Part 2: “It has to do with individual risk. Obtaining insurance depends on the past experience of the boat owner.”
By Mike Smith — July 2004
Owners planning a transatlantic trip should know that insurance is much less expensive if they ship their yacht rather than send her over on her own bottom. “But you must buy cargo insurance,” warns Lincoln. “Once the yacht is aboard a ship, it becomes cargo and is no longer covered by a yacht policy.” He adds that insurance for a float-on/float-off yacht transporter costs less than half that for deck cargo. “The damage usually comes when the yacht’s being on- and off-loaded, and float-on carriage is much less risky,” he explains.
Marine insurance brokers I spoke with in other parts of the country echoed Lloyd’s assessment. “The [insurance] problem never got to powerboats run by crews. Even in windstorm areas, underwriters felt that the crew would be able to move the boat to a safe area,” says Lee Judd, president of Hinckley Marine Insurance in Southwest Harbor, Maine. (Hinckley Marine Insurance is a division of Marsh U.S.A., the largest insurance broker in the world.) Nor should owners of smaller trawler yachts be concerned about obtaining cruising coverage: “Trawlers aren’t really a problem, because the owners tend to stay aboard,” Judd continues. “It’s when an owner from Montana, say, keeps his boat in a marina in Florida unattended for half the year that there’s a problem.”
On the West Coast, Gary Clausen of Twin Rivers Marine Insurance Agency in Antioch, California, says, “It’s not about the boat, but the individual. It has to do with individual risk. Obtaining insurance depends on the past experience of the boat owner.” He adds that he can find insurance even for inexperienced skippers, although the insurance company might require they take a pro with them at first to teach them the ropes and/or get some kind of training up-front. “Some companies will write any policy, but in the past five, six, or seven years it’s gotten a lot harder,” he adds. “The best advice is, find a good broker, then let the broker work the deal. Insurance is more than just writing the policy.”
Clausen points out that geographical limits on insurance policies are handled differently on the West Coast than on the East. While some insurers will write policies good for everywhere on the East and Gulf Coasts, from northern Maine to Brownsville, Texas (often with some limitations added during hurricane season), on the West Coast limits are more restrictive because conditions change dramatically as you travel north and south. “What the limits are depends on the company writing the policy. One company will give you the whole U.S. West Coast to southern Alaska, but not Mexico; another will cover you into Mexico even during Chubasco season [summer]. Some East Coast companies will write all-West-Coast policies without knowing the conditions.” Most insurers want at least three crew members on passages involving legs of more than 12 hours, he adds.
When it comes to yacht insurance, Clausen concludes, “It’s not like, ...I’ve got a ‘63 Chevy and I need insurance.’ All policies are not the same, especially when it comes to how partial losses are paid. A policy that gives all-West-Coast coverage might have different partial-loss payout rules than another with limited geographic coverage. It’s important to discuss this with your agent beforehand. The content of the policy is everything.”
Based on what these experts say, I’d advise boaters to stop worrying about losing their insurance and start thinking about how to afford their next boat. Unless you have an arm-long history of claims or are planning to set sail for Tahiti in a ‘68 rustbucket with only your significant other as crew, buying insurance shouldn’t be high on your list of worries.
Hinckley Marine Insurance Phone: (800) 367-3692. www.hinckleyinsurance.com.
Spencer Lloyd Phone: (800) 648-9303. www.cahansen.com.
Twin Rivers Marine Insurance Agency Phone: (800) 259-5701. www.boatinsuranceonly.com.
This article originally appeared in the June 2004 issue of Power & Motoryacht magazine.