Yacht Policy Warranties and Why They Matter

Yacht owners generally agree that speaking with knowledgeable, helpful & experienced marine agents benefits their understanding of what is covered and what is not covered in a yacht insurance policy when deciding where to spend their premium dollars. In today’s market, the handful of yacht insurance companies still insuring yachts are focused on profitability more than ever. If these marine insurance programs do not make a profit, they too will close their doors to the marine industry like the 20 plus insurers that have preceded them in the last several years. Since our founding in 1987, we at Novamar Insurance, being boat owners ourselves, want as many yacht insurance companies as possible to choose from. Our goal is to help boatowners understand the risk attributes insurers are looking for from our clients and work with insurers to deliver the best and most affordable insurance products. In a perfect world, this would seem to be a simple formula. Unfortunately, in recent years the formula has proven to be imperfect as the industry continues to navigate through more challenging waters.

There are three main components that affect the profitability of a yacht insurance book. 1 – The risk profile (What, When, Where, and type of coverage offered), 2 - what is covered (or excluded) in the policy contract, 3 - pricing. Regarding number 1, It is common for underwriters to state that a bad risk cannot be priced high enough to make it a good risk. When seeking yacht insurance bring your A game and discuss your situation thoroughly with your agent. Now let’s jump to #2 “what is covered or excluded” as this is playing a vital role in the current yacht insurance market. Some yacht insurance companies are including Policy Warranties like a Seaworthiness Warranty, Captain Warranty, Survey Recommendation Compliance Warranty, Named Storm Plan Warranty, Navigation Warranty among others. The best way for a boatowner to treat a Policy Warranty is that of a promise. If your yacht insurance policy includes a Warranty (promise by you) that is not fulfilled and a claim occurs, the insurance company can contractually deny coverage. Not realizing the restrictive nature of warranties or not adhering to warranties can lead to company claim denials. The warranties are used as a way to improve insurance company profitability by encouraging increased awareness of the boatowner’s responsibilities and protection of the vessel. However if not understood fully, this comes at the expense of the policy holder at claim time.

The problem is Warranties can sometimes be written in confusing language or not clearly stated and can bite you in the stern at claim time. To reduce your exposure to the contracting insurance markets and increased requirements, feel free to call the Novamar Yacht Insurance office nearest you to discuss your current policy conditions, and find out what options are available before a problem occurs. The devil is in the details and what you don’t know may hurt you financially. In this current tumultuous time in the industry with insurance company and agency mergers and acquisitions, Novamar has held fast as a family owned Yacht Insurance agency since 1987 in the USA and since 2009 in Mexico and we plan to be around assisting our clients for more many more years to come.