Insurance

This information will hopefully assist you to understand the basic insurance coverage that is available under boat and yacht policies, and the items that should be considered before selecting a policy. We will also identify the factors that the underwriter considers when determining the rate to charge a customer. Hopefully this "plain english" approach will help you make a more informed decision when purchasing insurance for your boat.

Let's start by describing the two basic sections of a typical boat or yacht insurance policy: physical damage and liability. The physical damage section covers accidental loss or damage to the boat and its machinery. This not only covers the hull and the engine(s), but also the sails and other equipment on board that are required to operate the boat.

The liability section covers your legal obligations to third parties. This legal liability can arise from bodily injury or loss of life, or damage to someone else's property, as a result of the ownership or operation of your boat.

PHYSICAL DAMAGE
Physical damage coverage will pay for repairs to your boat that are necessary as a result of damage caused by a wide range of perils. The best policies provide comprehensive coverage, which means that if the cause of loss is not specifically excluded, it is covered. Common causes of loss that are covered include: weather-related perils such as wind, rain, hail and lightning; fire; loss or damage caused by theft or vandalism; and collisions with jetties, submerged or floating objects or other boats. Make sure that the policy you select continues to cover your boat while it is stored on land, or while you transport your boat over land by trailer. Coverage for the removal or disposal of your boat is also important.

The boat owner has the responsibility to maintain their boat, and so items that are damaged as a result of normal wear and tear are not covered under a boat or yacht policy.

AGREED VALUE vs MARKET VALUE
When comparing physical damage coverage, the most important difference that can be found among boat or yacht insurance policies is whether the coverage is based upon "agreed value" or "market value" loss settlement. An agreed value policy will pay the amount shown on the policy if the boat is considered to be a total loss. A market value policy may provide less coverage than an agreed value policy. A market value policy will pay only the current market value of the vessel in the event of a total loss, taking into account depreciation and the condition of the boat at the time of the loss.

Under both policy types, damage resulting from a partial loss is generally paid for on a replacement cost (new for old) basis, less your deductible; that is, physical depreciation will not be factored into determining the value of the lost or damaged items. However, some items that are subject to higher amounts of normal wear and tear, such as covers, sails, trailers and some machinery, may be depreciated.

PERSONAL PROPERTY
An additional coverage found in quality boat and yacht insurance policies is Personal Property coverage. Personal Property coverage covers such items as clothing, personal effects, waterproof gear and manchester belonging to you or your family while those items are being loaded/unloaded and while aboard your boat.

LIABILITY
The liability section of most comprehensive boat insurance policies provide many coverages that are important to boat owners. If you ever intend to borrow someone else's boat, confirm that your liability coverage extends to the other boat. This is called "substitute" boat liability coverage.

FACTORS AFFECTING THE COST OF INSURANCE
The underwriter must consider many factors when determining the rate (or premium) to charge for a boat policy. The most common determinants are: value, length, construction and age of boat; type of boat (i.e., power, sail); type of engines; mooring location; intended area of navigation; previous boating experience and claim history of the owner; and deductible amount.

 There are several ways that you can reduce the cost of your boat insurance. The most common way is to select the highest deductible amount that you are comfortable with. Each higher deductible amount reduces your insurance premium. Think about how much you could affordably pay out of pocket if a loss occurred.

Many trailer boat policies include a lay up period which is a time that the boat is normally laid up and out of commission, such as during the winter months. The underwriter will normally allow a discount for each month that the yacht is laid up at agreed premises.

The condition of your boat was also mentioned as a rating factor. If you own a boat that is greater than 20 years old, the underwriter may request a recent marine survey of your boat before quoting or insuring it. The better the condition, the greater the likelihood of being approved for insurance and receiving a competitive quote. Anything that you can do to update and repair critical systems prior to the boat being inspected can improve the results of the marine survey and leave a better impression with the underwriter.

SEEK OUT MARINE INSURANCE SPECIALISTS
Now that you have a better understanding of boat and yacht insurance policies, you'll be in a better position to ask the right questions when buying marine insurance. It also pays to work with a company who thoroughly understands boat and yacht insurance. This is important not just at the time that you apply for insurance, but also in the unfortunate event that you have a claim. Ensure that the underwriter has a developed repairer network in order to minimise the time taken to settle your claim and get you back on the water quickly.

It is also important to disclose your claims history and other required information in order to receive insurance coverage notwithstanding payment of your premium.

DOES YOUR POLICY PROVIDE:

DOES YOUR THIRD PARTY COVER:

DOES YOUR EXISTING POLICY COVER:

DISCLAIMER
The information provided above and any further related information and documentation, is provided without any responsibility or liability on any account whatsoever (including responsibility to any person by reason of negligence) on the part of Lake Macquarie Yacht Brokers, to the fullest extent permitted by law and each recipient of this information (and any further related information or documentation) waives any right which it might have now or in the future, against Lake Macquarie Yacht Brokers in respect of any errors, omissions or misleading statements, however caused.