One solution to consider is adding a Ship Repairer’s Liability policy to your yacht insurance program.
Whether you’re planning a new build, a refit, or regular maintenance, it is critical to inform your insurance advisor ahead of time to avoid potential gaps in coverage or even the possibility of coverage denial. Here we’ll discuss a few key insurance considerations to keep in mind when your yacht will be in the shipyard.
There is plenty of risk exposure before the yacht even hits the water. Engage your insurance advisor from the very beginning stages of the build so that the right insurance coverage is put in place to protect the owner, as well as the vessel, its contents and the crew along the way.
– Review the Yard Contract and Builders Risk Policy – First and foremost, in addition to having your maritime attorney review all contracts, it is most helpful if your insurance advisor is able to review insurance related documents to identify areas that may create exposures for the owner. Builders Risk policies are designed to cover the hull during the building phase but do not provide coverage for the owner’s liability once their employees are on site at the yard.
– Consider Coverage when Crewing Up – As your crew – e.g., captain, engineer, project manager, or others – ascends on the yard during the build, you may learn that they are not covered by the yard’s policy, which puts them and you as the owner at risk.
– Protect Your Tender and Contents – Even before you launch your vessel, as you’re loading contents such as furniture and art, these items must be properly insured.
Maintenance or Refit
It is important to communicate with your insurance advisor when your vessel will be going in for work. Standard shipyard contracts often contain language that looks to limit the yard’s liability while your yacht is in for routine maintenance or substantial refit. Further, owners should consider that most hull policies have a 1-2% deductible, which depending on your policy limits, could amount to a large sum if you need to file a claim under your policy. This means that you, as the yacht owner, may have little to no recourse in certain loss situations.
One solution to consider is adding a Ship Repairer’s Liability policy to your yacht insurance program. This policy can be a cost-effective way to protect the hull policy and fill in the gap left by the limitations on the yard contract. And it allows you the flexibility to use the yard of your choice.
Ship Repairer’s Liability policies may not be available through all insurance advisors. Advisors who specialize in the mega-yacht space, such as the Yacht Practice with Marsh Private Client Services, can help you address yard contract limitations and help you protect yourself and your yacht whether in the yard or on the seas.
About the Author: Howard Brod is the Client Advisory Manager for the Marsh Private Client Services Yacht Practice and a second-generation marine insurance broker with more than 20 years of dedicated experience.