An Introduction to the Underwriting of Yachts & Pleasure Craft by Dr Nicholas G. Berketis 1
The Underwriting of Yachts & Pleasure Craft Definitions Insurance Conditions Underwriting Guidelines 2
Definitions of Yachts 17th Century: small sailing vessel used for carrying passengers; 18th / 19th Centuries: light sailing or steam vessel used either for pleasure or for racing; Today: private pleasure and / or sporting activities. 3
Insurance Conditions Institute Yacht Clauses 1/11/85 and ancillary clauses Note: Except when an Insurer insists, it is not compulsory to use the Institute Yacht Clauses 1/11/85 4
Clause 2 In Commission and Laid up Vessel is free to navigate Laid up: Vessel is covered while laid up out of commission 5
Clause 3 Navigating and Charter Hire Warranties Navigating limits are restricted If beyond navigating limits: Assured to promptly inform the Insurer Vessel only used for private pleasure purposes unless specially agreed by Underwriters 6
Clause 5 Speed Warranty Warranted designed speed limited to 17 knots Should Underwriters agree to delete the above warranty: cover according to Clause 19 (Speedboat) 7
Clause 9 Perils (1 / 3) Not an All Risks cover Only named perils are covered 8
Clause 9 Perils (2 / 3) This insurance covers loss of or damage to the vessel caused by: Perils of the seas, rivers, lakes or other navigable waters Fire Jettison Piracy Contacts with dock or harbour equipment/installation, land conveyance, aicrafts or similar objects falling therefrom Earthquake, volcanic eruption or lightning 9
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https://youtu.be/pz9zequ39eq https://youtu.be/0l5c7gqzsoa MSc in International Shipping, Finance and Management 14
Clause 9 Perils (3 / 3) Provided not resulted from want of due diligence by the Assured, Owners or Managers Accidents in loading, discharging, moving gear etc. Explosions Malicious acts Theft of entire vessel (securely locked), theft of machinery / gear / equipment following forcible entry 15
Clause 10 Exclusions (1 / 3) Outboard motor dropping off or falling overboard Ship s boat exceeding 17 knots Generally accepted Can be covered (clause 19 apply) Ship s boat not permanently marked with name of parent vessel 16
Clause 10 Exclusions (2 / 3) Motor and connections (damage due to heavy weather) Sails and protective covers Machinery Damage Extension Clause (Cl. 332) Limited cover granted (clause 10.4) Sails, masts, spars or standing and running rigging whilst racing Limited cover granted (clause 10.5) Racing Risk Extension Clause (Cl. 330) MSc in International Shipping, Finance and Management 17
Clause 10 Exclusions (3 / 3) Personal Effects Consumable stores, fishing gear or moorings Sheathing or repairs thereto Personal Effects Clause (Cl. 333) Limited cover granted (Clause 10.8) Loss and expenditure to remedy in faulty design or cost incurred by betterment / alteration in design of construction 18
Clause 11 Liabilities to Third Parties (1 / 5) This clause only to apply when a sum is stated for this purpose in the Schedule to the policy TPL insurance is not compulsory (except in some countries) 19
Liabilities to Third Parties ( 2 / 5) Cover for legal liability only in respect of: loss / damage to any other vessel or property whatsoever loss of life, personal injury or illness removal of wreck / cargo legal costs 20
Liabilities to Third Parties (3 / 5) Separated from H&M cover; Claims are recoverable in addition to any other claims even in addition to a total loss; Loss must be added to any other partial loss claims. 21
Liabilities to Third Parties (4 / 5) EXCLUSIONS: accident and/or illness covered under Workmen s Compensation or Employer s Liability any boat belonging to the vessel with a maximum designed speed of 17 knots (unless specifically covered) punitive or exemplary damages 22
Liabilities to Third Parties (5 / 5) EXCLUSIONS: 11.6.3 Water skiing or aquaplanning 11.6.4 Sports activities Can be reinstated: Water-Skiers Liabilities Clause 23
Underwriting Guidelines INFORMATION REQUESTED: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Name of Assured; Name & type & year of built of yacht insured; Subject matter insured (H&M etc, TPL, etc.); Sum Insured and Insured Value; Times and date of attachment and termination; Navigation limits agreed with the Insurer; Period of lay-up if any agreed with the Insurer; Clauses that form part of the contract; Any other conditions, additional clauses or warranties agreed and/or by the Insurers; Always apply a deductible; Split of Sum Insured (Hull, engines, tenders and equipment); TPL cover not to exceed twice the Sum Insured for H&M Recent survey; Statistics (premium / losses) over a 5 year period. 24
Sources Hudson, Geoffrey N., Madge, Tim & Sturges, Keith, (2012), Marine Insurance Clauses, Fifth Ed., Informa Law 25