Bluewater Yacht Insurance FAQ | Frequently Asked Questions

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Bluewater Cruising Insurance FAQ

	Yacht Insurance Rigging Inspection Question: My insurance company is asking for a rigging inspection, as I want to sail to Panama. They never asked before, when I was sailing just around Florida. What gives? Answer: For sailing vessels in an offshore environment the mast and rigging is a critical area of stress and a major concern to insurance companies, as a dismasting is a possibility, especially in older vessels. If your sailing vessel is 10 years or older the mast, tangs, chain plates, swages, guys, shrouds, spreaders, turnbuckles and all other components of your mast and rigging should be inspected by a professional rigging company and a written report or rigging survey received. It is better to replace any items under concern. Losing your mast half way across the Atlantic is the last thing anyone wants to experience, not to mention the real possibility of injury to crew aboard in such an occurrence. Finally, all insurance policies have a provision for exclusions for losses and claims that occur due to wear and tear and gradual deterioration. The failure of an old fitting that needed to be replaced due to age and use, could possibly exclude coverage under your policy.

	Yacht Insurance Navigation Question: My insurance company sent a quote that stated "NO BOX". What does this mean? Answer: The "BOX" is both a time period and a navigation area in the Caribbean. The restricted coverage for the box usually starts on June 1 and ends on November 30, which is the active hurricane months in the Caribbean. The navigation area is usually between two latitude lines as noted. Moving your insured yacht to Grenada in the summer will lower your premium, and moving it to Trinidad will lower it even more in most cases. Hauling your vessel in the storm season can also lower your premium, subject to details of how she is secured ashore.

	Yacht Insurance Coverage Question: Does my yacht insurance policy cover everything? How can I avoid having a claim or total loss that would not be paid by the company? Answer: There is no such thing as a standard yacht insurance policy. 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 a 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.

	Yacht Insurance Cruising Experience Question: My wife and I want to go world cruising but we have only sailed in the Great Lakes for a year.Is this going to be a problem? Answer: Sounds like it could be if you are planning any long passages. If you do not have enough experience for the navigation area you are planning, your insurance company may require an experienced professional captain to be aboard for your trip. This varies with the insurance company somewhat, but all companies are going to want you to have offshore experience if that is what you are planning. Other options include a non-licensed experienced blue water sailor that can make the trip with you. However, later on, when you wish to be approved to operate without a crew, you will have to obtain a letter of competency and that letter will have to be from a licensed captain who has sailed with you.

	Yacht Insurance Piracy Question: My friend has a cruising policy that excludes coverage or liability for Piracy. Do all policies exclude this coverage? Answer: No, although piracy is excluded from some policies, many do include this coverage as long as the vessel is in the navigation area noted on the policy. Lloyds of London has some policies where the basic policy form excludes coverage for acts of piracy, but this exclusion is deleted which adds the coverage back into the policy, so you have to read the policy carefully or better still email your agent for a written answer for your files.

	Yacht Insurance Survey Question: I am buying a cruising sailboat. Does the yacht have to be surveyed out of the water? Answer: Depends on the age of the yacht. If fairly new, the company may accept an in-water survey. If an older vessel, probably not. Also, if the boat was hauled and bottom maintenance was completed in the last 12 months, you may be able to provide receipts to the company and an in-water survey.

	Yacht Insurance Single Handed Question: I want to single hand my Valiant 40 from Boston to the Mediterranean. Is this OK with the companies? I have it set up for single handing and I have a wind vane self-steering system aboard. Answer: No, we know of no company that will agree to insure a vessel that is single handed for long passages, it is too dangerous. The first question they would have is who is watching for freighters in the middle of the night when you are sleeping? Second question is who will operate the vessel if you fall or become incapacitated?

	Yacht Insurance Circumnavigation Question: I want to circumnavigate but not sure of the exact route. Can I get a policy that will just insure me for anywhere I want to go? Answer: No, we know of no insurance company that will offer "carte blanche" as far as the navigation area. Even if you are not sure, we will need a general navigation area that you will need to provide that will encompass all the area you could need for the 12 month period of the policy. Remember that you can always request a change in your policy limits and, if agreeable to the company, they will allow for other navigation areas not included in the original policy.

	Wood Sailboat and World Cruising Insurance Question: We have a 39 foot Ketch built in 1959. We have owned her for three years and we want to sail from New England to Australia. We have a lot of blue water experience. Can we get this vessel insured for such a trip? Answer: As long as she passes a stringent out of water survey including an aloft rigging inspection, we have several companies that will offer a quote on such a vessel. Might be a good idea to find a wood boat expert/surveyor who could pull some fastenings and inspect them as well, and make sure you advise the surveyor what navigation you are planning. All companies have a hardwood endorsement in their policies that allow an insurance company to repair a wood vessel with the best wood available today, but do not guarantee to repair with the same wood from which the boat was originally constructed. This is due to the fact that many types of wood are no longer available in today's market. To give an example we had a beautiful Angleman Ketch that was built of Honduran mahogany in Costa Rica in 1956. If we had to replank an area, Honduran mahogany is no longer available so we would opt of the best wood we could find, which might be teak or some other hardwood.

	Yacht Insurance Excluded Areas of Navigation Question: Why are some areas of navigation excluded from my policy? Can I go there anyway and pay a higher premium? Answer: Certain areas or countries are excluded from some policies due to many reasons. Mostly, these areas are excluded due to dangerous or treacherous conditions in the area. You might think sailing around Cape Horn in the winter is a grand adventure, but your insurance company would not have the same opinion. Also, in many cases political unrest or a high crime rate may eliminate an area. They may allow the navigation but there may be an endorsement that changes your policy coverage in that area by adding a higher deductible, or a provision the vessel must be kept in a locked marina facility or that capture and seizure by a government agency is deleted from the coverage while in that area or country. In some instances the company will allow the navigation but add additional premium.

	Charter Yacht Insurance Question: We have owned a 48 Hatteras LRC for several years, and want to charter the boat when we are not using her, to provide some additional income. Can we do this? Answer: Yes, we can offer Quotes for Charter Insurance from several A rated companies. The two types of charters often used for non Coast Guard inspected vessels, like most yachts, are bareboat and/ or captained charter policies, the latter of which are often called 6-pack charters because the Coast Guard regulations usually allow up to 6 guests aboard a non inspected vessel. Bareboat charter 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.

	ACV Yacht Insurance Question: An agent sent me an ACV or Actual Cash Value quote for my yacht. It is less premium than the agreed value policy I have now with your agency. Should I take the ACV policy? Answer: You can save money on the premium with an ACV policy but you get what you pay for! 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.

	Trans-Ocean Crossing Yacht Insurance Question: We would like to sail our Morgan 60 Ketch to the Mediterranean next year from Newport Rhode Island. What do we need to do? Answer: We have several yacht insurance companies that will provide an annual policy that will include Transatlantic and Transpacific navigation. They require up to date surveys including an up to date rigging inspection for sailing vessels. Crew requirements are a minimum of three experienced sailors aboard that have prior blue water experience.

	Breach of Warranty Yacht Insurance Question: My bank wants a breach of warranty clause on my yacht insurance policy, what is this? Answer: A breach of warranty clause provides payment to the bank for a mortgage amount that is placed on the boat, in the event that the owner voids or breaches the policy through an action or non action. 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.

	Letter of Compliance Yacht Insurance Question: I sent my insurance company a new survey and they now need a letter of compliance. What is this? Answer: A survey letter of compliance is a form that you sign and provide the yacht insurance company that confirms that any survey recommendations on the survey have been repaired or replaced. This is a very important document because if you have a loss or claim from a survey item that has not been addressed, the claim could be denied by the insurance company. If you are not going to do a survey item, you must note it on the compliance form and make sure the company approves non repair of this item.

	Minimum Earned Premium Yacht Insurance Question: I got a quote to insure my Marlow motor yacht that includes a 25% minimum earned premium. What is this? Answer: Some companies will quote with a certain minimum amount of premium that is due for a policy that is cancelled early. Most of the time the minimum earned premium is 25% of the total premium or, three months of coverage.

	Custom Trimiran Yacht Insurance Question: We are thinking of buying a 58 Custom Trimiran, can you insure this for us? Answer: Trimirans are very difficult to insure. We have one or two companies that may offer a quote for them. On the other hand, we have many companies that are happy to offer insurance for Catamarans and we have many insured.

	Surplus Lines Company Yacht Insurance Question: What is a Surplus Lines Company and why do you add taxes and fees on these quotes when I don't see these added fees to other companies like Progressive or Chubb? Answer: Surplus Lines Companies are approved but non admitted companies that are allowed by the Florida Department of the Interior to offer insurance in the state of Florida. Many surplus lines companies are very large world wide companies like Lloyds of London or Great Lakes UK. They are A rated and offer very competitive quotes in areas of insurance that US or non surplus lines companies do not want to write. We, as agents add Florida taxes and fees to these quotes as these must be sent into the State by law. Admitted carriers like Progressive and Chubb already pay fees to the state directly and nothing is added to these quotes.