Best boat insurance quote
A simple boat insurance guide
Finding the best boat insurance quote or discovering just what your boat insurance policy really covers is about as much fun as having a heart attack during a game of charades. I have written this basic guide to help you understand why boat insurance is so important and why the cheapest boat insurance is not always the best. To help me I enlisted the help of an expert, Barrie Sullivan of Y Yachts Insurance who provided answers that help to clarify some of the finer points of boat insurance.
Boat insurance renewal time?
Let’s be honest here. When the notice comes through saying your boat insurance renewal is due most of us become as inventive as the man who named the “fire place”. All we want to see is that wonderful paragraph saying, “If you do nothing your boat insurance will continue”. Occasionally we may ask other sailors what company they are insured with but usually that is as far as it goes. If we are insured with a reputable company we tend to stick with them and don’t even consider looking at other boat insurance quotes. Why do we do this? Why are we not trying to find a boat insurance company with better rates, better cover or ideally both? Because essentially, it’s too much hassle. Images of a boat survey and the additional costs come floating into the mind as well as trying to prove you have “X” number of years no claims to the new company. Now if a boat insurance company said, “No survey, the price is lower and the cover is better” we would jump at it, wouldn’t we?
Check the small print in the insurance policy.
If the price of our renewal has not risen dramatically then the chances are we don’t read the small print to see if the cover has changed. We would rather be out sailing.
What we should be doing is thinking of boat insurance as a hospital gown. It may cover most things but it can also leave you very exposed in the end. That is why it so important to not only check the small print but thoroughly understand the wording and what it means to you. If I had known the difference between the words antidote and anecdote, one of my good friends may still be living.
Why the best boat insurance is so important?
We want the best boat insurance, not a cut price one that does not cover us.
For us, our boat is not only our home but part of the family. We spend the winter season lovingly maintaining Cygnus III so we know that come the summer everything works and more importantly we will be safe. We learn about everything aboard and how to fix it if it does go wrong because at some point it will. It is a huge investment in not only money but time as well and that investment needs to be protected. That is why getting the best boat insurance should be paramount.
So, let us have a look at a few of the more important parts of a boat insurance policy and what they mean.
What will my boat insurance policy cover?
Does your boat insurance fully cover you!
What is covered. (Comprehensive policy).
Damage or total loss from a collision, fire, lightning, theft and vandalism.
Damage to a boat and permanently attached equipment such as masts, rigging, sails and anchors.
Bodily injury liability which covers someone being injured on your boat.
Property damage liability, which pays for damage you may cause to someone else’s property.
Guest passenger liability, which pays for legal expenses of someone helming your boat with permission.
Medical payments, which pay expenses for you and your passengers on your boat.
Accommodation or repatriation in the event you cannot stay.
What isn’t covered.
Wear, tear, depreciation or gradual deterioration
Corrosion or electrolysis
Deliberate acts of negligence or recklessness under the influence of alcohol or drugs.
Third party insurance.
In general terms, your policy will cover you for damaged and injury caused by you to other property but your own boat will not be covered. This makes it far cheaper than the other two options but again you may be taking a big gamble with your most valuable asset. Your own boat.
Check your own boat policy carefully.
Do you need additional cover
These are of course very general points and not all may be included in a boat insurance policy or quote. If in doubt ask the insurance broker. If they are not easy to get hold of or do not answer you then think about changing your broker. A good broker can also add additional cover into a boat insurance policy tailored specifically for you.
I have often wondered if atheists make a claim on their insurance if it was an Act of God?
Other important points to check.
Actual cash value.
This means the insurance company will look at the market value of your boat at the time of the incident and the settlement you get may turn out to be far lower than your own estimate.
Agreed amount value.
You make an agreement with the marine insurance company before hand on the price of your boat, yacht, motorboat, or super yacht. If it becomes a total loss the agreed amount is paid out (less any deductibles). This type of boat insurance will also tend have a new for old clause incorporated in it but again that is something to check.
Obviously one policy will be cheaper than the other but do you really want to take that gamble?
Are the burgers done yet?
Should your engine or other significant part fail on your boat when in a precarious position some policies will cover what they call “consequential damage”. Others won’t.
Consequential damage is basically where one thing leads to another which may be catastrophic. It may be a through hull fitting (figures suggest through hulls are the cause of 18% sinking’s at sea and almost 50% of sinking’s in a marina). It may be engine failure at sea but what if was because you had not serviced or even checked the engine for several years? That may fall into another category which is referred to as due care and diligence and may be the excuse the insurance company needs to not pay out on your claim.
Y Yachts Insurance Company
When it comes to the ins and outs of boat insurance I am just a mere mortal but I have been lucky enough to speak with Barrie Sullivan who knows the industry inside and out. He is the owner of Y Yachts Insurance Company and a man that speaks to his clients in plain language and answers their queries. I have come to respect him not only because of his knowledge of the boat insurance industry and his love of sailing but also his strong belief in customer care which is becoming the gold standard. When I contacted him to help me out on this post in a question and answer session there was no hesitation. He believes that boat insurance should be transparent and understandable by all.
Just in case you are wondering I get no commission, no free insurance or any other remuneration from Y-Yachts. I also have a confession. I am not insured by his company either. Why? Because I am one of those who looks for the line “If you do nothing your insurance with us will continue”. After researching information for this post and reading Barrie’s replies things will change at my next renewal.
Interview with Barrie Sullivan from Y-Yachts Insurance Company.
How did you get into the industry and why did you start your own company?
When I left the Army in about 1970 I studied insurance after which I worked for an Insurance Broker advising on life insurance, pensions and investments. I formed my own brokerage in about 1973 because I believed I could give a more personal service. During this period, I spent most of my spare time sailing and in 1980 built a UFO 27 specifically for the 1982 Two Handed Round Britain and Ireland Race. In 1981, I lost the mast and had so much difficulty in getting the claim paid that I took an interest in Yacht Insurance. I knew I could improve the service then being given by most yacht insurers. I completed the 1982 race whilst being sponsored by the English Tourist Board. For the race my UFO 27 was called “Maritime England”.
An insurance policy is like arguing with your wife. You start of reading the small print but then just give up and click…I agree. Do you find that most boat owners don’t read the small print?
In 1990 when I formed Pantaenius UK Ltd on behalf of German shareholders, all UK yacht insurers were using the “Institute Yacht Clauses” based on ancient commercial marine insurance clauses. For most yachtsmen, it was necessary to employ a specialist marine solicitor to interpret the wording as it was so complicated and ambiguous. In 1990, we introduced much simpler wording that was understandable to the average yachtie. Over the next ten years our competitors were obliged to follow our example and today there are many different policy wordings, some indifferent and still difficult to understand, some good and one or two very good. The very good ones are not difficult to understand and should be read by policy holders as they are written for your benefit rather than for the benefit of insurers and their solicitors.
When we insure our boats through the major companies such as Y Yacht Insurance we are not really insuring with you but with underwriters. You are just a broker between the insured and the insurer so what do you do?
At Y Yacht Insurance we are privileged to have a “Binding Authority” with Lloyd’s of London. We are trusted to assess the risk and determine the premium for different yachts in different parts of the world. Needless to say, we are given minimum premiums which can be used in exceptional circumstances. We have this facility because of my many years’ experience in both owning and sailing yachts as well as insuring sailing yachts, motor yachts and Superyachts. So, to answer your question, just about everything! Because we are not the underwriters of our policy we can represent our clients totally.
Is it right that you do not get paid by the boat owner but on commission from the insurance company. If this is the case are you working for them rather than the boat owner?
An interesting question! Yes, we are paid commission by the insurer. Most yacht insurance brokers have agency agreements with several insurers and can look for competitive premiums from different insurers. A conflict of interest could arise if different insurers pay different rates of commission. There is a general misconception that yacht insurance policies are like motor and household policies in that they are all the same and give the same cover. This encourages people to shop around for the lowest premium. Marine insurance is a specialist subject and there are considerable differences in policy wordings. Yes, it is important to seek a competitive premium but it is far more important to find the best insurance cover (policy wording) to protect your investment. At Y Yacht Insurance we only use one underwriter, MS Amlin. We are able to give competitive premiums but most important of all we are able to offer an unambiguous policy with exceptionally wide cover. Under the rules of our regulator (The Financial Conduct Authority (FCA)) we are obliged to look after our clients rather than the insurers who pay us.
How do you work out the premium for a boat? Is there an Einstein like formula or do you just pick a number out of a hat?
There are both formulas and minimum premiums. These formulas are based on the claims experience of underwriters over many years insuring different models and types of yachts and motor boats in different parts of the world. The ultimate decision is normally left to a human who will use his or her experience to assess and price of a risk.
You can ring round many brokers and get wildly different quotations for the same boat. I am sure you get clients who want to insure with you but say they can get it half the price elsewhere. Is it a case of some companies are more expensive that others or generally do you get what you pay for?
The priority should always be to get the best boat insurance cover possible. For example, I would not want a policy which enabled the insurer to replace my boat with a boat of their choice in the event of a total loss rather than pay me the insured value. You should also avoid insurers who can avoid a claim if you have a mechanical failure. Imagine an engine failure whilst motoring inside Portland Race on a spring tide in no wind and you finish up on the rocks! There are other potential traps if you don’t have the best cover. You can get the best cover for a competitive premium. Yes, you do get what you pay for but you needn’t pay too much!
Do you find that boat owners will over estimate the value of their boat for insurance purposes or take out more cover than they need?
It is traditional for UK insurers not to insure for more than the purchase price paid plus improvements. The tradition is based on bad experiences in the past where ships were deliberately sunk for the insurance pay out.
Are there any areas of the world you cannot cover a boat to go?
Yes, South of the Suez Canal for obvious reasons.
I know you are a sailor yourself so, have you ever made a claim?
Only once as mentioned before when I lost my mast. The experience was not good!
Where do most accidents occur?
There are more boats insured by UK insurers in the UK so the answer must be the UK. Internationally there are many boats insured in the Med so there are a high number of claims there. When insurers consider cruising areas a major factor in costing the risk is costing the potential repair so areas such as the Caribbean are more expensive.
What is the most common type of claim?
Probably theft if you include all the smaller boats. In the case of Y Yacht Insurance the biggest cost to underwriters is storm damage.
In all your time in the industry can you tell us any funny claims that would not compromise you or the claimant?
Whilst I was in charge of Pantaenius UK a large motor boat was holed by something big and hard which was just submerged. The owner showed great initiative by plugging the hole with a big ham joint until harbour could be reached. When paying the claim, the underwriters handed over a new top quality organic leg of ham!
What is the smallest claim you have ever received?
£1 more than the deductible!
Is there anything most boat owners think they are insured for but they are not?
Most owners think they are insured for everything but even the best policies have exclusions. Every insured should check these on their policy as some boat insurers make unreasonable exclusions.
Do sailing qualifications or years sailing make any difference to the insurance premium.
Sailing experience is more important than even qualifications and yes it can influence premiums.
One of the most annoying things for boat owners is having to get a full survey prior to getting insured. When do you insist on this?
An insurer insuring cars can be reassured by MOT inspections. There are no such compulsory inspections for private boats. As you are aware most owners love and have a pride in their yachts and look after them properly. Sadly, this is not the case for all. To assess a risk an insurer must know the condition of a boat and a survey by a surveyor whose work is also insured provides the best answer. When I wear my underwriting hat, I know from experience the sort of problems different makes and models of different ages are likely to encounter so in some instances am prepared to look at recent photographs of specific parts in order to save the cost of a survey.
The big question, what can we as sailors do to reduce our premium?
If you compare the cost of motor insurance to the cost of yacht insurance it is cheap, especially when you consider the amount that could be paid out in the event of a total loss. The average yachtee is safe and wise and can do little to reduce insurance premiums. It is the few who probably won’t read this who could improve the situation by taking more care.
Does the British government charging VAT on insurance put you at a disadvantage against foreign competitors?
There is no VAT on insurance premiums. Insurance Premium Tax is charged in most countries and the rates vary. The tax is basically charged on where the yacht is registered or where the owner lives and has to be charged by all European insurers. Our foreign competitors therefor have no advantage. Furthermore, I believe the best UK policies offer the very best cover.
I don’t like putting our boat name on the dinghy as it identifies we are ashore when at anchor so I put our telephone number on it. When we lost our dinghy at sea once (don’t ask) we were rung the following day to say that it had been found. Are you happy with this idea rather than the boat name on the dinghy?
At Y Yacht Insurance, we would be, as long as it was properly painted on and photographed. Bearing in mind the largest number of claims are for theft it also helps recovery if there are some hidden identifying marks also photographed.
Can Y Yacht Insurance provide marine insurance cover anywhere in the world (apart from the Arabian Gulf for obvious reasons) no matter what nationality the boat or owners are?
In most instances we can but there are exceptions. For example, the Australian government insists that Australian owned/registered boats are insured by Australian companies in home waters. However, we can usually cover them away from home. Another problem is with American and Canadian registered/owned yachts. In the USA different states have individual insurer licensing requirements which restrict the ability of European insurers to cover these yachts. Also, because of the high pay-outs in American courts, UK insurers are aware that covering USA vessels risk higher claims which mean higher premiums for all. The answer is for yacht owners to always ask – we are here to help if we can.
Do you have any insurance advice to boat owners?
Read your policy and if you are in doubt about anything get a written answer from your insurer.
Thank you to Barrie Sullivan from Y Yacht Insurance for your replies which have demystified some boat insurance questions. If you have any worries about your own policy or there is something you don’t understand speak to your broker. They are there to help.
If you want to speak to Barrie or get a quick online boat insurance quote from Y Yachts all the details are on the website at www.yyachtinsurance.com
Always remember to disclose everything when applying for boat and yacht insurance for your own protection and peace of mind. You don’t want to end up like this lawyer.
A short insurance story that happened for real:
A lawyer in Charlotte, USA purchased an extremely expensive box of cigars that he thought he could get for free and ‘beat the system.’ He had the cigars insured against floods, storm damage, and fire.
The lawyer smoked the expensive cigars over the course of a month and then contacted his insurance company. According to him, the cigars had “been lost in a series of small fires”. His insurer refused to pay him, assuming (correctly) that he had just smoked the cigars. The lawyer brought the insurance company to court where he used legal arguments to convince the judge that the insurer had never stated a condition for “unacceptable” fire. He was awarded $15,000 in compensation.
He must not have paid very close attention in law school, because the insurance company brought him back to court, where he was found guilty of over 20 instances of arson and thus insurance fraud. He was sentenced to 2 years in prison and was ordered to pay $24,000 in fines.
I have only just scratched the surface (no pun intended) when it comes to answers about the best boat Insurance and there is so much I have not mentioned. It is a subject where you may need the advice of an expert which is why I asked Barrie Sullivan the questions. If you have found this quick guide on boat Insurance useful or if you have any questions why not leave a comment below.