Yacht Policy

There is a special policy that insures pleasure craft such as yachts, motorboats, and sailboats. It covers the watercraft owner’s property and its liability for collision damage caused to other vessels. It may be endorsed to cover liability for other collisions and for injury to persons.

The policy describes the watercraft insured and covers the hull and its appurtenances, such as spars, sails, tackle, machinery, boats, and furniture.

The hull may be insured by one of two different policies:

Limited hull policies cover loss or damage caused by the perils of fire and lightning or fire, lightning, and theft.

Full marine policies cover the following perils:

• Fire, lightning, explosion
• Explosion, bursting of boilers, or breaking of shafts through latent defects in the hull or machinery
  This is the coverage ocean marine policies provide under the Inchmaree clause. This is reviewed under Marine Cargo Policy–Hazards Covered–Latent Defects In Machinery, Hull, Appurtenances.
• Perils of the sea
• Theft of the entire watercraft and its equipment by persons who make forcible entry into it
• Collision
• Conversion of the watercraft by its master or mariner to his or her own use

When part of the watercraft, tackle, or furniture is removed from the watercraft and stored on shore, coverage applies to only loss or damage the fire causes and not for more than 50% of the amount of insurance that applies to the hull.

The yacht policy also covers the insured’s liability for collision with other vessels. This coverage does not apply to collision damage caused to property other than boats. Coverage for liability for damage to bridges, piers, docks, wharves, buoys, and other property that the insured’s collision with them causes may be added by using protection and indemnity coverage. This coverage also applies to the insured’s liability for bodily injury or death caused by operating the watercraft.

Basic yacht policies exclude the SR&CC perils and the FC&S perils discussed above. Coverage is specifically restricted and applies to only the waters or operating territory described in the policy. It is usually written for a one-year term and usually specifies certain months of the year when the vessel is laid up and does not operate.

Either party may cancel the yacht policy by giving proper notice to the other party for the appropriate time period that applies in the particular jurisdiction.