Topics covered:

Underwriting requirements and concerns

Policy overview; definitions

Property coverages

Exclusions applicable to property coverages

Liability, medical payments, and uninsured boaters coverages

Exclusions applicable to liability, medical payments, and uninsured boaters coverages

Longshore and harbor workers compensation coverage

Loss settlement conditions

Miscellaneous conditions

Endorsements

Underwriting Requirements and Concerns

The American Association of Insurance Services (AAIS) Yacht Coverage Form, YT 0100 09 10, intended for boats in excess of twenty-six feet. The Insurance Services Office (ISO) Yacht Coverage Form, IH 00 82 09 09, on the other hand, could be used with virtually any boat acceptable to the individual insurer. Both coverage forms are intended to insure boats used for recreational boating; they are not intended for use with commercial vessels (although the AAIS form can be endorsed for chartering activities). Business entertainment for which there is no direct compensation is acceptable, although coverage for this usage must be added to the AAIS form.

Underwriting a particular boat will involve reviewing the manufacturer and model, year built, hull material and style, type of motor(s) or engine, value, and recommended maximum speed. Many insurers will require a marine survey, particularly when asked to insure an older or high-valued yacht. Of course, with a new, small boat the cost of a marine survey is not warranted. Similarly, the cost of a marine survey is not warranted with an older, lower-valued boat.

The territory in which the boat is to be operated will be of concern. A yacht operated on large rivers, the ocean or intracoastal waterway, or the Great Lakes is obviously a greater exposure than one operated on smaller lakes and rivers. Rating is based in part on the territory. Insureds should not think to obtain a better rate by stating, for example, a boat will only be operated on a small inland lake when it fact it will be operated on the ocean. Both coverage forms allow for coverage to be denied if a loss occurs away from the indicated territory.

It is an unfortunate fact of boat ownership today that some parts of the world are not safe. Piracy continues to be a growing threat, with the Associated Press reporting that there were 445 pirate attacks worldwide in 2010 resulting in 1,181 hostages being taken, mostly off the Somali coast. These attacks are often against cargo ships and tankers, but a large yacht with potentially wealthy travelers aboard can present a tempting target. Any agent with insureds who regularly cruise to other parts of the globe will want to make clients aware of potential danger.

A corollary to navigation territory is where the yacht will be stored when not in operation. In the South or the western part of the United States , boats can safely be left in the water year-round. But in northern waters, boats left in the water are susceptible to freezing. Both forms exclude coverage because of ice while the boat is moored or laid-up afloat. Additionally, both forms exclude coverage if the boat is operated outside the lay-up period.

Underwriters will want to review the qualifications of potential operators, giving preference to those with clean MVRs. Both Power Squadron and the Coast Guard offer safe boating courses.