Marine insurance: guide to insuring your boat or yacht

How to insure a boat with the Hull and Machinery Yacht Insurance Policy

boat insurance

THE INSURANCE FOR YOUR BOAT

Upon purchasing a boat, an extremely important aspect that must not be underestimated is the insurance coverage. Civil Liability: Did you know that also the 2.5 HP tender must be insured? In Italy, the Civil Liability insurance is compulsory (Law 990) for any type of motor-powered boat, including the tender with very small outboard motors. It is therefore compulsory to have the original documents on board.

Hull and Machinery Policies

Obviously, the civil liability policy is not enough to cover all sea risks, therefore in order to have a certain amount of tranquillity for our leisure boating activities, it is very important to subscribe to an Hull & Machinery policy. H&M policy covers damages to your own boat following any (ok, but check the exceptions!) event, including total loss and abandoning of the watercraft. The first step is to choose the right insurance broker. Often, at the moment of purchasing a boat, the choice is based on a proposal made by the dockyard or by the leasing company, possibly attracted by a small saving on the insurance premium. It is a good idea to know however that the choice is completely free and that the ship owner can turn to who offers him the best guarantees. Who should you turn to –

Broker or directly the Insurance Company?

Apart from the insurance company, you can seek advice from a broker, an agent who is capable of choosing the best amongst the many offers on the market as well as being able to offer more personalised services. The broker, not depending on a single commercial offer, has the possibility of dealing with numerous products coming from several companies, with extremely high volumes. This allows the broker to find the right product at the right price. Furthermore, it is not the broker that has to answer to the risk, but the insurance company. Finally, it is easier that a broker is familiar with the jargon that we “sea dogs” speak with respects to the companies that speak “legalese” that is often incomprehensible!

Rates and deductable

On average, the premium is calculated with rates between 0.80% and 1.60% of the insured value. Obviously it can vary depending on the age of the yacht, on the fixed franchise fees and above all on the policy conditions. Therefore it is a good idea to avoid policies with extremely low rates ….. these could nasty surprises in store for you at the moment when you need most help. It is evident that the added value and the quality of the service offered by a broker/company are mainly distinguished by the way in which they manage of an accident.

H&M Policy: Conditions – Additional Clauses:

Did you know that damages incurred during a regatta are not covered by insurance? And that if you navigate outside the Gibraltar Strait you are not covered except for extensions? Well, it is very important that you know the conditions of your policy very well before going out to sea. Here is a list to check together with your broker/insurance agent based on your needs:

Navigation limits

Generally the Mediterranean Sea. If you only use the boat for a few months per year, you could request a policy with a time limit so reducing the risks and therefore also the premium.

Coverage during towing and launching

It is important to have insurance coverage even if the Dockyard has its own policy.

Duration of the contract

Waiver of right to compensation against the dockyard (only in case of fire). This clause is often requested by dockyards.

Agreed Value

According to this clause, the evaluation indicated in the policy is equivalent to an estimate accepted by the Insurance brokers and therefore it corresponds to the amount that will be paid in compensation in case of a total loss.

Salvage and wreck removal costs

It is important that these are included in the insurance coverage costs.

New part replacements

In case of the substitution of damaged parts/accessories, these will be compensated at the cost of purchase, without the application of depreciation due to usage.

Damage to the machinery

It is possible, generally by means of a policy extension, to cover damages to the motor system caused by bad weather, hidden defects, negligence, over-heating. As for machinery damage, generally a double franchise fee is applied.

Sailing regattas

If you take part in sailing regattas, this condition is essential

Floods and deluges

Should the bilge pumps not work………

Unprotected waters

If you are on holiday and you leave the boat anchored outside the port without anyone on board, it is a good thing that you have this additional condition in your policy!