Land-Based Yacht Exposures: Are You Covered?
While much of the joy of yacht ownership occurs while on the water, a lot of activity to manage the yacht happens on land. From crew errands to special events, there are often additional exposures present that may not be covered by the yacht insurance policy.
Whether you own a luxury sailing or motor yacht, yacht ownership creates specialized insurance coverage needs that owners may not be aware of. More often than not, additional exposures are present that are not covered by the yacht insurance policy. Consider the following scenarios that create a substantial gap in coverage, resulting in an uninsured or underinsured loss.
Hired or Non-Owned Auto Exposures
While in port, the captain of your yacht rents a vehicle to be used for yacht-related activities. The captain uses a credit card issued to the entity which owns the yacht to rent the vehicle and purchases the optional liability and physical damage insurance coverage offered by the rental company. While picking up equipment for the vessel, the captain runs a red light, causing an accident that sends several people to the hospital with serious injuries.
Unfortunately, unless you have purchased a separate hired and non-owned auto insurance policy in the name of the yacht entity, there is minimal or no liability coverage for this incident. Yacht policies address liability resulting from the use of watercraft and motor vehicle liability is excluded. While minimum statutory liability insurance may be purchased through the auto rental company, these limits are typically insufficient to protect the assets of the yacht-owning entity or the beneficial owner. Similar exposures exist when a captain or crew member uses their personally owned or rented vehicle for yacht-related business.
Workers’ Compensation and/or Foreign Employers’ Liability
Coverage gaps can also exist when you or your yacht captain instructs crew to perform duties outside of their normal scope of work. Consider a situation where the yacht’s chef is instructed to prepare and serve dinner for a party at the owner’s residence. While preparing the meal, the chef suffers severe thermal burns that cause partial permanent disability.
In this case, there is no coverage under the yacht policy for the crew member injured while performing non-crew duties. Once the crew member steps outside their role of “acting in service to the yacht,” coverage is excluded. A separate workers’ compensation policy for the yacht entity should be considered for this type of circumstance.
Specialized risk management strategies are needed to protect yacht owners against various perils that are often overlooked. By working with an experienced insurance broker who understands the nuances and operations of yacht ownership, you can help protect yourself against risks that can occur both in the water and on land.