make sure you know in what capacity the company you deal with acts, if they are regulated and the security behind your policy. Disasters do occur in the Caribbean so the Insurer needs to be well funded to cope with a catastrophe without going under.
So what do you need to budget for when you commence your search for insurance?
Windstorm Cover – following the 2005 and 2004 hurricane seasons, d Windstorm Cover is probably the most vital element of your policy. d Windstorm premiums are higher north of 12 degrees 40 minutes North (Grenada) and south of 35 degrees North ( Cape Hatteras), but cover is available. You will need to budget for the premium required for this cover, as well as the cost of preparing your boat for the hurricane season. Unstepping the mast or using an engineered cradle will cost money but either should save you premium. Make sure you investigate this fully with the insurance company, ask for advice, and make sure that you understand the conditions applying to your policy in this respect. There are certain locations where d Windstorm Cover will not be provided and the term and conditions regarding this type of cover will vary enormously between companies.
Racing – If you race your boat, even in a friendly regatta, it will have a financial impact on your premium. The standard yacht policy offers very limited cover for your rig if racing; if you have not told your insurer and your rig fails you could be facing a hefty repair bill. You can purchase additional cover for the rig and the premium required will depend on the value of mast, spars, sails, standing and running rigging and your racing itinerary. Be aware, however, that even if you purchase additional coverage, the insurer’s liability is limited and you will need to pay at least one-third of the repair costs yourself.
Excess/Deductibles – this is the amount you pay in the event of a claim. You can reduce the level of premium you pay by increasing the excess you are prepared to carry. Note that in addition to the excess, you may be asked to contribute to any betterment that may occur in the event of a repair – for example: repainting the hull, rig damage, etc. Also, replacement of navigational, electronic and mechanical items such as outboard motors will result in you making a contribution to take into account new for old. An insurance company will pay the reasonable cost of repair and will endeavor to place you in the same position after a claim as you occupied immediately before. You will need to budget for this eventuality
Dinghy and Outboard – the incidence of theft of such items in the Caribbean is high. There is normally a requirement that dinghies are marked in some way so that they are easily identifiable. If boat owners do not take adequate precautions against dinghy theft – such as lifting it out of the water when they stop for the night – their premium levels could be adversely affected. As it is likely your policy will provide you with the market value of these items and not the replacement cost, in the event of loss you will find that you will be required to make up the difference.
Cruising Area – the extent of cruising will have an impact on your premium. Generally, the wider your cruising area, the higher the premium. Take into account the hurricane season and area, and plan your cruising accordingly. When you plan future cruising then you will have to budget for extra insurance premium and perhaps an increased excess. Make sure you keep your insurer abreast of all your sailing plans. Check your insurance policy and make sure you and your crew are aware of the cruising area covered by your policy. If you venture outside your cruising area without advising your insurer, you will invalidate your insurance and a claim will not be paid.
Water Sports – does your boat or her dinghy exceed 17 knots? Do you need cover for waterskiing, parascending, towing toys? Make sure that you purchase this additional cover- the premium is relatively small. Check out the cover and limits provided. Can you tow everything you want to?
Sum Insured – this is a deciding factor when arriving at the premium to be charged. You should reassess your sums insured each year. Make sure additional or replacement items are added and sold items deleted. Bear in mind the market value of your boat. If she has undergone a refit then obtain a professional valuation to substantiate her new market value.
Repair, Replacement and Maintenance – Keep a record of the work you have done, retain invoices, and keep receipts for replacement items. Be organised with your paperwork. If you have a claim this could save you time and effort, and result in your claim being quickly settled. Proper documentation will also support the amount you are claiming.
Communication – good communication is vital. Make sure your insurer knows how to contact you to remind you about renewal of your policy or to check up on your hurricane contingency plan. Make sure you inform them of any alterations to your plans. Many companies can communicate with you and send you your policy documentation electronically. Do not risk being uninsured.
Relationship – build on your relationship with your insurer. A longstanding relationship leads to a greater understanding on both sides, which is vital in the event you have a difficult claim. Find out what level of service you can expect. Will you be able to speak to a real person who can respond to your needs rather than a call centre? Does a representative of the company visit yards and repair facilities in the Caribbean regularly? Do they have a good network of surveyors?
Policy Documentation – read it. Yacht insurance is not the same as your car policy or your household policy. As with all insurances, there are terms and conditions – make sure you know what they are. Any regulated UK insurer will give you 14 days to consider your policy during which time a refund of premium will be given provided no claim has occurred.
Make a checklist of what you would like to see from your policy and your insurance provider and listen to recommendations from fellow sailors. Remember you are purchasing a promise to protect you and your boat. When you find the right boat and the right insurer you can sail with complete peace of mind.
NOTE FROM JSW: If you are a boat owner, former owner, boat broker, boatyard owner, marine store owner/worker or have experience with any other aspect of boating – insurance, haul-outs, financing, marinas … you name it – and would like to share some of your experience, I would like to hear from you. Please send your comments, and a picture of you, your boat or your business logo, to me via e-mail at SummerVI@earthlink.net. Please include your business name, website and other pertinent information. I reserve the right to edit remarks and will submit as many as I can to the publisher, who reserves the right to do even more editing.
Next month: Tips from Tunick Insurance, St. Thomas, VI.
With thanks to:
Robert Holbrook, Managing Director
Admiral Marine Limited
4 Barnack Centre
Blakely Road, Salisbury SP1 2LP
+44(0) 172 241 6106
Boat Buying Tutorial
Guide Tips for Buying a Boat
J. Summer Westman took an in-depth study into How To Buy a Boat. I think it is a tour that each of us in the Marine Industry needs a refresher every now and then – especially before you buy or sell your next boat. These same lessons are valuable for sail boats or power boats.
- Part 1 – How will I use my boat?
- Part 2 – What do I really want
- Top Five Buying Tips for Boat Insurance
- Tips on What to Consider When Buying Boat Insurance
- Why does Boat Insurance Cost So Much?
- Steps to Follow When Buying Boat Insurance
- Part 6 – The Budget: Slip Fees and Hurricane Storage
- Part 7 – The Budget: Maintenance Fees and Other Costs
- Part 8 – How to Find Your Boat
- Part 9 – The Art of Negotiation
- Part 10 – Brokers, Lawyers and Contracts! Oh My!
- Part 11 – Survey and Sea Trial
- Part 12 – Transporting your Boat
Here is a handy list of Boat Brokers in the Caribbean