Marine Insurance FAQ

In pleasure craft insurance, the term “vessel” is defined as:
“The vessel herself, her machinery, boat(s) gear and equipment such as would normally be sold with the vessel”.
It follows, therefore, that anything that would not be sold with the vessel may not be covered.
To make sure that the cover is “set up” correctly it is important that the sum insured fully covers all the other bits and pieces.

Dinghies & Tenders
These should be specified individually and individually valued.

• For cover on a tender or dinghy to be in force the tender or dinghy must be permanently marked with the name of the parent vessel.

Outboard Motors
These again should be separately specified, with the full details, and individually valued.

• This value should be the current market value as this is the basis on which a claim would be paid.
• Keep a record of the serial numbers.
• If the outboard is to be left attached to the vessel it must secured by an appropriate anti-theft device in addition to the normal method of attachment.

Trailers
These, again, should be separately specified and valued.

• The trailer should always be immobilised with a wheel clamp when left unattended.
• The trailer should be indelibly marked in a unique way to aid identification.

Liferaft
Again these should be separately specified on the Certificate of Insurance. If possible, they should also be marked in a unique way.

Personal Effects
This extension is not intended to be a replacement of the “All Risks” section of your Household Insurance.

While it is wise to include a sum under the insurance to cover such personal items, which may be left on board when the craft is in use but taken home when she is not, there are restrictions and limitations which should be borne in mind:-
There is usually a limit of, say, £250 any one unspecified item. This means that any item of a value of more than £250 is not covered unless it is specified and agreed by insurers.

The cover is only effective while the property is on board or in transit to or from the home of the boat.

The cover only applies to the property of the owner or the owner’s family. The property of crew or friends is not covered.

The cover excludes cash, currency, traveller’s cheques, credit cards and the like.
It is important that the sum insured is adequate as, in the event of a loss and it being discovered that the total value of the items on board exceeded the sum insured for those items, any payment will be reduced in the same proportion as the value exceeds the sum insured.

It is also essential that your insurer is advised of any major changes by way of additional items bought after purchase or a subsequent renewal. Unless insurers are told – they may not be insuring such items.

Some hints on Insurance
The need for insurance may not always be appreciated for craft safely tucked away ashore while being worked on. There can, however, be problems where an insurance would prove to be a sound investment.

Fire, storms, theft and vandalism are but four areas where loss or damage can occur, even to craft owned by the most careful owner. Third Party insurance is also essential and, if work is being carried out in a yard, may be compulsory.

When should an Insurance be Started?
From the time there is a value at risk. If fitting out a professionally built hull, for example, the insurance should be taken out from the moment the hull becomes your property.

What Information do Insurers Need?

Apart from the usual boat insurance questions:-

• Where will the craft be kept.
• The inception value i.e. original purchase price.
• How long it is anticipated that the project will take.
• What will be the final completed value, this should be the estimated market value at the completion of the work not just the cost of the materials.

Will there be a need for a Survey?
Firstly ask your insurers whether they will require a survey. In any event it is wise to involve a surveyor who should:-
Be asked to visit the craft before any refitting is done, while she is stripped out.
Be asked to suggest when a further visit will be required and then be called back at these stages.
Be called back when all is done to give a final “signing off” report.

What about Increasing Value?
It is normal to insure, from the outset, at the final estimated competed value. This ensures that, at any stage, the sum insured should be adequate. The premium rating structure takes into account that the value is low at the start and that it will steadily increase as the work progresses.
If a surveyor is involved he can keep the valuation “up to date”.

Points
Keep all receipts for items purchased as the work progresses.
Keep a record of the work done – perhaps with photographs.
If you wish to use the boat during the work, insurers must be advised and their agreement obtained.
Tools are not covered and should be insured under your household insurance.

Chartering
Putting your craft up for charter may seem a good idea but you should be aware of possible regulatory and insurance complications before you do so.

Regulation
There has recently been introduced a set of regulations called; The Safety of Small Vessels in Commercial use for Sport or Pleasure, operation from a Nominated Departure Point – A Code of Practice.
This covers such important points as:

• The area of operation
• The equipment that needs to be carried
• The running of the vessel

This publication is available from the Maritime & Coastguard Agency in Southampton or any maritime bookshop. Further advice can also be obtained from the Marine Leisure Association.

Insurance
Most pleasure craft insurance policies or wordings contain a restriction on the use of the craft, for example, “warranted used for private pleasure purposes only” or “warranted not to be used for hire or reward”.
In general terms insurers do not deem cost sharing or joint ownership as “charter”.
It is not possible for a charterer to insure the vessel while he has it on charter – it is the owner’s insurance policy that has to be extended.
It is also better to extend an insurance to cover charter for a full policy period rather than try to buy cover for each charter as it happens.

Type of Charter
While it may be possible to extend an insurance to cover an element of “commercial” use, it is a matter for an insurer to decide whether they wish to do so and, if they do, at what additional premium. A lot will depend on the type of charter.

Skippered Charter
This is where the craft is chartered with the owner or the owner’s permanent employed skipper on board and in command at all times. An extension to cover this sort of charter may be available for an additional premium.

Bareboat Charter
This is where the vessel is chartered out without a skipper appointed by the owner and therefore becomes more complicated.
Many insurers will not even quote for this class of charter on a “one off” basis and some will only offer terms where the craft is part of a professionally managed fleet.
If you are seeking insurance for a single craft be prepared for the insurer to have some very restrictive terms and conditions, such as:-

• Details of the sailing experience of the charterer including types of craft on which the experience was obtained.
• Names and addresses of any independent person who can confirm the prospective charterers boating ability. (If there is any doubt these references should be taken up).
• The charterers passport number should be recorded, together with details of any driving licence (number etc). and details of the bank account from which any payment is made.
• All payments should be by cheque or credit card and not in cash.
• The vessel should be managed and charter arranged through a member of the Marine Leisure Association.

Excess
Most craft insurances have a policy excess, which, depending on the type of charter, may be increased while the vessel is actually on charter.
Charter contracts usually involve a security deposit from the charterer to be held in case of loss or damage. To make life easier and simplify administration, the security deposit should be for the same amount as the insurance policy excess.

The Charterer
The craft insurance policy will treat the charterer as if he or she were the owner of the boat but there are occasions where the boat insurance will not provide cover for the charterer – these can include:-

• Personal liability arising out of an event unconnected with an incident involving the vessel.
• Loss of deposit or additional expenses in the event of the charter being curtailed or cancelled.
• Loss or damage to personal items, taken on board, for the period of the charter and which are the property of the charterers.
• Medical expenses, personal accidents and the like.

These should be separately insured for the protection of both parties to the agreement.

Here are some key points to think about when you are going through a check of what it will take to turn your dreams into reality, particularly when it comes to insurance.

Is insurance necessary?
Insurance is not compulsory in the United Kingdom for any boat kept in coastal waters but many countries will ask for proof of insurance upon arrival – at least a minimum of Third Party Liability Insurance.
For example, it is law in Spain, Italy and Greece that a Certificate of insurance is issued to show that there is a minimum of third party liability in place. This document must show the level of cover and must be written in the local language.

Is insurance easy to arrange?
That depends on what it is you are trying to do. There are a limited number of insurers in the pleasure craft market and most of these are wary of long voyages with minimal crew. However, with the right planning, boat and crew numbers, it should not be a problem.

So, how do I begin to plan my adventure?
We suggest that people talk to others who have undertaken such a voyage. Organisations such as the Cruising Association and the Ocean Cruising Club can guide the owner in the right direction.
Secondly, you must be able to demonstrate to any prospective insurer that you are planning the voyage in a thorough and detailed way. Asking for cover to get to New Zealand in one year shows you are in a hurry and may be pushing the boat hard.
Thirdly, the plan must be seen to be possible. Any insurer is going to ask about the voyage. This is not just underwriters’ being nosey, but an attempt to discover whether the voyage has been planned properly. For example, has consideration been given to avoiding hurricane and typhoon areas? Or at least that they have been taken into account.
Here’s our checklist:

• Prepare a full itinerary of the ports to be visited and the approximate dates. Set this out on an annual basis, this way a premium can be calculated based on where you are actually going.
• Prepare a full C.V. for you and all members of the crew who will be on board for the voyage and particularly for any of the ocean crossings, the more detailed the better. In these cases actually having done it before counts for far more than theoretical qualifications. It will be looked upon favourably if at least one of the crew has done a transatlantic crossing if that is the voyage to be undertaken.
• Tell the insurer about any specific gear or equipment that has been (or will be) fitted to make the voyage safer - for example, self-steering, radar alarms and the like.
• Have the boat surveyed by an independent qualified surveyor to confirm that the vessel is capable of such a voyage.

Is there a minimum crew size required by insurers?
This depends on the insurer and the answer to the questions above.
Single handed round the world voyages are very difficult to get insurance for.
Double-handed voyages are viewed similarly to single-handed. If one crew member is injured, you are down to single-handed again. For this reason, like single-handed voyages, these will prove very difficult to insure.
Most insurers are happier with three, or more, people – certainly for the long distance voyages, for example across the Atlantic, or down from the UK to the Mediterranean. It will however depend on the experience of the crew.

What if I can’t get insured for the whole trip?
Don’t panic. The trip is likely to be a long one, especially if you are going the whole way round the world. Policies will be written on an annual basis and should at least be able to provide cover as far as your next destination, or near to it. If for example you can’t get liability cover in the US, arrange it with the local market when you arrive in the Caribbean. As long as effective cover is in place at the time of arrival in any port, you can stay there while solving the problem of the next stage. The locals understand the market and should be better suited to placing your insurance needs for that region.
You may want to employ a specialist broker who will ensure you have all the details before approaching the insurers. The more planning and the better prepared you appear to be to undertake such a voyage, the more chance you have of getting your peace of mind for the trip.

Commercial Vessels

The Sum Insured
It is important that the correct sum insured is agreed between the insurers and the client and it should be based on the market value of the craft. That is the purchase price or the cost of replacing her with another boat of similar size and condition.
It must not include the cost of the mooring or licence.

Is Underwater Gear covered?
Under most policies there is an exclusion with regard to the propeller shaft or strut however this can be included free on certain low speed vessels or for an additional premium on faster vessels depending on the Underwriter concerned.

Where can I moor my craft?
Most moorings can be accommodated but where you keep your craft does affect the Underwriters assessment of the risk. There are moorings where we will not insure craft afloat during certain periods.
We need full details of where your craft is to be moored and in particular when she will be there. If the mooring varies with the time of year, we need to know both, or all, moorings.
Some Underwriters will give a 10% discount if the permanent berth is one of their recognised marinas.

Is Fishing Gear covered?
Fishing gear and equipment is covered if it is noted and valued on the Certificate of Insurance. If it is noted on the Certificate, cover is for loss by fire, lightning, theft following forcible and violent entry into the craft or place of storage or following the total loss of the vessel in circumstances covered by the insurance.

How far may I sail?
There may be a limitation issued for your craft by the MCA (Maritime Coastguard Agency) under its Code of Practice. Where this is the case, you are insured within this cruising area when using the craft commercially. Otherwise, you are insured if the craft is cruising within the area stated in the Certificate of Insurance.

Am I covered for Passenger Liability?
Liability to any guest or passenger is excluded, fare paying or otherwise, whilst the craft is used for commercial purposes, however this exclusion can usually be deleted on payment of an additional premium. Underwriters will need to know the maximum number of passengers to be on board and you may not take more passengers on board than is agreed under the MCA Code of Practice.

Do I need crew liability?
You may need this protection if you have someone else working with you on your craft. Liability to crew is normally excluded but some Underwriters can delete the exclusion if they know the number of crew to be on board, usually up to a maximum number of 4.
Most Underwriters cannot provide Employers Liability Insurance so there will be no cover for any crew member who is an employee of the insured, i.e. someone who has a contract of employment. However it is possible to obtain Employers Liability for crew and ther are specialist insurers that can provide this.

Do They Make a Difference to an Insurer?
Where and how a vessel is moored can effect the risk a boat faces. It also affects the insurer’s assessment of the risk and it’s rating, terms and conditions.
Generally, subject to any specific terms and conditions, the insurance covers the vessel ashore and afloat, and includes hauling and launching.
Different moorings can carry different conditions and limitations and it is important that these are understood.

Marina Berth
This is the preferred mooring for most craft. In order to promote freedom to use the vessel, it is advisable and best to have 12 months in commission cover.
With certain policies any loss or damage occurring while the vessel is ashore or afloat on a pontoon berth in a professionally run marina is subject to our Marina Benefits Clause. This clause provides that the excess will not be deducted from any claim, nor will any earned no claim bonus be effected.

Dry Sailing
Usually, this is not a problem. However with boats kept on dry land when not in use, certain conditions regarding the security of the vessel and trailer may apply. In particular, the need for the trailer to be wheel clamped when the craft is not actually being towed is commonly used and this condition must be complied with precisely.

Speedboats
Small craft, which have a maximum designed speed in excess of 17 knots, are subject to the “Speedboat Clauses”. One of the applicable Speedboat Clauses provides that a claim will not be recoverable where a vessel is left afloat unattended off an exposed beach or shore. The extent to which the Speedboat Clauses apply vary depending on the type of mooring and the type of vessel. It is important to understand the effect that they have on coverage.

Moorings (Swinging, Fore & Aft, Trot, etc.)
The location of a mooring will dictate whether the policy permits the vessel to be left on the mooring throughout the year or whether it is restricted to certain months of the year.
Moorings should be laid professionally and should be regularly checked and maintained by a professional mooring contractor. It is also wise to ensure that the person who laid the mooring carries adequate professional indemnity insurance to cover his liabilities.
If the mooring area is at all exposed, (even to a freak wind), it is wise to use a chain from the mooring to the vessel, rather than relying on a rope strop. The vessel’s topsides can be protected from chaffing by covering the top section of the chain with a plastic tube.

Laid Up
If your policy stipulates a period during which the vessel must not be left on the mooring, this period must be strictly adhered to. If you require the vessel to be left on the mooring after the lay up date, or it is to be put into the water before the end of the lay up period, the insurers must be advised and their agreement obtained in advance.
As with any insurance matter, the terms and conditions of an insurance are very important. All boat owners must be aware of the implications of these terms and conditions. If you are in any doubt regarding any stipulation as to where and how the vessel is to be moored or stored, immediate clarification should be sought from the insurer.

 

 

 

Insurance Implications
Any craft with a maximum speed (N.B designed not capable) in excess of 17 knots (20 miles per hour) will be subject to some additional exclusions or restrictions in the insurance cover.
Some of these are standard to all insurance’s and are very rarely, if ever, open for amendment:

• There is no cover for loss, damage, liability or expense arising while the craft is racing or undergoing speed tests or speed trials.
• Where the craft has inboard machinery, there is no cover for loss, damage, liability or expense arising through fire unless the craft is fitted in the galley with an adequate fire extinguishing apparatus and in the engine room or tank space with an adequate fire extinguishing system automatically operated or having controls at the steering position.

Note - any such equipment or system must be properly installed and maintained in efficient working order.
There is a further restriction in cover which might be amended :

• Loss damage liability or expenses arising from the vessel or boats being left unattended off an exposed beach or shore.

Effectively this means that the craft should never be left unattended, afloat and, while with larger craft this may be able to be deleted it is important to appreciate the effects of this clause.
A further consideration comes with the use of the craft in conjunction with water based activities such as water skiing. If you require cover for the liability to and of water skiers, this should be disclosed as it may not be automatically included.
Furthermore, if you have cover for water skiing, this does not mean that all forms of water sports are included. Great care should be taken, to be sure what is covered and what is not. Paragliding, the towing of donuts, wake boards, knee boards, sausages, or similar activities may be excluded and some insurers will not cover these activities even for additional premium.

It is generally considered good practice to have a second hand boat surveyed before purchasing it.
There will also be occasions when an insurer will require sight of a survey report before agreeing to provide cover on some vessels. Those over a certain age, home built and refitted boats.

The Right Man for the Job
Find a surveyor who is knowledgeable in the type of vessel involved.
The Surveyor must be independent of the buyer, the seller and any intermediary involved in the sale.
Be sure that the surveyor carries a professional indemnity insurance.
Many surveyors carry qualifications and/or are members of professional bodies, such as the Yacht Designers and Surveyors Association (YDSA)
To find a surveyor speak to such an association or ask at the local marina or a Yacht Broker for their recommended list.

What Type of Survey
The survey itself should be full, covering the whole craft including engine(s), rig, hull, deck and fittings.
The survey should be done out of the water i.e. “dry”. There should also be an indication of the value of the vessel when the survey is done.
To be acceptable to an insurer (and each insurer may have their own rules) any survey for insurance purposes should be not more than one year old.
A survey done for someone else, the previous owner or a previous potential buyer, should not be relied upon. While it may be a useful guide the surveyor involved only has a responsibility to the person who commissioned the survey and to no-one else. If there is a survey in existence, done for someone else, it may be possible as well as more economic to re-approach that surveyor for an “update” rather than commission a new survey.
Any survey will contain recommendations. It is sensible to speak to the surveyor once in receipt of theses recommendations to understand fully what needs to be done. These recommendations should be divided up in some sort of order of priority such as:-
Those that must be attended to before the craft is put back into the water.
Those which can be done after the craft is afloat but before she is put back into commission.
Those which should be done soon but can wait until the next lay up period.
Those which need doing to “keep the craft in good condition”.
Once the recommendations have been attended to, the surveyor should be called back to check them out, and confirm, in writing, that the recommendations have been complied with to the surveyor’s satisfaction.

Condition Reports
On some craft, usually smaller craft, an insurer may only ask for a condition report. In these cases the craft should be inspected by a knowledgeable (boat builder and the like), independent (not one who has worked on the boat) person.
He should be asked to confirm in writing that the craft is in sound, sea (or river) worthy condition, is suitable for the use to which she will be put and is being and has been well maintained.

Inland Waterways Safety Certificates
While these are not full surveys, some insurers will accept them in lieu of a survey in craft over 25 years old provided both the safety certificate is valid and there is a report on the hull carried out by a surveyor out of the water. However, craft of 40 years old or more may still be subject to a full survey.

How Often
While it is wise to have any “elderly” craft regularly checked over it is up to an owner as to how often the vessel should be surveyed.
The majority of insurers will ask for surveys on a regular basis, every 3 or 5 years however there are a few who do not where the vessel is insured with them for the same owner.

It is wise to ask any insurer, who requests a survey, how often after the acceptance of the first one will there be a request for another.
A survey may seem an expensive irritation but while any owner will feel that they “know” their own boat it is essential that an independent, qualified, insured person is called in when necessary.
The above is for information purposes only. It is not intended to define legal terms nor is it intended to affect the interpretation of any policy we may issue.
If you have any questions concerning your insurance please contact Cheers Insurance Brokers.

One area where most pleasure craft insurances differ from other classes of insurance is that it is a valued policy. There are insurances around that are not “valued” but are “market value”. In these the amount payable in the event of a total loss is the current market value and not the agreed sum insured on the policy.
Cheers Insurance Brokers would always advise that you obtain cover on an “agreed value” basis to protect your investment.

Note - this does not apply to claims paid on outboard motors, which will be based on the current market value.
An agreed value insurance means that, if there is a total loss, the sum insured is the amount that will be paid irrespective of the actual value at the time of the loss.
It also means that a recoverable claim for damage, that is not a total or constructive total loss, will be payable in full whatever the total sum insured or value at the time of the loss.
As a result it is very important that the correct sum insured is arrived at the start of the insurance. The value should represent what it would cost to replace the craft with a craft of similar age, type and condition.

Purchase Price
The simplest, and most reasonable, way to estimate this if the boat is a recent purchase is to use the purchase price.

Market Value
This can be different from the purchase price, particularly where a craft has been in the same ownership for some time. It is always wise to check occasionally that the insured value represents the current market value.

Additional Equipment
While the sum insured should be increased to cover these items of gear etc., it is wise to separately specify and individually value such items as outboard motors (see note above), dinghies and trailers.

Valuations
Where it is felt that the agreed sum insured is inadequate, or an increase is felt necessary, insurers may ask for justification of the increase by way of a valuation.
This can be obtained as part of a survey or, if no survey is being done, from a Yacht Broker. This valuation will represent what the surveyor or broker feels is the current market value of the craft.
One further point. It is stated above that the vessel should be insured for its current market value. If the craft is put up for sale and the suggested asking price from the Broker differs from the current sum insured, the sum insured under the policy should be amended to reflect the, now known, market value. However, it should be borne in mind that the asking price is not necessarily the market value in a buyers’ market. Insurers may not simply inflate a sum insured just because the craft is on the market at that price.

It is an unfortunate sign of the times that a vessel’s gear and equipment, personal effects and outboard motors are more vulnerable to theft than they used to be. It is important to ensure that insurance is extended to cover all such items at risk. It is also important to fully understand the extent of restrictions to the cover for theft.
In pleasure craft insurance, theft of the vessel itself is usually an insured risk.
However with certain types of craft, (particularly speedboats or some small craft) there may be certain restrictions on the coverage in respect of theft of the vessel.
Theft of small craft is increasingly prevalent and insurers use common exclusions in respect of such vessels. Examples include:-
Theft only covered following forcible and violent entry into a permanent locked building.
Theft only covered following forcible entry into a locked compound.
Theft of vessel and trailer unless wheel clamped when not actually being towed.
It is essential that any conditions are fully and exactly complied with because insurers are discharged from liability from the moment there is a breach of these conditions.

Dinghy/Tender
Theft of the vessel’s dinghy or tender is usually covered subject to the dinghy being permanently marked with the name of the parent vessel.
It is always advisable to keep a record of the serial numbers or any other means of identifying the dinghy.

Outboard Motor
Theft of the outboard motor is covered following forcible and violent entry into the vessel or into any place of storage ashore.
If the outboard motor is to be left attached to the vessel, it is normally a condition of the insurance that the outboard motor is attached to the vessel by an anti theft device in addition to any other method of attachment.
Details of the serial number should be retained for identification purposes.

Equipment
Theft of equipment is covered following forcible and violent entry into the vessel or place of storage ashore.

Personal Effects
There is no cover under the vessel insurance section for any items that would not be sold with the vessel were she to change hands.
Accordingly it is important to ensure that coverage is obtained for personal effects under the Personal Effects section of the pleasure craft insurance or under your household insurance.
The Personal Effects section should be used for the insurance of personal items, which are bought especially for the boat, and these items are likely to be left on board when the vessel is left unattended. Such items might include wet weather gear. This insurance excludes cover for jewellery, currency, traveller’s cheques and consumable stores.
Items such as watches, jewellery, cameras, mobile phones, cash and other items that are taken to the craft each time it is used and are taken home afterwards would be better insured under the household insurance.

Forcible and Violent Entry
The courts have considered the meaning of “forcible entry” – it may involve the use of very little force, in fact the turning of a handle and pushing a door open has been held to constitute “forcible entry”. In a boat, the opening of an unlocked locker could be considered to be forcible entry.
However, pleasure craft insurance covers theft following “forcible and violent” entry so the element of violence must be present.
It is difficult to provide a definition of “violence” that will encompass every different circumstances as to when the element of violence will be satisfied. Each claim will be considered in the light of its own circumstances, but reference to case law helps to clarify what constitutes “violent entry”:
Entry obtained by turning the handle of an outside door or by use of “skeleton” key constitutes forcible entry, but the element of violence is absent.
An entry effected by picking a lock or forcing back the catch by means of an instrument involves violence.
The theft of keys that are subsequently used to gain entry results in forcible but not violent entry.
In summary, theft following forcible and violent entry in the context of insurance means that the use of force (which might be minimal) must be accentuated or accompanied by some act of entry, which in the light of all the circumstances could be properly regarded as violent.

Apart from the restrictions noted below, it is usual for an insurance to cover anyone driving your boat with your permission.
If there is someone who will regularly use the craft, whether or not you are on board, it is advisable to inform the insurer. Give details of the name, age, record and experience, together with any claims history of this person. Do this in writing and obtain a written confirmation of the insurer’s acceptance.
Anyone borrowing the craft should also be made aware of any limitations to the insurance, in particular, where the craft may be used or moored.
Under the normal pleasure craft insurance there are specific references to restrictions as to who may “drive” the craft.

• There is a condition that the owner or a competent person should be on board and in command at all times while under way.
• The Third Party section contains a clause that excludes any third party liability while the craft is being “driven” by “any person operating or employed by the operator of any shipyard, repair yard, slipway, marina, yacht club, sales agency, delivery contractor or similar organisation”. If anyone covered by these categories is going to drive the craft it is essential that it is confirmed that the person involved carries their own “Third Party Insurance”.
• If you are lending your craft for any form of “consideration”, this will not be deemed “private pleasure use” it will be deemed to come under the heading of “hire or reward”. This use is excluded under this insurance unless insurers have given their prior agreement to such use.