Driving by a marina or boatyard, most of us admire the beautiful yachts, and may even daydream about a weekend on the water. Insurance agents likely also envision easily selling coverage to recreational boating customers. However, even as other areas of insurance become increasingly automated, insuring yachts requires a specialized focus on five important considerations: relationships, information, value, losses and experience.
A successful yacht insurance agent needs to maintain connections with various related marine professionals, to benefit from their knowledge and experience (and referrals). These include manufacturers, dealers, banks and finance brokers, and marine surveyors.
Few carriers specialize in yacht insurance, and many agents may lack the experience or expertise to evaluate a prospective customer and secure the best coverage. It takes effort and commitment to develop, but specialized knowledge and experience can assure the necessary exchange of information between insurer and prospect.
Email and the internet make it easy to communicate quickly, but in yacht insurance brevity often can lead to overlooking important details. Electronic submissions can be insufficient on such key details as the actual ownership of
a vessel, the loss history of all its owners, or the navigation needed by the policyholder — in other words, the waters the vessel will navigate throughout the year.
Complete disclosures are critical. For example, warranting that a yacht will be “in layup” (decommissioned and out of use, often during winter months) for an extended time generally results in a premium discount. But it also restricts coverage, and an owner inadvertently using the vessel during the layup period forfeits protection if a loss occurs.
An essential resource for yacht insurance transactions is a thorough marine survey. Reputable marine surveyors have unique training and skills to provide detailed assessments of the condition of a vessel.
The credibility of an objective, experienced surveyor is beneficial to the owner and insurer alike. It can be challenging to choose a marine surveyor, since there is no licensing, government regulation or industry standard that applies to assure competence or professionalism. While it is not the agent’s or insurer’s place to choose a surveyor, they can provide their customers with names of multiple qualified candidates and encourage them to seek additional references and evaluate their work product in order to choose wisely.
Many owners overestimate the value of their vessels, perhaps biased by emotional attachments or equating the significant funds invested in maintaining or customizing their yacht with the market value. Unfortunately, it is also not uncommon for less professional marine surveyors to state valuations above market conditions, without any supporting evidence.
Most yacht policies are written based on “agreed value” coverage, representing the current market value of a yacht at the time a policy is written. Agents and yacht owners should be wary of cheaper options that may only provide for actual cash value. Also, over-insuring a vessel can be an expensive mistake, paying for coverage that is of no clear benefit and often results in higher deductibles as well.
In contrast, a yacht owner shouldn’t cut corners by purchasing low liability coverage. In addition, many marinas are increasingly requiring yacht owners to maintain high liability limits in their policies. Fortunately, increasing liability limits typically doesn’t substantially increase premiums.
Umbrella policies, and their requirements for underlying contracts, are also important considerations and good reason to scrutinize the financial strength of any yacht insurer under consideration.
An insurer proves its mettle in how it handles claims. An agent must not only evaluate an insurer’s ability to pay claims, and the responsiveness of its claims adjusters, but understand the unique processes and expertise involved in handling a yacht loss.
A yacht claim specialist must know the unique nature and broad variety of vessels, and how to mitigate and evaluate complicated marine losses.
Experienced yacht claims staff have knowledge of marine construction, electronics, mechanics, navigational rules and regulations, maritime law considerations, weather patterns and more. Insureds will benefit from their established relationships with surveyors, repairers, salvors and others to provide expert claims service.
Vessel owners also must maintain focus on loss prevention. Most insurers, for example, offer incentives to encourage strong prevention of losses due to named tropical storms. There is also a need for owners to be diligent in regular maintenance and usage of their vessels to prevent common, avoidable losses. Insureds frequently look for guidance in such areas as storm planning or vessel security, and experienced agents can help their customers understand the importance of active loss prevention.
An agent who wants to develop a yacht specialty needs to do so by gaining experience firsthand, starting with key relationships.
Joining local chapters of marine insurance or trade associations can give access to current knowledge on yacht-related industries while building a network of marine professionals.
Experienced agents provide invaluable analysis of competing terms and conditions among various insurers’ policies. While most contracts have broad similarities, there can be subtle but meaningful distinctions among them. Insurers can vary in their underwriting and risk appetites, and knowledge of those distinctions is needed to guide customers to the best fit for their needs and circumstances.
For those that are called to venture out to sea, the specialized knowledge of an experienced yacht insurance agent is important to every voyage.
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