A yacht is a luxury item, and it is necessary to protect such items through insurance. Yacht insurance policy provides the indemnity coverage for the yacht. The policy covers any damage to the property of a third party, damage of personal property and bodily damage. The terms and conditions of the policies are dependent upon the yacht policy providers. Some policies may include the towing facility, assistance in case the yacht gets stranded and gas delivery.
Some insurance companies have the specialty in extending coverage for classic, luxury and antique products such as boats. Insurance buyer generally has the choice between the agreed value policy and actual cash value policy. The actual cash value policies are not expensive but factors like market value and depreciation have a direct impact on its value, and therefore affect the payout. Insurance providers extend discount on the basis of the experience and education of the owner, safety features, and also the type of yacht, whether it is electric or hybrid. The package deal facility is also offered by some companies, that is, the discount is provided on the yacht policy if the buyer also buys another policy such as car insurance, health insurance or home insurance.
The difference between the ships, boats and yachts is described with the help of the length of the vessel, that is, boats are 197 feet long, ships are longer than 197 feet and the length of the yacht is not defined in the paper but generally a 30 feet long vessel is termed as a yacht. Any boat whose vessel length is below 30 feet, it is termed a pleasure boat. 27 feet is the dividing line that is created by the National Boat Owner Association for the pleasure boat. The coverage of the yacht is broader than the coverage of the pleasure boat as the longer vessels are exposed to higher risk and travel farther.
Before the activation of the yacht insurance, a sum of the amount must be paid by the insured is known as the yacht insurance deductible. The amount to be paid is the percentage of the insured value. For instance, a 1% deductible on $100,000 means that the insured has to pay $1,000 for kicking in the insurance. The maximum deductible allowed on the yacht insurance is 2%.
There are a lot of components that are not covered in the yacht insurance such as gradual deterioration, wear and tear, marring, marine life, scratching, denting, osmosis, animal damage, electrolysis, blistering, ice and freezing, defects in design and manufacturing defects.
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The yacht insurance policies have two principal components.
Hull insurance – The direct damage coverage includes only the agreed amount of coverage. At the time of writing the policy, the amount is settled. The amount is paid in full in case of the total damage. In case of partial losses, there is a replacement cost. Sometimes outdrive is not covered along with the outboards, batteries, canvas and sails. These components are subject to depreciation.
Protection and indemnity – It refers to the broadest coverage which is a necessity as maritime law is particular. Protection and indemnity include Jones act coverage, and longshore and harbour coverage. It is crucial to have these coverages as losses in these areas can lead to significant losses which can run in six figures also.
A yacht insurance buyer should consider the following options while buying the insurance,