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Watercraft Insurance: What It is, How It Works

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What Is Watercraft Insurance?

Watercraft insurance is an umbrella term for three types of insurance: boat insurance , yacht insurance , and personal watercraft insurance. It protects against damages to vessels powered by a motor that has a horsepower of at least 25 miles per hour (mph). Examples of the types of costs covered by watercraft insurance policies include physical loss or damage to the boat, theft of the boat, and towing.

Key Takeaways

• Watercraft insurance is an umbrella term for three types of insurance: boat insurance, yacht insurance, and personal watercraft insurance.
• The type of coverage you buy is dictated by the size of your vessel.
• Although watercraft insurance is not required in many states, many boat owners choose to purchase it anyway.
• Boat-loan providers and marinas often require boat owners to have watercraft insurance.

How Watercraft Insurance Works

Depending on the policy, there may also be watercraft liability coverage for bodily injury to people other than the boat’s owner and family, guest passengers using the boat by themselves, and medical payments for injury to the owner and their family. Some policies, however, require the purchase of additional liability coverage as an add-on. The specific type of insurance you buy is dictated by the size of your vessel.

Watercraft insurance is similar to other types of insurance products. In exchange for paying a series of insurance premiums, the policyholder receives protection from certain rare but potentially costly risks. Depending on factors such as the size of the craft, its age, and its intended uses, the premium costs may range from relatively inexpensive to pricey. When underwriting a policy, an insurance company will also consider the policyholder’s track record of previous claims.

Boat Insurance

Any vessel under 197 feet long is considered a boat, while ships are 197 feet or longer. The dividing line between boat and yacht is less settled. Some sources define a yacht as at least 30 feet long. Anything shorter is a pleasure boat. For insurance purposes, the National Boat Owners Association marks the dividing line at 27 feet.

Small craft, such as canoes, rowboats, small sailboats, and powerboats with less than 25 miles-per-hour horsepower may be covered under a standard homeowners or renter’s insurance policy. However, such coverage is unlikely to include liability insurance. Typical boat insurance covers theft; physical damage to the boat itself due to a collision or striking a submerged object; property damage to the boat caused by vandalism, a windstorm, or lightning; and medical payments for injured passengers and the owner and their family. For each coverage, there will be different deductibles, which is how much you must pay out of pocket before your insurance kicks in. Boat insurance will often provide better liability insurance than a homeowners policy, but it is often wise to purchase additional liability coverage as an add-on.

In the event of a total loss, it is important to know whether your policy pays actual cash value (ACV) or agreed value (AV). ACV is cheaper because it only pays for what the boat was worth at the time of the loss, factoring in depreciation and wear and tear on the vessel. AV pays a price that you and your insurer agree upon in advance, an amount that is likely to be closer to the amount you paid for the boat when new.

Other considerations for boat insurance can include:

• Lay-up period —This covers your boat for property damage during the off-season, when it isn’t in the water.
• Navigational territory —Your insurance will generally specify where you can go in your boat and still be covered.
• Property damage —This is for damage your boat inflicts on someone else’s property.
• Hurricane haul-out provisions —This covers your costs of getting the boat out of harm’s way before a windstorm. 
• On-water towing and assistance —This is for unexpected breakdowns or running aground.
• Fuel spill liability protection —Should there be an accidental discharge of fuel from your boat, this will cover the costs of a clean-up.
• Personal effects coverage —This will protect any expensive equipment you have on your boat, such as fishing gear
• Ice and freeze coverage —Should cold weather damage your boat’s engine and water systems, this will pay the bill.

Yacht Insurance

Most yacht coverage is broader and more specialized than pleasure boat coverage because larger vessels travel farther and are exposed to greater risks. It also generally costs more, in part because yachts cost more . In terms of a deductible, it is usually determined as a percentage of the insured value. With a 1% deductible, a boat insured for $175,000 would have a $1,750 deductible. Most lenders allow a maximum deductible of 2% of the insured value.

Generally, yacht insurance coverage does not include wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, defects in design, and ice and freezing.

There are two main parts of a yacht insurance policy: hull insurance and protection and indemnity (P&I). The first is an all-risk, direct damage coverage that includes an AV for hull coverage, and in the case of a total loss, it will be paid out in full. Replacement cost  coverage on partial losses is also available. However, sails, canvas, batteries, outboards, and sometimes outdrives are usually subject to depreciation instead.

P&I insurance is the broadest of all liability coverages, and because maritime law is particular, you will need coverages that are designed for those exposures. Longshore and harbor workers’ coverage and  Jones Act  coverage (for the yacht’s crew) are included and are important because your losses in these areas could run into six figures. P&I will cover any judgments against you and also pay for your defense in  admiralty courts .

Personal Watercraft Insurance

Personal watercraft insurance is for recreational vehicles such as Jet Skis , Sea-Doos, and Yamaha Wave Runners. These surface-skimming craft can have engines with horsepower anywhere from 60 mph to 310 mph. They usually are not covered by homeowners insurance, and even when they are, the coverage limits are low.

Personal watercraft insurance covers the owner and anyone they allow to use the craft for risks such as:

• Bodily injury to another person
• Bodily injury to you that is caused by an uninsured watercraft operator
• Liability in the form of legal costs if you’re sued due to an accident (which can include water sports liability for things such as waterskiing risks)
• Property damage to another watercraft, a boat, or a dock
• Towing after an accident

Deductibles and liability limits will vary depending upon the policy and the company offering it. You can buy additional coverage for trailers and accessories and, if you own more than one craft, you may be able to bundle your insurance policies for a discount. These pleasure vehicles are easy to use but can also be dangerous, causing thousands of injuries every year, which makes personal watercraft insurance a wise investment.

Watercraft insurance policies may limit the geographic areas in which the boat or watercraft can be operated while maintaining coverage. These often include inland waterways, rivers, and lakes, as well as ocean waters within a certain number of miles from shore.  

Do I Need Watercraft Insurance?

Only a few states make it mandatory for boat owners to obtain watercraft insurance. However, many owners will opt to purchase it regardless, partly because doing so is required in order to obtain a boat loan . Marinas may also require owners to have watercraft insurance as a condition within their rental agreements.

Even if your craft isn’t worth much money, obtaining watercraft insurance is a good idea because of the risk of injury on the water, especially from a collision. Even if you aren’t at fault, you could spend a lot of money in legal fees defending yourself—much more than your insurance premiums. If you do decide to purchase this insurance, make a point of comparing policies from multiple companies before deciding on which is best for you. As with all insurance, the question is what price you put on having peace of mind.

Insurance Information Institute. " I.I.I.: Know Your Boat’s Insurance Coverage from Stem to Stern ." Accessed Feb. 6, 2022.

Westlawn Institute of Marine Technology. " Definitions of: Boat, Yacht, Small Craft, and Related Terms ." Accessed Feb. 6, 2022.

National Boat Owners Association (NBOA). " The Best Yacht Insurance Rates ." Accessed Feb. 6, 2022.

DiscoverBoating.com. " Boat Insurance Guide: Boat Insurance Coverage FAQs: What is a normal deductible? " Accessed Feb. 6, 2022.

National Marine Lenders Association. " Insurance: Large Boats: What’s Not Covered? " Accessed Feb. 6, 2022.

DiscoverBoating.com. " Boat Insurance Guide ." Accessed Feb. 6, 2022.

Boat Owners Association of the United States (BoatUS). " Do I Need Boat Insurance? " Accessed Feb. 6, 2022.

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Yacht Insurance

Finding the perfect coverage has never been easier.

Insurance doesn’t have to be boring. That’s why we hired Sara East to be our BA insurance writer. Maggie specializes in making mundane subjects hella-entertaining.

Yachts are a luxurious way to be on the water, but owning a yacht means having the right insurance in the event of damage or being destroyed. Because of their price, repair or replacement is likely to be very expensive making the proper coverage crucial for boat owners.

Before using your yacht, an independent agent can work with you to create a customized yacht insurance policy to your specific watercraft, its value, and how you use it. 

Boating Statistics

No one likes to think about the dangers of boating, but accidents can happen and it's best to be prepared in the event that you face unexpected hardship. Whether you hit another boater, have an incident with a passenger, or your boat is damaged while being transported or docked, lots of things can lead to a financial headache for you.

Here are some statistics about boating accidents.

• Cabin motorboats, which include yachts, accounted for 14% of all boating accidents
• Only about 20% of all boaters who drowned were on vessels larger than 21 feet
• Operator inattention was cited as the leading cause of accidents involving cabin motorboats

What Is Yacht Insurance and What Does It Cover?

Yacht insurance is a specialized type of boat insurance for luxury boats. Yachts can be used for personal as well as commercial use, so insurance policies must be created to accommodate each of those needs. 

While yachts, like most boats, depreciate over time, they still generally have a much higher than average value. Because of their high values, a standard boat insurance policy may not provide enough coverage for your vessel.

The components of yacht insurance are similar to standard boat insurance coverage.

• Bodily injury and property damage liability: Covers the costs associated with injuries or property damage you cause to another person, as well as legal fees. If the liability limits in your yacht insurance policy are not adequate to protect your assets from a lawsuit, you may want to consider buying an umbrella liability policy , which provides a much higher liability limit.
• Collision coverage: Pays for damage to your boat after a collision with another boat or object.
• Comprehensive coverage: Covers non-collision damage or loss, including theft, fire, vandalism, or damage caused by an object other than another boat.

Additional yacht insurance options to consider

• Uninsured/underinsured boaters insurance:  Covers any damage or injuries from an accident with an uninsured or underinsured boater. Since boat insurance is rarely required by law, if you have a significant amount invested in a vessel, this is a good insurance option to discuss with your agent. 
• Medical payments coverage: Covers medical expenses and funeral expenses for anyone on that is injured, entering, leaving or while on your boat.
• Equipment and personal effects coverage: Pay to repair or replace damaged or lost items such as gear, fishing equipment, cameras, and other personal belongings.

An independent agent can work with you to determine the appropriate coverage for your needs. Because these agents work with multiple insurance companies, they can help protect all of your interests with a broad range of insurance coverage, all from one agency office.

Is Yacht Insurance Different from Standard Boat Insurance?

Yacht insurance provides similar types of coverage as standard boat insurance . However, yachts have some specific differences from standard boats, and yacht owners generally need certain protection that regular boat insurance does not provide.

For example, a yacht policy tends to restrict hauling on a trailer to only a few hundred miles, while boat insurance tends to provide coverage for trailering over longer distances. 

Also, deductibles for yacht policies are very flexible, instead of having set amounts like $250, $500 or $1,000. In addition, yacht policies can include coverage for raising and removing a sunken yacht, while boat policies generally do not include this coverage.

Is Yacht Insurance Required?

Yacht insurance is not typically required by state law. However, sailboats often do have insurance requirements. So, if you have a sailing yacht, insurance may be required by law. 

Yacht club membership statistics

You will also need to buy insurance to protect your investment in your vessel if you finance the purchase of your yacht through a lender.

Many marinas require that you have insurance in order to slip your boat at the marina. Check your local marina's guidelines, and be sure to learn about your state’s laws and regulations. 

Do I Need Yacht Insurance?

A yacht can range in price from $300,000 to several million dollars. Purchasing one is a big investment and having the ability to insure your investment can ease your mind if there's an accident or your yacht needs repairs or replacement.

Insuring your yacht is also not just about the boat. In the event that an injured party files a liability claim against you, you will want to have enough coverage in place to protect your boat, home, savings, investments, and future income.

Assessing your financial situation will help you to determine how much yacht insurance you need.

Save on Boat Insurance

Our independent agents shop around to find you the best coverage.

How an Independent Insurance Agent Can Help with Yacht Insurance

A local independent agent will talk with you, free of charge, to learn about your yacht and insurance needs. They'll gather multiple quotes for you from several different companies and help you compare options and rates. Your agent can assist you with every aspect of your insurance and will be your point of contact if you need to file a claim.

An independent agent can help to prevent gaps in coverage that leave you exposed to risk. You will know you are getting the right coverage for your needs, and that you are not paying for any unnecessary coverage. 

https://www.ussailing.org/wp-content/uploads/2018/01/Demographics2010.pdf

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Yacht Insurance: The Definitive Owner’s Guide

A sailing vessel’s indemnification liability coverage is provided through yacht insurance, and it covers any damage to the yacht’s body, property destruction of others, and private property damage aboard the vessel. This insurance may also cover gas supply, towing, and help if your boat gets stuck, depending on the insurance company.

Understanding The Two Parts of Yacht Insurance

Hull insurance.

Hull insurance is a direct and all-risk insurance policy that covers damage and includes an agreed amount of hull insurance. The amount settlement is done when the policy is drawn up, and the payment is in full in the event of a total loss. In addition, there’s the possibility of replacement costs insurance for partial losses. Still, sails, batteries, canvas outboards, and sometimes outdrives aren’t covered and are instead at risk of depreciation.

Indemnity and protection (P&I)

Protection and indemnity (P&I) insurance provides the most comprehensive insurance coverages for liability. Because maritime law is unique, you must have coverages specifically designed to protect you from risk-taking situations. P&I will cover any judgments against you and pay to defend you in admiralty courts.

What are the factors that can influence your yacht insurance?

Insurers consider many factors when deciding whether to offer a policy.

Almost any vessel can be insured – for a price. You should consider the following to make sure the policy you buy meets your needs:

• Age of the vessel
• Value (make sure you consider depreciation over the years of the value of your yacht)
• Speed/Power
• Type of vessel (Sailing, motor, Inboard, Outboard, utility, cruiser, offshore fishing boat)
• Custom built (boats without serial numbers can be tricky to insure)
• Location of use (which ocean are you planning to locate your boat. Make sure you let your insurance know whenever this changes over the months!)

What does yacht insurance usually cover?

Usually, the yacht insurance covers:

Liability protection: the bare minimum insurance

Property damage liability pays for damage to another person’s property caused by the accident you commit. You are covered if your yacht causes damage to individuals or damages other ships, docks, or buildings. Remember that harm or damage might occur due to direct contact with your boat or events induced by your yacht, such as during heavy wakes. In most cases, boat liability insurance covers you against covered claims and litigation involving settlements and legal expenses. To ensure that you have the right coverage, talk to your advisor regarding your needs and potential dangers.

Hull and machinery coverage

Hull insurance will cover any physical injury to your boat, including motors, trailers and equipment, and even accessories in many instances. Damage from wind and fire are typical claim types.

Uninsured boater coverage

Indemnifies bodily injured passengers of the insured watercraft who suffer injuries due to the uninsured owner of a different vessel.

Search and rescue

The maximum amount is $10,000 for costs that an insured incurs to a government entity like the United States Coast Guard (USCG), which provides emergency assistance and is covered at absolutely no cost.

Marine environmental damage and pollution coverage

This protection is available up to $10,000 in penalties and fines in the event of marine environmental damage as per the policy’s conditions. This coverage is added to the insurance company’s liability and OPA limit.

Agreed value coverage or actual cash value coverage

A cash value policy offers lower coverage than an agreed value insurance policy, however, generally with a lower cost. ACV policies provide coverage up to the value of the vessel. ACV policy would protect up to the price of the market for the boat if there was a complete loss, including depreciation and conditions of the vessel when it suffered the loss.

Crew medical and personal coverage

Reasonable medical and related costs are covered for all onboard passengers leaving or boarding the vessel. These benefits are granted per person instead of per event.

If your vessel gets damaged by accident, collision insurance is an optional insurance policy that covers the cost of fixing and replacing the damaged part with less deductible.

Sinking and wreck removal

Insurance for boats generally can cover sinking. However, there are some critical policy limitations. In general, insurance for boats should protect your boat if it sinks due to any covered risk. The policy could reimburse you for the cost of salvage or removal.

What is usually excluded from yacht insurance policies or comes as an extra?

War coverage

Damages caused by acts of war can turn out to be too great to insure, making the repayment too astronomical to be true.

Hurricane insurance

Your boat insurance provider may be able to pay for damages to your vessel caused by wind and hail from a storm in the event of a hurricane unless stated explicitly in the policy. Contact your boat insurance provider to find out what coverage you have during a storm.

Marine life encounters

Most insurance for boats doesn’t provide coverage for marine-related damage such as sharks, whales, and many other species. If you frequently sail in water full of marine creatures, it is possible to discuss a supplemental insurance policy with your insurance provider.

Insects and mold

The majority of yacht insurance policies do not cover insects and mold. It is essential to take the necessary steps to safeguard yourself against any pests on your vessel. So, this means that you must wash, drain, and dry your boat’s equipment after use.

Toys and PWC onboard

The PWC onboard may need to have a separate insurance policy as it is an expensive purchase.

Negligence or criminal acts

No insurance company is accountable for paying for the illegal actions of other people. Damage or loss due to reckless negligence and incompetence is also not acceptable.

Most insurance coverage for boats won’t cover certain events, such as racing on a yacht. Suppose you plan to use your boat to compete. In that case, you might want to consult your insurance representative about supplemental insurance, precisely the possibility of additional liability insurance if there’s a crash in the course.

Kidnapping and ransom

Because of the high stakes involved – human life and assets such as vessels and cargo — as well as the criminal character and challenging legal context, resolving a hijacking or abduction for ransom is a difficult task. Hence, kidnapping and ransom are not included in yacht insurance.

What do you need to know before picking a yacht insurance policy?

When evaluating physical damage cover, the most significant question is whether the insurance is focused on “agreed value” or “actual cash value” damage payout. If there is a complete loss, most agreed value coverage covers the amount shown on the insurance contract. After depreciation, you will receive compensation.

The actual cash value coverage offers protection up to the vessel’s present market worth at the moment of complete loss, after depreciation and the deductibles.

Although the coverage is smaller in an actual cash value insurance than in agreed value insurance, the policy is generally inexpensive.

The next thing you want to consider while choosing your insurance is the deductible and premium.

The amount you self-insure in the case of a loss is your yacht insurance deductibles. Put another way, it is the amount you spend on claims before your insurance comes in.

The next is premium. Choose insurance that can fit your budget to pay your premium on time without fail. 

Another thing to consider is the Intended cruising area. Some policies put restrictions or have a defined area while cruising. So, choose an insurance policy that suits your cruising area so that in case of mishaps, you can get coverage.

Yacht Insurance Requirements

Is yacht insurance mandatory?

While it’s not usually a legal necessity, it is always a good idea. It’s unlikely to cost much, but it might save you a lot of money in a disaster. Even if you or your captain are the finest sailor on the planet, you must consider what would happen if someone else collides with your yacht.

Changing weather may damage your boat, yet you usually have little control over it. Fortunately, most yacht insurance policies aren’t too costly, and the modest additional cost may provide comfort while cruising on the sea.

Does the bank require insurance while you finance the yacht?

Yes, your bank may require proof of yacht insurance if you want to finance the yacht.

Do ports and marinas need your yacht insurance?

For utilizing their facilities, numerous ports and marinas will need you to have boat insurance.

Does renting the yacht require insurance?

If you intend to rent out your yacht, you must have coverage to safeguard your asset, and yacht insurance can be highly beneficial. If you want to rent your yacht, you must get boat insurance to protect yourself from liability hazards, and the insurance covers the majority of liability concerns.

Read also : The yacht charter experience ladder

How much does a yacht insurance cost?

Usually, yacht insurance costs between 1% and 5% percent of the yacht’s value. For instance, you may spend around $2,500 annually to insure a boat worth $100,000.

However, similar to other types of insurance, the cost of your boat insurance depends on you and your vessel. The higher the value of a boat, the greater the insurance cost. Yacht insurance is often costlier than floating insurance since yachts are more expensive. High-powered boats are riskier. Thus, insurance companies consider the kind of engine (inboard or outboard, amount of horsepower, and so on).

How can I lower my yacht insurance cost?

Here are a few steps that you can take to lower your insurance cost.

Limit the cruising area of your yacht

There are navigational restrictions in marine rules, meaning you may only sail inside a specified region. The premiums will be less the smaller and securer the area is.

Have good training and driving records

Insurance companies are interested in your expertise on the water. The completion of a boating course demonstrates proficiency, which reduces your risk. Most insurance companies would consider boating lessons, but they may even provide a rate reduction. Contact your agent to determine whether safety-related boating classes impact your premium rates.

Lower the liability limits

Most insurance companies will require your credit score to establish suitable premiums. Maintaining a good credit score has several advantages, including cheaper insurance prices. To lower your liability limits, consider working on your credit score.

Pick a higher deductible to reduce the premium of your insurance

A greater deductible implies that the policyholder will be responsible for a percentage of the claim, hence decreasing the occurrence of claims. You choose to pay a part of the claim by raising your deductibles out of your cash, and the company will eagerly reduce your premium.

Choose seasonal insurance during the offseason

Fire, theft, vandalism, and winter storms can all cause significant damage and financial burden. You won’t be insured for any winter tragedy that strikes your yacht during the off-season if you don’t have insurance. You’ll be responsible for possibly astronomical expenditures.

Pick a modern boat rather than an old one

A new yacht will cost less to insure than an older one. This is because older ones are susceptible to acquiring defects, while newer ones are not. Further, you can take several steps to improve your yacht’s safety, contributing to lowering your cost. Like, installing an autonomous fire control system may decrease the danger of fire damage and make you eligible for a premium reduction. Additionally, safety devices like radar, depth finders, first aid kits, GPS, emergency kits, and EPIRBs may reduce the danger.

Our advice to find the best insurance broker at the best cost for a yacht

Avoid using your home and car insurer for yachts above 27”.

Usually, boat insurance is meant for vessels less than 26 feet long. Yachts are generally longer than 27 feet, have far more powerful engines, and cost more than smaller vessels.

Yachts typically go greater distances and deeper seas, transport more passengers, need a crew and have several equipment and personal possessions. These variables result in distinct risk exposures and need particular insurance policies, coverage choices, and deductibles.

Maritime law governs rather than state or federal law in deeper seas, which may be more complex. If your boat has a crew, you might be obliged to have Harbor workers and Longshoreman’s covers.

Partnering with an advisor who knows the worth of your boat and how you intend to use your boat can assist you in getting the necessary coverage for any potential catastrophes. You will also need specific insurance coverage if you own a high-performance boat due to the increased risk.

Pick a trustable company with expertise in marine insurance

You can choose your regular insurance provider to get your marine insurance. There are several maritime governing rules when you decide to sail on the sea or plan to sail overseas. Additionally, it is essential to engage with a provider that has a deep understanding of boat and yacht coverage. This is vital at the time of insurance application and in the severe case of a claim.

Special needs might require custom policies

If you have any special needs, additional coverage choices are available for medical costs, private possessions, the boat’s transportation equipment, and more that may be added to any plan. However, that relies on the type of insurance provider you choose.

Optional coverage extensions:

• Trip disruption
• Private property
• Trailer Coverage
• Towing and Emergency Roadside Service
• Uninsured Watercraft
• Individual Liability

Get an experienced yacht broker to help you navigate policies.

You may have 100 policies in front of you and many lucrative offers claiming several things. Yet, making the right insurance takes time and a better understanding of all the coverage. So, an experienced broker can help you navigate all these policies and select one that fits your budget and particular situation.

The best companies for yacht insurance

Many insurance firms provide boat insurance at affordable prices. Shop around to ensure that you receive the necessary information to make an educated selection. Also, there are several websites that offer evaluations of various insurance providers and are excellent starting points for your study.

Communicate with other sailors; determine which aspects they value and why. You would be in a position to make the most excellent option for your requirements when you analyze the services of various companies.

Being on the ocean is a feeling of serenity, tranquility, and impending new experiences. So, this is an encounter you want to go on forever. Further, your sailing boat is a significant investment. Hence, consider having your luxury boat insured to cherish the best of life and keep your investment safe.

Don’t take chances with your yacht, act now and ensure a safe and worry-free sailing experience

Now that you understand the importance of yacht insurance, don’t wait any longer to protect your valuable asset. Contact us today to get a quote and secure peace of mind on the water. Our team of experts will guide you through the process and help you choose the best coverage for your needs.

Frequently Asked Questions

All ship and yacht owners are obliged to have marine insurance, mainly when the vessels will be utilized for commercial or transit reasons and move people, labor, or goods overseas.

our yacht insurance usually protects your yacht against frequent dangers such as drowning, storm, fire, collisions, and theft. You may also be protected by boat insurance if you accidentally harm somebody or destroy their property. Your coverage may cover the following boat components: machinery, attached equipment, hull.

The exclusions from yacht insurance policies include: criminal actions of others, insect infestations, lack of due diligence on the part of the assured or managers, common wear and tear, loss resulting from delay, and intentional wrongdoing by the captain or crew.

The typical cost of boat coverage is between $200 and $500 per year. However, insurance may cost between 1 and 5 percent of the boat’s worth for a yacht or sailboat. For instance, you may spend around $2,500 annually to insure a boat worth $100,000.

Sailboat owners often spend between $250 and $1,500 annually to protect their yachts. This price varies depending on various criteria, including insurance type and insurance amounts, and sailboats usually are less costly to cover than powerboats.

Annual insurance on the yacht will range at roughly 1.5 percent of the boat’s value. The cost to insure a catamaran depends on hull valuation, location, and the boat’s operation.

The insurance coverage of a mega yacht or a super yacht can be around $240,000.

To reduce the cost of yacht insurance, you can take the following steps: installing safety equipment, demonstrating better boat riding skills by undertaking a boating course, considering your deductibles, limiting your sailing area or working on credit scores.

Hull relates to the vessel’s body. The insurance will cover unexpected damage or loss to the boat anywhere inside the policy’s specified maritime boundaries.

Usually, classic boat insurance is provided by specialized insurance firms who specialize or have experience in protecting classic and antique vessels. For covering your old boat, get a quotation from a specialized insurer and verify that your policy provides the protection you want for a sense of security.

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What is Marine Insurance?

A simple definition of insurance would be “Protection against future loss.” Marine insurance is another variant of the general term ‘insurance’ and, as the name suggests, is provided to ships, shipyards, marinas, offshore installations and floating equipment.

Independent owners can avail of insurance facilities for their watercraft (PWC), megayachts, yachts, and pleasure craft. Some boat insurance coverages include wreck removal and salvage without additional hull coverage costs.

Most importantly, cargo insurance provides coverage to cargo loaded onto ships or vessels during the transportation process.

Different types of coverage options offer protection to various kinds and sizes of ships, depending on the shipping routes taken.

Insurance policies are well-laid-out contracts that both parties must abide by. A policy ensures the vessel is against common risks, such as property damage, theft, collision, explosion, capsizing, etc.

Marine Liability Insurance/P&I, or protection and indemnity, protects third-party liabilities that shipowners and companies are exposed to during their operations. It is indemnity and not liability coverage. It includes coverage for injuries, illnesses, and loss of life caused by operating the vessel. Medical expenditures, damage to other vessels, collision and related expenses are also covered.

Many types of marine insurance and marine insurance companies with years of experience and expertise offer different coverage plans.

Some inland marine insurance providers provide coverage for goods in transit, even when they have reached land and are taken to storage and logistics facilities.

Marine insurance coverage is essential because, through marine insurance, ship owners and transporters can be sure of claiming damages, especially considering the mode of transportation used.

Of the four modes of transport—road, rail, air, and water—the latter most worries the transporters. Not only do natural occurrences have the potential to harm the cargo and the vessel, but other incidents and attributes could cause a huge loss in the financial casket of the transporter and the shipping corporation.

Incidents like piracy and possibilities like cross-border shoot-outs also pose a significant threat to water shipments. Therefore, to avoid any loss because of such events and happenings, it is always beneficial to have a backup, such as marine insurance, in the interest of the corporation and the transporter.

Another important aspect of having marine insurance is that a transporter can choose the insurance plan according to the size of his ship, the routes that his ship takes to transport the cargo, and many other minor points that could significantly affect the transporter.

Also, since various plans and policies indicate covering not just the cargo but also the vessel, the transporter can choose and avail of the best policy that suits his business.

However, as much as marine insurance provides a fair claim to transporters and corporations, it has to be understood that the trickiest and strictest insurance areas when the insurance commenced – i.e. from the 17th century onwards.

While dealing with the scope and range of marine insurance , a ship’s captain must follow a rigid protocol regarding the route and time taken for the cargo and the vessel to reach the intended destination port.

If there is any discrepancy or violation in terms of the route taken, i.e. if the captain varies or digresses in his route from the one originally intended as a part of the ship’s course, then even if there is any mishap occurring to the vessel or the cargo, the insurance claim will be rejected entirely without any possibility of the claim being reimbursed to the claimant at some future date after a few tough negotiations.

Therefore, it becomes essential that a ship’s captain consider the prescribed routes to avoid a failed insurance contract due to an accidental loss caused by a deviation in the path. This would encourage caution on the captain’s part and reduce the possibility of losing essential insurance claims due to inadvertence and negligence.

Marine insurance is a haven for shipping corporations and transporters because it helps to reduce financial loss due to the loss of critical cargo. Also, it helps to establish the duty, dedication, and straightforwardness of the insurance companies toward the transporting companies and the receiving parties.

You might also like to read

• Different Types of Marine Insurance & Marine Insurance Policies
• Marine Insurance for Piracy Attacks: Necessities and Benefits
• The Importance of Marine Insurance Brokers
• What is Marine Cargo Insurance and How to Get One?

Disclaimer : The information contained in this website is for general information purposes only. While we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

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About Author

Raunek Kantharia is a marine engineer turned maritime writer and entrepreneur. After a brief stint at the sea, he founded Marine Insight in 2010. Apart from managing Marine Insight, he also writes for a number of maritime magazines and websites.

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i like the information you give on media

A very informative post. Marine insurance is important in case of import and export of goods which is an integral part of the economy. By compensating against the loss of goods and ship, the policy helps exporters and importers bear any losses incurred during transit.

i liked it so mush but can you write about it is polices ,please!!

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• Oct 18, 2023

Understanding Yacht Insurance - What You Need to Know

For those who own or dream of owning a yacht, the allure of open waters and boundless adventure is an irresistible siren song. Whether you're a seasoned sailor or a novice, navigating the world of yacht ownership involves much more than just hoisting the sails and setting a course. One crucial aspect of yacht ownership that often goes overlooked is insurance. Yacht insurance is a complex and highly specialized field that demands a keen understanding, as it can mean the difference between smooth sailing and a financial shipwreck.

Types of Yacht Insurance

Yacht insurance comes in various forms, each tailored to meet specific needs and circumstances. The three primary types of yacht insurance are:

a. Hull Insurance: This is the equivalent of comprehensive coverage for a car. It protects the yacht's physical structure, including the hull, equipment, and machinery, against damage from accidents, weather, theft, and vandalism.

b. Liability Insurance: Liability insurance covers the costs associated with bodily injury or property damage caused to others while operating your yacht. This type of coverage is essential for protecting your assets and financial well-being in case of an accident.

c. Personal Property Insurance: Personal property insurance covers the belongings and equipment aboard your yacht, such as electronics, appliances, and personal items. It's vital for ensuring that your possessions are protected, especially when spending extended periods on the water.

Determining Coverage Needs

The coverage you require for your yacht depends on several factors, including the value of your vessel, its intended use, your cruising grounds, and your financial situation. To assess your coverage needs accurately, consider the following:

a. Yacht Value: The value of your yacht is a significant factor in determining the insurance premium. The more expensive your yacht, the higher the premium. Make sure your coverage adequately reflects the current market value of your vessel.

b. Usage: The intended use of your yacht also plays a role in determining the type and level of coverage you need. Whether you plan to use your yacht for weekend getaways, long-term cruising, or chartering can impact your insurance requirements.

c. Cruising Grounds: The waters you plan to navigate can influence your insurance policy. Some areas may be riskier due to severe weather, piracy, or other potential hazards. Insurance rates may differ depending on your chosen cruising grounds.

d. Personal Financial Situation: Assess your financial situation to determine the level of coverage you can afford and how much risk you are willing to bear. A comprehensive policy may be more expensive, but it offers greater protection in the event of a claim.

Navigating Policy Exclusions

Yacht insurance policies often come with various exclusions that limit coverage. Understanding these exclusions is crucial to avoid unexpected setbacks. Common exclusions may include:

a. Wear and Tear: Yacht insurance typically does not cover damages resulting from normal wear and tear. Regular maintenance and proper care are essential to minimize such risks.

b. Acts of War: Most policies exclude coverage for damages incurred during acts of war or civil unrest. Make sure you are aware of the political and security situation in the area.

c. Negligence: Negligence on the part of the yacht owner or crew may result in claim denials. It's vital to follow best practices in yacht operation and safety.

Additional Coverages

Yacht owners can opt for additional coverages to enhance their insurance policies, including:

a. Salvage Coverage: Salvage coverage protects against the costs of recovering a yacht after an accident, such as running aground or sinking.

b. Pollution Liability: Yachts can accidentally release pollutants into the water. Pollution liability coverage helps pay for the cleanup costs and fines associated with such incidents.

c. Uninsured Boater Coverage : This coverage protects you against damages caused by another boater who lacks adequate insurance or is uninsured.

Reducing Insurance Costs

While yacht insurance is a necessary expense, there are ways to reduce your premiums:

a. Safety Measures : Implement safety features and practices on your yacht, such as security systems, fire extinguishers, and crew training. Insurance companies often reward safety-conscious owners with lower rates.

b. Higher Deductibles : Consider accepting a higher deductible in exchange for lower premiums. This can reduce your upfront costs but means you'll pay more in the event of a claim.

c. Bundling : If you have other insurance policies (e.g., home or auto), consider bundling them with your yacht insurance to receive discounts.

GYS is Here to Assist Every Step of the Way

Yacht insurance is an essential aspect of yacht ownership that requires careful consideration. Understanding the types of insurance available, determining your coverage needs, navigating policy exclusions, and exploring additional coverages are all vital steps in safeguarding your investment and ensuring peace of mind on the open waters. By taking a proactive approach to your yacht insurance, you can enjoy the beauty and excitement of yacht ownership without the worry of unexpected financial setbacks.

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Anchoring Your Peace of Mind: The Complete Handbook on Boat Insurance Coverage and Selection

Envision the serenity of gliding across a glistening sea, the sun casting golden reflections on the water, your boat moving effortlessly through the waves. It’s the epitome of freedom and joy that comes with owning a boat, a dream cherished by many.

Yet, beneath this serene tableau lies an ocean of unpredicted risks and challenges. In these waters, boat insurance emerges not just as a necessity, but as your steadfast beacon of security. It shines light on the dark, uncharted possibilities, offering you protection and peace of mind.

This comprehensive guide will navigate you through the essentials of coverage, compensation, and selecting the ideal policy, ensuring your maritime journey is as safe as it is exhilarating.

Dive Deep into Coverage

Your boat is more than just a fun way to spend a sunny day on the lake–it’s an investment. But accidents and unexpected damage can mean financial disaster without the security of boat insurance.

You’ll be covered for any physical damage, like collisions or theft, but you’ll also be safeguarded from liability if another person gets injured while on your boat or their property is damaged.

Arm Yourself with Knowledge

There are several types of coverage available, which include things like mechanical breakdowns, salvage costs, and navigational limits for larger boats.

But most importantly, properly understanding the insurance coverage options provided in your policy could save you thousands of dollars in the long run.

Evaluate Insurance Options 

When thinking about boat insurance, you have to consider the advantages and disadvantages of Actual Cash Value (ACV) and Agreed Value (AV) policies.

An ACV plan is likely more affordable initially, however the payment in case of a total loss decreases as your boat ages. It means that if your boat is damaged, the insurance company will give you what your boat is worth at that point, minus your deductible.

For an AV plan, you make a deal with the insurer on the value of your boat when you start the policy. If you suffer a complete loss, they pay out that prearranged amount. This can provide more security for new or costly boats, but may not be beneficial for older ones.

Eventually, the choice depends on aspects such as the age and condition of your watercraft, your budget, and how much risk you’re willing to take.

Grasp Restrictions

Comprehending navigational restrictions in your boat insurance policy is critical, as these dictate the geographical area in which your boat is protected. These rules are particularly necessary for larger boats, such as yachts, where cruising areas can be more extensive.

If you journey outside the outlined area in your policy, you could forfeit your insurance coverage. Meaning, any damage or obligation incurred beyond those bounds won’t be covered by your insurer. These are like boundary lines set by your insurance. They define where you can take your boat and still be covered.

The navigational limits are often established according to the type of boat and intended usage zones–for instance seas, lakes, rivers, or coastal regions. Policies with broader navigational boundaries usually require higher premiums, highlighting the augmented danger associated with a wider marine region.

It’s paramount to accurately gauge your seafaring practices and regions of operation when deciding on an insurance plan to guarantee that you are sufficiently shielded within your ordinary boating area.

 If you decide to take on a longer journey or switch sailing areas, it’s best to speak with your insurer to modify your policy accordingly.

Gain Complete Protection

Essential coverage may include liability, salvage, medical coverage, and protection against uninsured boaters. Plus, personalize your policy with specialized add-ons for extra security.

Additional services like towing services, fuel delivery, hauling protection, and mechanical breakdowns/special equipment coverage can guarantee that you are equipped for any unforeseen circumstances while captaining the open seas.

Select the Right Policy 

The dimensions, class, and location of your boat determine whether an insurance company will create a policy for it. You can decide between larger companies that offer multiple types of coverage, or select specialized ones that understand boating better. Both options have advantages, so choose what best fits your requirements and expectations when making this crucial decision

When determining which insurance provider to safeguard your beloved boat with, it is paramount to consider if an individual policy should be taken out instead of a homeowner’s policy.

Homeowner’s policies may restrict or exclude marine-specific risks, but they can cover smaller boats adequately. It is almost always wise to go with a dedicated marine insurer for total and complete coverage​​.

Dedicated marine insurers are equipped with the knowledge to provide comprehensive coverage tailored for maritime boats.

Be Vocal about Needs

Securing the right boat insurance policy requires extensive research and a deep understanding of your particular needs. Consult experienced boaters for advice and evaluate how insurers processed past claims, as that’s usually an accurate indicator of their future service quality. Inquire with local insurance agencies to gain further insight about companies’ reliability and trustworthiness.

Furthermore, understand your chosen policy’s claims process; a simplified yet supportive system is essential during times of trouble.

Make sure to choose an insurer who volunteers assistance beyond just the claim – arranging emergency services demonstrates their devotion to customer satisfaction.

Lastly, make sure to balance coverage, cost, and the insurer’s credibility for service and support when making your final decision.

Save Money, Win Benefits

Saving money on boat insurance doesn’t mean you have to compromise on coverage. There are various ways to reduce costs while maintaining adequate protection.

These include opting for policies with diminishing deductibles, which reduce your out-of-pocket costs over time.

Completing boater’s safety courses can also lead to discounts, as many insurers offer incentives for educated and safe boaters.

Bundling your boat insurance with other policies under the same insurer can also lead to savings.

Additionally, some insurers collaborate with boat manufacturers to offer special deals, which can be a cost-effective option if you own a boat from one of these manufacturers.

Final Thoughts

Now that you are armed with a guide offering actionable advice, such as the importance of understanding policy restrictions and how to choose between different types of insurers, you can leave the harbor with confidence, knowing that you are well-informed and totally secure.

So, unfurl those sails, and keep a peace of mind! 

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Marine Insurance | Meaning, Types, Benefits and Coverage

[vc_row][vc_column][vc_column_text][/vc_column_text][/vc_column][/vc_row][vc_row el_class=”padding-sm-bottom-40″][vc_column offset=”vc_col-lg-8 vc_col-md-8″ el_class=”post-details-sec”][vc_single_image image=”11951″ img_size=”full” css=”.vc_custom_1706687923693{margin-bottom: 44px !important;}”][vc_row_inner css=”.vc_custom_1608297138483{margin-bottom: 0px !important;}”][vc_column_inner][vc_column_text]Setting sail into the vast oceans brings excitement and challenges. Ever wondered how ships and cargo stay protected? That’s where Marine Insurance comes in. Marine Insurance, also called Cargo Insurance, is essential for ship owners, shipping companies, and cargo owners to safeguard their interests.

In this guide, we’ll sail through easy explanations of what Marine Insurance is, the different types it has, the good things it does for you, and the stuff it covers.

Think of it as a friendly map to help you navigate the sea of insurance. So, if you’re curious about keeping things safe at sea, hop on board as we explore the world of Marine Insurance together!

What is Marine Insurance?

Marine insurance acts as a protective shield for ships, cargoes, terminals, transports, and transfers, ensuring coverage in the face of damage or loss. In simpler terms, if something goes wrong with your boat or watercraft, a marine insurance policy steps in to cover the financial setbacks.

However, the extent of coverage depends on specific criteria, like the location of your boat. Whether it’s onshore, out of the water, snug in your garage, or parked at a boat club, these details play a crucial role in determining the safety considerations affecting your insurance premiums.

Essentially, marine insurance offers a safety net for the unpredictable seas of potential risks, ensuring that your investment in maritime assets remains protected, regardless of the various circumstances that might come its way. So, whether you’re a shipowner, cargo handler, or simply passionate about maritime ventures, understanding the nuances of marine insurance becomes paramount for securing your nautical interests.

Advantages of Marine Insurance

Understand the benefits of Marine Insurance to make a good and informed choice:

Financial Protection: Marine insurance provides a financial safety net, offering coverage for potential losses and damages to ships, cargo, and related assets during maritime activities.

Risk Mitigation: Helps businesses mitigate risks associated with unpredictable events at sea, such as accidents, storms, or other maritime perils, reducing the impact of these uncertainties.

Business Continuity: Ensures business continuity by covering the costs of repairing or replacing vessels and cargo, allowing operations to resume swiftly after an insured incident.

Customer Confidence: Demonstrates commitment to customer satisfaction, instilling confidence in clients by assuring them of secured and insured transportation services.

Legal Compliance: Meets contractual obligations, as many export contracts necessitate the inclusion of marine insurance, ensuring compliance with trade agreements and international shipping standards.

Comprehensive Coverage: Offers a range of policies catering to diverse needs, including coverage for vessels, cargo, liability, and specific risks associated with marine activities.

Flexible Policies: Provides flexibility with various policy types, allowing businesses to choose coverage based on their specific maritime operations and requirements.

Efficient Claims Process: Streamlines the claims process, facilitating quicker reimbursements and minimizing disruptions to business operations in the aftermath of an insured incident.

Global Trade Support: Facilitates global trade by mitigating the financial risks associated with transporting goods across international waters, fostering a more secure and reliable shipping environment.

Protection Against Unforeseen Events: Acts as a safeguard against unforeseen events such as theft, accidents, or natural disasters, offering peace of mind to businesses engaged in marine activities.

Understanding Marine Insurance Coverage

Get into more details to understand Marine Insurance Coverage:

Vessel Damage: Covers physical or structural damage resulting from collisions with submerged or above-water vessels.

Property and Injury Coverage: Protects against damage to your property or others’ belongings on board, including coverage for bodily injuries.

Assistance Services: Includes towing, assistance, and gas delivery if your boat is stranded.

Cargo Protection: Extends coverage to your ship and cargo during the transportation of goods.

Liability Coverage: Covers liabilities arising from damage or loss of goods during transit.

Commercial Transportation: Crucial for businesses involved in transporting customers’ goods, ensuring comprehensive coverage.

Trust Building: Having adequate marine insurance builds trust with customers, assuring them of insured services.

Collision Events: Addresses damages caused by collisions, whether with underwater or above-water vessels.

Property on Board: Safeguards against losses related to property on the vessel, ensuring financial protection.

Bodily Injury Protection: Offers coverage for bodily injuries, providing financial support in case of accidents.

Emergency Assistance: Provides essential services like towing and gas delivery during unexpected incidents.

Goods in Transit: Protects goods being transported, mitigating financial risks associated with potential damage or loss.

Liability Protection: Extends coverage to liabilities arising from damage or loss, reducing financial burdens.

Customer Assurance: Demonstrates a commitment to customer satisfaction by ensuring a secure and insured service.

Responsibility Emphasis: Highlights the importance of taking personal responsibility to secure adequate marine insurance, especially in commercial transportation scenarios.

How Does Marine Insurance Work?

Understand how Marine Insurance works below:

Liability Transfer: When you secure marine insurance, the liability for potential losses and damages shifts from you and other stakeholders to the insurance provider. This ensures that you have financial protection in case of unforeseen events during transportation.

Limited Liability as an Intermediary: As an intermediary handling transported goods, you inherently have limited liability. However, purchasing insurance further safeguards your interests and minimizes potential financial risks associated with cargo loss or damage.

Exporter’s Responsibility: Export contracts often mandate the exporter to obtain marine insurance. As an exporter, it becomes your responsibility to secure insurance coverage to fulfill the contractual terms and conditions, such as Carriage and Insurance Paid (CIP) or Cost Insurance and Freight (CIF).

Customer Protection: Marine insurance is a crucial tool for protecting your customers’ interests and property. By adhering to contractual policies and providing insurance coverage, you assure customers that their goods are safeguarded throughout the transportation process.

Contractual Obligations: Fulfilling the terms of agreements, such as CIP or CIF, becomes seamless with marine insurance. This not only protects your business but also establishes a trustworthy relationship with customers, emphasizing your commitment to delivering goods safely and in compliance with contractual obligations.

Different Types of Marine Insurance

Various types of marine insurance coverage are available to meet diverse needs. Let’s explore these different options:

Freight Insurance: Freight insurance shields the owning corporation of a merchant ship from financial losses incurred in the transport of goods. In the event of cargo loss due to accidents, this insurance covers the monetary setbacks, providing a safety net for businesses heavily involved in freight operations.

Freight Demurrage and Defense Insurance (FD&D): Commonly known as FD&D, this insurance is a legal safeguard, covering costs, claims, and handling assistance for disputes not handled by other marine insurance types. It ensures a robust defense against a broad spectrum of legal challenges, supplementing the protection provided by P&I, Hull, or machinery insurance.

Hull Insurance: Hull insurance offers comprehensive coverage for a vessel’s structure, protecting ship owners from financial losses caused by damage or loss in accidents. It encompasses the hull, torso, and various ship components, serving as a crucial financial safeguard for ship owners.

Liability Insurance: Liability marine insurance compensates for financial liabilities arising from ship collisions, crashes, or induced attacks. It provides essential financial protection, ensuring ship owners can navigate unforeseen events without incurring significant financial losses.

Marine Cargo Insurance: Essential for cargo owners, marine cargo insurance protects against mishandling risks during handling or voyages. This coverage ensures compensation for losses incurred, including damage, loss, or misplacement of goods, offering peace of mind to cargo owners.

Machinery Insurance: Machinery insurance safeguards vital on-board machinery, providing compensation for operational damage to the ship. While subject to survey and approval from a surveyor, this coverage ensures that essential ship machinery remains protected from potential risks.

P&I Insurance (Protection and Indemnity): P&I insurance, provided by a P&I club, focuses on damages or losses to third-party goods that might not be covered by standard marine insurance policies. This specialized coverage ensures shipowners have comprehensive protection, emphasizing indemnity for damages to third-party interests.

Types of Marine Insurance Policies

Block Policy: Covers cargo owners against loss or damage throughout the journey, falling under maritime insurance.

Fleet Policy: Beneficial for owners of multiple ships, offering comprehensive coverage for the entire fleet.

Floating Policy: Ideal for frequent cargo transporters, this policy sets a maximum insurance limit, with details provided when the vessel begins its journey, saving time and money. Mixed Policy: Combines both voyage and time policies, providing versatile coverage. Port Risk Policy: Offers insurance to the ship while docked at a port, ensuring comprehensive protection during this crucial phase.

Single Vessel Policy: Tailored for small ship owners, providing coverage for a single ship’s insurance needs.

Time Policy: Valid for a specified time period, often a year, offering consistent coverage during this duration.

Voyage Policy: Specifically valid for designated voyages, providing targeted coverage.

Valued Policy: Clearly states the cargo’s value in the document, ensuring transparency in reimbursement.

Unvalued/Open Policy: Opposite of a valued policy, the cargo value is assessed after an incident, determining reimbursement based on the extent of damage or loss.

Wager Policy: Involves no fixed reimbursement terms, relying on the discretion of the insurance provider to determine genuine damage worth reimbursing. Note: This informal policy lacks legal standing in the court of law.

Whether you own a single ship, manage a shipping company, or handle cargo, marine insurance is crucial for safeguarding your goods and investments. Always consider securing marine insurance and consult with experts to ensure you get the right coverage tailored to your specific needs. It’s a smart way to protect your assets and gain peace of mind in the unpredictable world of maritime activities.

Who can use Marine Insurance Coverage? Marine insurance is accessible to various stakeholders, including:

• Manufacturers
• Importers and exporters
• Cargo owners
• Buying agents

What documents are needed to make a claim under maritime insurance? To make a claim under maritime insurance, you would need to have the following documents:

• Insurance certificate and the policy number
• Bill of lading
• Missing certificate or survey report
• Invoices, packaging lists, and shipping details
• Xerox of correspondences exchanged

What does Marine Insurance not cover? While marine insurance offers comprehensive coverage, certain exclusions should be noted:

• Deliberate damage or misconduct
• Damages from riots, strikes, or war
• Cargo damage due to inadequate packaging
• Transportation delays and related costs
• Wear, tear, or cargo leakage
• Shipping company insolvency or financial distress
• Wreck removal

Also Read: Understanding ECGC Insurance: Protection for International Trade [/vc_column_text][vc_empty_space height=””][/vc_column_inner][/vc_row_inner][/vc_column][vc_column width=”1/3″ offset=”vc_hidden-sm vc_hidden-xs” el_class=”post-col” css=”.vc_custom_1638872146414{padding-left: 50px !important;}”][vc_widget_sidebar sidebar_id=”consulting-right-sidebar” el_id=”single-right-siebar”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text][/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1638349264629{padding-top: 100px !important;padding-bottom: 80px !important;}”][vc_column][vc_custom_heading text=”Related Post” font_container=”tag:h2|font_size:25px|text_align:center|color:%233c3c3c” google_fonts=”font_family:Poppins%3A300%2Cregular%2C500%2C600%2C700|font_style:600%20semi-bold%3A600%3Anormal” css=”.vc_custom_1638774169659{margin-bottom: 30px !important;}”][vc_raw_html]JTVCc21hcnRfcG9zdF9zaG93JTIwaWQlM0QlMjIxMDAwNSUyMiU1RA==[/vc_raw_html][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

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Table of Content

• What is Marine Insurance

Marine Insurance Act 1963

• How Marine Insurance works

Types of Marine Insurance

• Which clauses cover Marine Insurance

Difference between Fire Insurance & Marine Insurance

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13 July 2021

Marine Insurance | Meaning, Types, Benefits & Coverage

What is marine insurance.

Marine insurance refers to a contract of indemnity. It is an assurance that the goods dispatched from the country of origin to the land of destination are insured. Marine insurance covers the loss/damage of ships, cargo, terminals, and includes any other means of transport by which goods are transferred, acquired, or held between the points of origin and the final destination.

The term originated when parties began to ship goods via sea. Despite what the name implies, marine insurance applies to all modes of transportation of goods. For instance, when goods are shipped by air, the insurance is known as the contract of marine cargo insurance.

Importance of Marine Insurance

Marine insurance is required in many import-export trade proceedings. Admitting the terms, both parties are liable for the payment of goods under insurance. However, the subject matter of marine insurance goes beyond contractual obligations, and there are several valid arguments necessary for buying it before dispatching the export cargo.

Goods in transit need to be insured by one of the three parties:-

• The Forwarding Agent
• The Exporter
• The Importer

Also, it can be taken by anyone involved in the transit of goods.

Also Read: Role of a Freight Forwarder | Functions, Duties & more

Where to get Marine Insurance?

The process to purchase marine insurance in India is easy. The country’s geographical position allows many banks and financial institutions to provide marine insurance.

The Marine Insurance Act, in India, came into existence in 1963. As per section three of the act, any time the term ‘marine insurance’ is used, expressed or even extended for the insuring of goods against loss or damage, the insurer will be at risk to bear the charges. The insurer will consider all the certainty of goods in case of misfortune sustained during marine ventures.

Principles of Marine Insurance

Principle of Good faith - Parties demand absolute trust on the part of both; the insurer and the guaranteed.

Principle of Proximate Cause - The proximate cause is not adjacent in time; also, it is inefficient. Nevertheless, it is the definitive and adequate cause of loss.

Principle of Insurable Interest - Any object presented as a marine risk and the assured covering the insurance of goods - both should have legal relevance. Also, a series is devoted called 'Incoterms' to respectfully assign the insurance of goods to each party.

Principle of Indemnity - The insurance extended to the parties will only be applicable up to the loss. The parties can't buy insurance to gain profits. If they do, they won't get more than the actual loss.

Principle of Contribution - Sometimes, the risk coverage for goods has more than one insurer. In such cases, the amount has to be fairly distributed amongst the insurers.

Features of Marine Insurance

How Marine Insurance works?

Marine insurance best transfers the liability of the goods from the parties and intermediaries involved to the insurance company. The legal liability of the intermediaries handling the goods is limited to begin with. The exporter, instead of bearing the sole responsibility of the goods, can buy an insurance policy and get maritime insurance coverage for the exported goods against any possible loss or damage.

The carrier of the goods, be it the airline or the shipping company, may bear the cost of damages and losses to the goods while on board. However, the compensation agreed upon is mostly on a ‘per package’ or ‘per consignment’ basis. The coverage so provided may not be sufficient to cover the cost of the goods shipped. Therefore, exporters prefer to ship their products after getting it insured the same with an insurance company.

The Scope of Marine insurance is necessary to meet the contractual obligations of exports. To align with agreements such as cost insurance and freight (CIF) or carriage and insurance paid (CIP) , the exporter needs to take marine insurance to protect the buyer’s or their bank’s interest and honor the contractual obligation. Similarly, in the case of Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP) terms, the seller may not be obligated to insure the goods, although in practice they generally do.

To get marine insurance and avoid insurance claims, ensure the following:

Packing of goods should be done keeping in mind their safety during loading and unloading

Packing should be good enough to withstand natural hazards to the best extent possible

Keep in mind the possibility of clumsy handling or theft when packing goods.

How to calculate Marine Insurance Premium?

Freight Insurance

Liability insurance, hull insurance, marine cargo insurance.

In freight insurance, for example, if the goods are damaged in transit, the operator would lose freight receivables & so the insurance will be provided on compensation for loss of freight.

Marine Liability insurance is where compensation is bought to provide any liability occurring on account of a ship crashing or colliding.

Hull Insurance covers the hull & torso of the transportation vehicle. It covers the transportation against damages and accidents.

Marine cargo policy refers to the insurance of goods dispatched from the country of origin to the country of destination.

Types of Marine Insurance policies

• Floating Policy
• Voyage Policy
• Time Policy
• Mixed Policy
• Named Policy
• Port Risk Policy
• Fleet Policy
• Single Vessel Policy
• Blanket Policy

Floating policy

Floating in Marine Insurance policy, large exporters may opt for an open policy, also known as a blanket policy, instead of taking insurance separately for each shipment. An open policy is a one-time insurance that provides insurance cover against all shipments made during the agreed period, often a year. The exporter may need to declare periodically (say, once a month) the detail of all shipments made during the period, type of goods, modes of transport, destinations, etc.

Voyage policy

A specific policy can be taken for a single lot or consignment only. The exporter needs to purchase insurance cover every time a shipment is sent overseas. The drawback is that extra effort and time is involved each time an exporter sends a consignment. With open policies, on the other hand, shipments are insured automatically.

Time policy

Time policy in marine insurance is generally issued for a year’s period. One can issue for more than a year or they may extend to complete a specific voyage. But it is normally for a fixed period. Also under marine insurance in India, time policy can be issued only once a year.

Mixed policy

Mixed policy is a mixture of two policies i.e Voyage policy and Time policy.

Named policy

Named policy is one of the most popular policies in marine insurance policy. The name of the ship is mentioned in the insurance document, stating the policy issued is in the name of the ship.

Port Risk policy

It is a policy taken to ensure the safety of the ship when it is stationed in a port.

Fleet policy

Several ships belonging to the company/owner are covered under one policy. Where it has the advantage of covering even the old ships. Also the policy is a time based policy.

Single Vessel policy

In single vessel policy only one vessel is covered under marine insurance policy.

Blanket policy

In this policy, the owner has to pay the maximum protection amount at the time of buying the policy.

Which clauses cover Marine Insurance?

The Maritime insurance coverage provided by marine insurance can be understood by going through the risks handled by the insurance policies loaded with various marine insurance clauses:

Institute Cargo Clause C provides basic coverage and includes a restricted list of risk covers. It covers the shipment against events such as fire, discharge of cargo in case of distress, explosion, accidents like sinking, capsizing, derailment, collision, etc.

Institute Cargo clause B offers an additional layer of protection. Not only does it include all the risk covers provided under Clause C, but it also covers the shipment against events such as earthquake, volcanic eruption, and damage due to rainwater, seawater, river water, etc., and loss to package overboard or during loading and unloading.

Institute Cargo Clause A provides maximum coverage as it covers all risk of loss or damage to the goods. Apart from the risks covered under Clauses B and C, it also covers losses due to breakage, chipping, denting, bruising, theft, non-delivery, all water damage, etc.

Risks such as wars, strikes, riots, and civil commotions are not covered under the institute cargo clauses. However, the insurer may provide this cover on payment of additional marine insurance premium.

So in terms & conditions of marine insurance coverage, these three types of marine insurance clauses: Institute Cargo Clauses A, B, and C. Clause A provides maximum coverage, Clause C provides basic risk coverage.

What is not covered under Marine Insurance?

Fire insurance is an insurance that covers the risk of fire. The subject matter is any physical asset or property. The moral responsibility is an important condition here. There is no expected profit margin in terms of fire insurance. The insurable interest must be present before taking the policy and also at the time of loss.

Whereas, the Functions of Marine insurance is one that encompasses risks associated with the sea. The subject matter is the ship, freight or cargo. It does not consist of any clause related to the moral responsibility of the cargo owner or the ship. 10 to 15% profit margin is expected in terms of marine insurance. Also in marine insurance the insurable interest must be only at the time of loss.

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Avani Ghangurde

Senior associate, public relations at drip capital.

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Boat Insurance Guide

Boat Insurance Guide: Costs & Coverage

When it comes to insuring your boat, it’s often best to separate your boat insurance from your homeowner's policy. Many homeowners’ policies limit or don’t cover marine-specific risks, such as salvage work, wreck removal, pollution or environmental damage; but there are exceptions.

Types of Boat Insurance

• Boat Insurance Costs
• Boat Insurance FAQs

Insurance Factors

Insurers consider many factors when deciding whether or not to offer a policy. Almost any vessel can be insured— for a price. You want to consider the following to make sure the policy you purchase meets your needs:

• Age of Boat
• Speed/Horsepower
• Condition (Does it meet US Coast Guard Standards in effect at the time it was built?)
• Primary residence (If the boat is used as a primary residence)
• Type (Inboard, Outboard, utility, cruiser, bassboat, saltwater fishing boat, performance boat)
• Homemade (Boats without a serial number are tricky but many kits are okay)
• Houseboats with no motor
• Ownership (more than 2 owners)
• Where it will operate (Ocean, lakes, bays, rivers, Great Lakes)

There are two basic types of boat insurance— “agreed value” and “actual cash value.” How depreciation is handled is what sets them apart.

An "agreed value" policy covers the boat based on its value when the policy was written. While it can cost more up front, there is no depreciation for a total loss of the boat (some partial losses may be depreciated).

"Actual cash value" policies cost less up front, but factor in depreciation. In other word, the policy will only pay up to the actual cash value of the boat at the time it is declared a total or partial loss. Eventually, as your boat ages, your insurer will likely insist on an actual cash value policy—and if often gives a substantial savings.

Kinds of Boat Insurance Policies

• Personal Watercraft ( PWC )
• Yacht  - generally, vessels 26' and smaller are called "boats,” and "yachts" are 27' and larger. Yacht coverage tends to be broader and more specialized because larger boats travel farther and have more unique exposures.
• Boat & PWC Rental  - Although this is generally not required, rental insurance will help cover any damage the vessel, as well as the operator and passengers.
• Boat Clubs  - covers all members of club while operating a boat.
• Professional (ProAngler, Fishing Guides & Charters)  - These policies are very customizable and can cover items like travel to a tournament, equipment and more.

What Boat Insurance Policies Cover

How and where you boat determines the type of coverage you need. An "all risk" policy will offer the best protection. However, an “all risk” policy does not cover every type of loss. In insurance terms “all risk” just means that any risk not specifically omitted in the policy is covered. Typical exclusions include wear and tear, marring, denting, animal damage, manufacturers’ defects, design defects, ice and freezing.

You may also be able to add extra coverage. Available options may include: medical payments, personal effects, uninsured boaters liability, and towing and assistance. Most policies will cover permanently attached equipment, as well as items like anchors, oars, trolling motors, tools, seat cushions, and life jackets. Be sure to discuss these options with your agent.

Types of Boat Insurance Coverage

This will depend on the type of policy, but common coverage add-ons (in addition to basic ones above) include:

• Specialized Coverage:  Coverage for something specific on your boat like an expensive prop or navigation equipment.
• Salvage:  Coverage that pays to remove your boat due to damage, from substantial to minor.
• Consequential Damage: Covers a loss that was the result wear and tear rather than an accident (rot, mold, corrosion).
• Towing: Towing your boat across a body of water to safety can cost $400 per hour.
• Cruising Extension: You can get temporary, additional coverage if you plan on leaving the USA (typically to Mexico or the Bahamas).

Insurance Claims

Hopefully, you will never need to make a claim but if you do, it’s good to be prepared. You are not required to carry proof of insurance on your boat, but it’s a good idea keep claim information handy for an emergency. Ask how the claim process works when you’re shopping for policies. Naturally, it should be quick and easy. In addition, find out if your agent (or other representative) will be available if you need help dealing with the aftermath of a claim, such as arranging for towing or salvage, rather than just cutting a check and leaving.

Shopping for Boat Insurance

Start with a little fact-finding. Ask your boating friends which company they use and how their claims have been handled. The way an insurer has handled claims in the past is a good indicator of the quality of service you can expect in the future.

State insurance regulatory agencies are also a good reference and can be found online.

Boat Insurance Cost Factors

• Cruising Area: Where you boat.
• Boating Safety Education: If you have been formally trained or certified.
• Good Driving Records: Both boating and driving.
• Liability Limits: The higher the limit the higher the cost.
• Deductible: The higher the deductible the lower the premium.
• Towing insurance requirements for offshore fishing (for example, a 20-mile tow could cost $3,000).

If you boat in a hurricane zone, your insurer may expect you to provide a hurricane plan. If a storm approaches, will you have it stored in a hurricane-proof facility or will you tow it or skipper it to a safer harbor. The answer can affect your rates, even lower them, but be prepared to follow the plan, because your coverage may hinge on it.

Insurance Discounts

There are a few ways to reduce your boat insurance costs. For example, if your boating is restricted by seasons and your boat is in storage during the winter, you can get deductions for winter layup. Many insurers offer discounts for good driving records and for anyone who has completed boater education classes. Finally, it usually costs less to be insured in fresh water versus salt, so be sure to discuss where you boat with your agent. You may earn extra savings by bundling your coverage with the same company that insures your home and/or car.

Before you buy your new vessel, it’s a good idea to determine your insurance costs based on your needs.

Boat Insurance Coverage FAQs

Small Boat (29' or less) Insurance

What is the best coverage for my boat?

It is best to have what is known as an "All Risk" policy, which will provide coverage for all types of losses except those specifically excluded in the policy. Typical exclusions may include wear and tear, gradual deterioration, marring, denting, scratching, animal damage, manufacturer's defects, defects in design, and ice and freezing.

How much should I insure my boat for?

You should insure your boat for the amount it would cost you to replace it with like kind and quality. This is called "Agreed Value" or "Stated Value" coverage, and in the event of a total loss, will pay the full insured amount. Beware of policies providing "Actual Cash Value" (ACV) coverage, which means the value of your boat will be replacement cost less depreciation.

What other coverages can I expect with my policy?

The following are standard coverages with standard deductibles and average limits:

• Medical payments, $5,000
• $1,000 limit Personal effects, $250 deductible
• Uninsured boaters liability, between $300,000 and $500,000
• $500 to $1000 limit Towing and assistance, no deductible
• $1,000 limit Fishing equipment, $250 deductible

Who is allowed to operate my boat?

Most policies will allow anyone to operate your boat so long as you have given them permission. There are exceptions, of course, especially with high performance boats or personal watercraft so always read your policy. But beware, too many additional drivers often results in increased premiums.

I live in an area where I can't use my boat in the winter, but my lender requires it be insured year-round. What can I do?

Ask your insurance agent if they offer what is commonly referred to as a “lay-up” discount. You have year-round coverage with a discount for the months your boat is in dry storage.

Large Boat (Greater than 29') Insurance

What are the differences between boat and yacht insurance?

Generally "boats" are considered to be 26' and smaller, and "yachts" are 27' and larger. Generally speaking yacht coverage is broader and more specialized because larger boats travel further and have more unique exposures.

What should I look for in a yacht policy?

There are two main section s of a yacht policy. Hull insurance is all risk direct damage coverage that creates a very broad insuring agreement. It will include agreed amount hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss.

A true yacht policy also includes replacement cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries, outboards and sometimes outdrives, which are depreciated. Protection and indemnity insurance is the broadest of all liability coverages, and because maritime law is unique, you will need coverages that are designed for those exposures. Such things as Harborworkers and Longshoreman's coverage and Jones Act (crew) coverage can be critical, as an uncovered loss in this area could run into hundreds of thousands of dollars. Besides providing payment of judgments against you, P&I also provides for your defense in Admiralty Courts.

What is a normal deductible?

A yacht policy usually carries a percentage of the insured value deductible, for instance a 1%, deductible means a boat insured for $100,000 would have a $1,000 deductible. Most lenders allow a maximum deductible of 2% of the insured value. Beware of "named special deductibles" such as storm damage of 10% or more.

What are some of the other standard coverages I can expect?

These standard coverages have standard deductibles and average limits:

• Medical payments, $10,000 limit
• $5,000 limit personal effects, $250 deductible
• $500,000 limit uninsured boaters liability, no deductible
• $1,000 to $3,000 limit Towing and assistance, no deductible
• $1,000 Hurricane haul out coverage. Small percentage of limit as deductible. Hurricane warning must be posted by NOA. Payment made to move boat to safe location, haul out or make special preparations to withstand storm.

What is Breach of Warranty?

That is coverage that primarily protects the lienholder's interest in your boat, paying off the balance owed but nothing more. If you breach the warranties in the policy, such as promising not to go outside your navigational limits, not to use your boat during the lay-up period, not to use your boat for anything but private pleasure use, and you do NOT have this coverage and experience a loss, you don't get paid for that loss and neither does the lender. You could end up making payments on a boat you cannot use.

Editor's Note: Information Courtesy of National Marine Lenders Association .

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Yacht insurance

The marine insurance leader for over 45 years.

Find a Markel marine agent and get a free, no-obligation quote today.

If you love your yacht, you’ll love our insurance.

We’ve been the yacht insurance leader for over 45 years because we provide coverages that fit your yacht and your lifestyle. Markel yacht insurance can offer distinct advantages in coverage features, options, knowledge and experience.

Why do you need yacht insurance?

Whether you own a yacht or a houseboat, we understand it’s not a typical boat and shouldn’t be covered by a typical boat insurance policy. That’s where we come in—each Markel yacht insurance policy can be customized to fit your yacht, your needs, your budget and your style.

Still not sure?

Here’s a few of the potential advantages to insuring your yacht with us:.

More complete coverage than any other carrier at no additional cost.

Experienced yacht underwriters and marine claims specialists who provide prompt, responsive service.

Discounts and cost-effective coverage options to save you money.

Flexible payment options.

Save money by customizing your yacht insurance

Actual cash value coverage (ACV) Reduce your coverage to ACV, which factors in depreciation of your yacht should you have to file a claim.

Lay-up option We’ll discount your yacht insurance premium during the winter months when your yacht is not in use.

Higher deductibles If you can manage minor repairs to your boat on your own, selecting a higher deductible will reduce your premium.

Windstorm exclusion Live in an area that isn’t at risk for a hurricane? You may consider removing windstorm coverage from your policy.

Liability only Coverage in case you damage another yacht and/or person (doesn’t require a survey—even for older boats).

What we offer

We offer coverage for a variety of watercrafts over 26 feet in length, including:.

• Sport fishing boat

Our coverages can include:

• Coverage for your yacht
• Coverage for you
• Optional coverages

Hull and equipment insurance protection including:

• Protect and recover can cover reasonable costs incurred when trying to protect your yacht from further damage after an accident
• Consequential damage for non-wood yachts–normal wear and tear and deterioration is not typically covered under a yacht insurance policy. However, if your yacht suffers damage from fire, explosion, sinking or collision because of one of these conditions, you may be protected
• Ice and freezing damage coverage if you contracted with a commercial marina or repair facility
• Agreed value for total loss
• Deductible waived on most total losses
• No depreciation on most partial losses
• Automatic tender coverage

Windstorm extra expense If there is a named storm, watch or warning, we will share the expense with you to help protect your yacht before the storm makes landfall.

Personal effects coverage For all the “extras” you physically bring onto your yacht. (i.e., smart phone, camera, etc.)

Emergency towing and assistance Coverage for towing expenses if your yacht happens to get stuck in or out of the water, including the delivery of gas, oil and parts.

Rental reimbursement coverage Coverage for when your yacht is being repaired from a covered loss.

Uninsured boater Unfortunately, not all boaters on the water have insurance. This coverage helps protect you and your family members if you are injured in an accident caused by an uninsured boater. Coverage is automatically included if watercraft liability is purchased.

Pollution liability Pollution coverage helps protects you if you are held legally liable due to an oil pollution leak or spill.

Medical payments Coverage for injuries suffered during an accident on your yacht.

Paid crew (Jones Act) Protection for you if you are legally responsible for injuries to a paid captain or crew member while on your yacht.

Protection and indemnity Coverage in the event that you are responsible for injuries to another person, or damage to their boat or property. Wreck removal is included with purchase of hull coverage.

• Boat trailer coverage
• Boat lift and boat house coverage
• Fishing tournament reimbursement for fishing boats
• Fishing equipment protection
• Transit and storage coverage
• Trip coverage
• Trip interruption reimbursement
• Personal liability coverage if you live aboard your yacht

Frequently asked questions about yacht insurance

General questions.

How much coverage do I need? Each boat, person, location and situation is different. There isn't a good way to give a "ballpark" figure for how much coverage you need. It’s best to evaluate your comfortable level of risk when protecting your boat, assets and passengers. Your best option is to call our boat specialists at +1.800.236.2453 to discuss the best coverage for you.

Can I insure my yacht for liability only? Yes, we offer protection and indemnity (liability only) coverage to help protect you in case you are responsible for injuries to another person or damage to another boat or property. Many carriers do not offer liability-only policies for yachts, or if they do, require a survey. However, Markel’s protection and indemnity coverage does not require a survey, so you’re able to do what you love without worries out on the water.

Will my policy cover normal wear and tear of my yacht? Most insurance policies will not cover normal wear and tear of your yacht and the deterioration or the resulting damage. However, if your yacht is damaged from fire, explosion, sinking, collision or stranding, you may be protected under our consequential damage coverage.

Can I use my yacht for chartering? We know that sometimes yacht owners charter their yacht for sightseeing tours or even sport fishing to help offset some of the costs of owning a yacht. Markel offers an optional limited charter coverage for these situations provided the captain of the watercraft has a minimum of 2 years loss-free experience of yachting. Additional restrictions may apply.

I live on my yacht. Am I covered? Markel provides live aboard coverage. Be sure to disclose that you live aboard to your agent.

My yacht is in a corporation's name. Can I still insure it with Markel? Our yacht insurance policy can cover corporately titled boats for both personal use and client entertainment. We do require all corporately titled boats designate a designee of the watercraft. Contact your agent to learn more.

Do I need to insure my yacht in the winter? It may seem that since you don't use your yacht in the winter you don't need to insure it. This is a risky way of looking at insurance and one that we have seen cost far too many people far too much money. Your yacht is at risk for damages at all times of the year, not only when it's on the water. For example, if your yacht is placed in storage for the winter and is damaged, you will not have any assistance in paying for those repairs without an active insurance policy.

Do you cover unique boats? We offer coverage for various kinds of boats that other insurers may shy away from, including: high performance boats, airboats, hovercraft, etc. Not sure if your watercraft will be covered? Give us a call at +1.800.236.2453 to speak with one of our marine insurance specialists.

What kind of fishing equipment is covered? Your rods, reels and tackle are automatically covered under your personal effects coverage up to the limit purchased. If that coverage isn't sufficient, our fishing equipment coverage provides insurance protection at replacement cost. Please contact one of our marine insurance specialists at +1.800.236.2453 to find out more.

Claims questions

How do I file a claim? We understand that no one wants to file a claim. That's why we do everything we can to make the process as painless as possible. You can report your yacht insurance claim by calling our office at +1.800.236.2453 or submit your claim online and we'll take it from there.

How long will it take for my claim to be processed? We are committed to investigating, evaluating and resolving marine insurance claims in a timely manner.

Is there anything I can do to help speed up the claim process? Yes, you can help streamline the claims and settlement process and avoid delays by providing the following information when you file your claim:

• Policy number
• Date, time and location of loss or damage
• Description of loss or damage
• Digital photos (if possible)
• Phone number to reach you

Additional resources

Related articles.

From boat safety tips to breaking down yacht insurance, find the information, advice, and resources you’ll need all in one place.

Warrior Sailing

Markel is a proud supporter of Warrior Sailing, an organization dedicated to healing and strengthening the lives of veterans through sailing. Visit warriorsailing.org to learn about Warrior Sailing and how you can donate to the program so they can continue to help the lives of wounded veterans.

Related products

Specialized coverage designed specifically for boats 26 feet or less, such as pontoons, runabouts, fishing boats and more.

Personal watercraft

Insurance for personal watercrafts (PWCs) such as a Jet Ski, Sea-Doo or WaveRunner.

High performance boat

Coverage for speedboats greater than 26 feet in length and capable of speeds 66 to 120 m.p.h.

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Yacht Insurance

Protect your superior watercraft with superior protection from Chubb.

Chubb has been a leading provider of yacht insurance for over 100 years, offering some of the most comprehensive policies available for private, pleasure watercrafts. Being on the water is an experience of peace, calm, and new adventures on the horizon. It’s an experience you want to protect. Our Masterpiece® Yacht insurance policy offers superior coverage for pleasure yachts 36 feet or greater in length. And for captained vessels 70 feet or greater in length and valued at $3 million or more, our  Masterpiece Yacht Preference policy has the specialty coverages you and your crew need.

Masterpiece® Yacht Policy Highlights

Agreed Value Coverage

We pay the entire agreed amount, with no deductible, for a total loss. With our Masterpiece Yacht Select policy, eligible vessels can receive Replacement Cost coverage up to 120%.

Liability Protection

Limits of coverage to suit your personal needs, including: legal defense costs, liability as required by the Oil Pollution Act of 1990, wreck removal, and Jones Act coverage for paid crew.

Replacement Cost Loss Settlement

Repair or replacement of covered property is paid for without deduction for depreciation for most partial losses.

Uninsured/Underinsured Boater Coverage

Pays for bodily injury to persons aboard the insured watercraft who are injured by an uninsured owner or operator of another vessel.

Medical Payments

Reasonable medical and related expenses are included for all those onboard, boarding or leaving the covered vessel. These benefits are provided on a per person basis, rather than per occurrence. Optional and customized limits are available.

Search & Rescue

Up to $10,000 for the expenses incurred by an insured in relation to a governmental unit such as the United States Coast Guard (USCG) who provide emergency aid and assistance are included for no additional charge. With our Masterpiece Yacht Select option, coverage is available up to $25,000.

Longshore and Harbor Workers’ Compensation Act (LHWCA)

When Liability coverage is purchased, coverage is automatically provided for those employed aboard the vessel who are within the jurisdiction of the LHWCA.

Personal Property & Fishing Equipment Coverage

Protection is automatically included for the clothing, personal effects and fishing gear of the boat owner and their guests. Optional higher limits are available.

Coverage for Marinas as Additional Insured

Marinas, yacht clubs and similar facilities where clients keep their vessels are included as Additional Insureds.

Trailer Coverage

We automatically include coverage up to $5,000 for your trailer used with your insured vessel. Higher limits are available.

Emergency Towing & Assistance

Our policy includes this coverage with optional higher limits available.

Boat Show & Demonstration Coverage

We automatically provide this coverage, at no additional charge.

Precautionary Measures

We will pay up to the policy limit the reasonable costs incurred to haul, fuel or dock the insured watercraft endangered by a covered peril.

Bottom Inspection

We will cover the reasonable costs to inspect the bottom of an insured vessel after grounding, stranding, or striking a submerged object. There is no deductible for this coverage.

Oil Pollution Act of 1990 (OPA) Coverage

If Liability coverage is purchased, our policy provides coverage in addition to the Liability limit, up to the required OPA statutory limits, regardless of the Liability limit chosen. Additionally, if the OPA statutory limit is increased in the future, our policy will automatically increase the applicable OPA limit to match the new higher statutory limits.

Temporary Substitute Watercraft

Up to $5,000 to charter a temporary substitute watercraft if the insured vessel is out of commission due to a covered loss and cannot be repaired within 72 hours. With our Masterpiece Yacht Select policy offering, the limit of Temporary Substitute Watercraft is increased to $10,000.

Marine Environmental Damage Coverage

This feature provides protection up to $10,000 for fines and penalties as a result of marine environmental damage, as defined by the policy terms. Coverage is provided in addition to the insured's applicable Liability and OPA limits. With our Masterpiece Yacht Select policy offering, the limit of Marine Environmental Damage Coverage is increased to $25,000.

57% of boating accidents happen on calm days with waves less than 6 inches.

Chubb offers some of the most comprehensive protection and services available rain or shine.

*Source: 2016 Recreational Boating Statistics, United States Coast Guard

Masterpiece Yacht Preference

Masterpiece Yacht Preference fulfills the specialty insurance needs of luxury yacht owners with captained vessels 70 feet in length and greater, valued at $3 million or more.

No depreciation applies on the following items

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A Yacht Insurance Primer for First Time Owners

[september 11, 2020].

The following article is designed to provide prospective yacht owners with an overview of the yacht insurance process. It should in no way be considered guidance. As detailed below, owners are advised to consult with an experienced marine insurance broker when acquiring or modifying their policie s.

Setting a course for peace of mind

Successful sailing experiences are built on a foundation of preparation and planning. From the boat’s gear and stores to its course and crew, every aspect of the trip must be thought through and squared away.

The same principle applies to yacht insurance, which is, of course, critical to a safe and relaxing journey. Unlike more common coverages, such as auto or home insurance, yacht insurance requires owners (especially first-timers) to prepare and plan for all sorts of eventualities and events.

Prepping for the right policy

Here are some of the issues would-be policyholders should be prepared to address as they seek the right policy for their yacht.

For openers, first-time yacht owners who expect to pilot their own craft must demonstrate a minimum level of boating experience.

“If you don’t have any experience, an insurance carrier will insure you, but you’ll be required to use a [professional] captain every time you go out on your boat,” says Hugo Hanham-Gross, a yacht insurance specialist with the Hanham Insurance Agency in Fort Lauderdale. “That can really limit your cruising options.”

Gaining experience

Fortunately, there are several easy ways to gain enough maritime experience to satisfy insurance carriers, says Hanham-Gross.

“You don’t have to take sailing classes,” he says. ”If your friends have boats, get as much experience as you can on their boats. If you are buying a Leopard, this experience doesn’t have to be on a catamaran. It can be on a monohull sailboat. It can even be on a motorboat – just get as much experience as you can.”

It’s important to log those hours – when, where, type of boat – in case the insurance carrier asks for confirmation. Hanham-Gross says this record can be as simple as a series of entries on a smartphone, so long as it’s truthful and accurate.

Learn from the best

Newbies can also meet the experience requirement by hiring a training captain and spending a few days on the water with her. When the captain feels the owners are ready to take the helm, she will sign a document certifying their readiness.

Hanham-Gross recommends submitting a sailing resume with a yacht insurance application. This document should provide carriers with background information about the applicant and detail their relevant boating experience and training. As with any resume, padding is a no-no.

“The carrier doesn’t care that you went sailing with your dad for an hour on a Hobie Cat when you were 13,” says Hanham-Gross.

Caribbean cruising?

Insurance carriers will also want to know where the applicant plans to operate their yacht. The answer may impact both the premiums charged and the yacht owners’ ability to wander. A U.S. waters-only policy, for example, would limit an East Coast policyholder’s ability to adventure in the Caribbean or a SoCal owner’s options down Mexico way.

Yacht owners who plan to spend significant time in the Caribbean should expect to jump through a few more insurance hoops. For example, some carriers will not insure yachts for travel in the Caribbean because of the hurricane threat. Those that do write such policies may require (or incentivize) policyholders to stay out of the region during hurricane season, which runs from June through November.

Applications for Caribbean coverage must typically include a hurricane plan. This document should list the places across the region where the yacht owners will seek shelter if a hurricane looms. The more detailed the plan, the better, says Hahham-Gross.

“The carrier wants to know how will you protect the boat, and what is your backup plan,” he says. “With a hurricane coming, you can’t just weigh anchor and sail 500 miles to the one marina on your list. If you give that answer, the carrier won’t write the policy because that attitude shows you aren’t taking the hurricane threat seriously.”

What are your cruising plans?

Insurance carriers will, understandably, also want to know how a prospective policyholder plans to use their yacht. If the applicant plans to live aboard their craft, they should disclose that to the carrier.  Carriers have different definitions of “living aboard.” That status typically has only an incremental impact on the owner’s premiums.  Most policies do not allow the yacht to be rented unless the renters hire a captain.

Finding the right insurance broker

The requirements and complexities of yacht insurance, which vary widely among carriers, can make the application process seem daunting. For that reason, newcomers are well-advised to work with an experienced yacht insurance broker. Such a professional can help owners determine their insurance needs, identify suitable carriers, and advocate for the owner during the application process and beyond. Building a strong connection with a broker is especially valuable for Leopard owners, says Hanham-Gross.

“That relationship is so important with catamarans because people who buy Leopards aren’t looking to sit in the Chesapeake Bay,” he says. “Their dream is to go to the Caribbean or the South Pacific. I probably talked to my Leopard owners five to six times a year because they constantly have to make changes to their policies.

Let there be no surprises

A broker can also help with the weird things that come up for large boat owners. For example, when you go into a marina now with a big boat, like a catamaran, the operator sometimes requires a certificate of insurance that names the marina as an additionally insured party on the policy.”

A broker is like a pilot. His training and unique expertise are invaluable as a new yacht owner navigates the shallows and channels of insurance towards the open waters of full coverage and the endless adventure it makes possible.

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Insurance : How much insurance should a yacht have?

YACHT-Redaktion

 ·  11.03.2024

The sum insured and the fixed valuation can correspond to the same value. But they do not have to

Why the definition of the fixed rate is important, how the fixed rate is sometimes softened.

From now on, we will be addressing the most frequently asked questions - and misunderstandings - about yacht insurance. In the first instalment, with the help of Dirk Hilcken from the leading boat insurance broker Pantaenius yacht insurance the fundamental Sense and purpose of a liability and comprehensive policy for the ship.

Anyone wishing to take out such insurance is immediately faced with a second fundamental question: How much is my boat worth, how much should I insure it for? For a new boat, the answer is perhaps easy to determine, but for a second-hand yacht, good advice is expensive. Because how do you actually measure the Sum insured - solely on the purchase price, the condition, the age of the ship? And what is the so-called Fixed rate to which many insurance providers repeatedly refer?

Dirk Hilcken explains: The two words - spoken in euros - can refer to the same number. But they do not have to. Simply explained: The sum insured is used to calculate the value of the ship and ultimately the insurance premium. Fixed rate, on the other hand, is insurance Latin for the amount that is paid out in the event of a total loss, provided no deductions are made for age. In other words, whenever the insured value is defined in the conditions as the new value. Admittedly, insurance is not quite so self-explanatory.

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In principle, every insurance contract for boats or yachts specifies a sum insured, regardless of how the claim is settled. This is also quite logical, as the insurer must of course be given the most precise information possible about the extent of the risk that is covered in a specific case.

This sum insured can then be used to calculate a premium rate with the help of various factors such as the type of ship, size, type of use, sailing area or amount of the excess. What is included in the sum insured depends on the respective provider. There is therefore an area within the insurance conditions called "Insured property", for example. Better policies also cover equipment, trailers, accessories, storage trestles or dinghies within the hull. All of these items should therefore also be included in the sum insured.

How the sum insured is determined

If it is a new boat, determining the sum insured is usually relatively simple. Add the purchase price plus everything that has been invested to get the boat ready for the season - and you have the sum insured. As already described, depending on the insurance conditions, accessories, trailer etc. should of course not be forgotten.

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For older boats, the question of the appropriate sum insured is sometimes a little more complex. We ourselves work with the rule of thumb that the sum insured should be selected in such a way that, in the event of a total loss, a similar boat in the same condition of care and equipment could be purchased for this amount. This applies regardless of how the insurance conditions define the settlement of total loss or partial loss.

However, especially if partial damage is settled according to the principle of new for old, the sum insured must usually have a certain minimum amount so that, for example, the mast breakage of an aging ten-metre sailing yacht does not immediately lead to a total economic loss. In this case, the insurer does not automatically pay less for the settlement of the partial loss because the yacht is slightly older or the sum insured is slightly lower than that of the neighbouring yacht, which has the same model of a slightly newer year of construction. A new mast of a certain size simply costs what it costs.

Now that the sum insured has hopefully become a little clearer, we can turn our attention to the term fixed premium. This is a frequently used term, which unfortunately does not always have the same meaning for the customer, but more on that later. As described at the beginning, in its original meaning, the fixed valuation is intended to explain that the amount of the sum insured is shown as a fixed insured value over the entire term of the contract. If there is a total loss, no deductions are made. No matter how long the boat has been insured.

The most obvious differentiation in this case is provided by boat policies in which the insured value is defined as the current value. Here, current value deductions are made in the event of a claim depending on the previous insurance period. The exact wording in such cases sometimes differs from provider to provider. However, it is common for fixed percentages to be deducted in the event of partial damage and deductions depending on the age and, above all, the condition of the boat in the event of a total loss. Fixed rate or current value therefore describe the principle according to which compensation is paid in the event of damage.

Understood everything? Insurance companies wouldn't live up to their reputation if there wasn't a little "but" waiting for us somewhere. Unfortunately, the fixed rate is not a protected term. As already indicated, this sometimes has unpleasant consequences for policyholders. In plain language: not every fixed rate is really fixed.

Many providers who use the term in their advertising refer in their terms and conditions to section 76 of the German Insurance Contract Act, for example. This explains that significant deviations in the insured value from the actual value of an item lead to deductions. However, how and when such a deviation is significant and how the individual condition of the boat or the current boat market are taken into account remains unclear at first.

Other providers also soften their fixed rate after a fixed period of time and then rely on current value cover. Caution is therefore advisable in this case. Only a fixed rate based on the replacement value and without corresponding notes is actually fixed.

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Sunken Superyacht Likely to Cost Insurers at Least $150 Million, Experts Say

Insurers of the Bayesian superyacht that sank this month, killing tech entrepreneur Mike Lynch and six others, could be on the hook for at least $150 million, according to the first estimates by industry experts.

The British-flagged 56-meter-long (184-foot-long) yacht, which the experts estimated cost around $40 million, capsized and went down on Aug. 19 within minutes of being hit by a pre-dawn storm while anchored off northern Sicily.

The superyacht’s hull was insured against physical damage by yacht insurance provider OMAC and a consortium of insurers including Travelers Cos. Inc., Navium Marine, and Convex, Reuters reported last week.

Yacht Insurer OMAC Is Hull Carrier for Yacht Sunk Off Sicily, Sources Say

Its protection and indemnity (P&I) insurance, which typically covers third-party liability claims including for environmental damage, injury and death, was provided by British Marine.

The hull was likely insured for around $40 million, while the P&I cover would be larger, insurance sources said.

“Our understanding is that the cost of the boat was between $40 and $50 million, so the limit of the hull & machinery policy was probably around those values,” said Marcos Alvarez, managing director, global financial institution ratings at Morningstar DBRS.

The P&I policy would likely be “several multiples” of the hull policy, or $200-300 million, Alvarez added, noting it would also likely cover liability payments even if the captain or crew are found to be negligent.

Prosecutors in the town of Termini Imerese, near Palermo, are investigating the captain and two other crew members. An investigation does not imply guilt or mean formal charges will follow. Prosecutors have said the probe would take time and require salvaging the wreck.

Oscar Seikaly, CEO of broker NSI Insurance Group, that provides yacht insurance, estimated the hull value at $40-70 million, but said P&I cover might not total more than $100 million.

P&I insurance would also cover recovery of the Bayesian, said Francesco Dubbioso, country manager for Italy for insurer Alta Signa Europe, who estimated the superyacht’s value at $30 million to $40 million.

Reuters is the first to report the potential insurance costs. OMAC, Travelers and Navium Marine did not immediately respond to Reuters’ for comment. Convex declined to comment.

The Bayesian disaster, which has puzzled experts who said the boat would have been built to withstand a severe storm, adds to recent woes for yacht insurers, who have faced a raft of hurricane losses in the past few years.

Premium rates have risen by four to five times in the past couple of years in parts of the U.S. and the Caribbean, and yacht insurers have cut the amount of cover they provide because of the risks, Seikaly said.

As a result, insurers have increased rates and re-evaluated their guidelines and risk appetite, according to industry experts.

As well as hurricanes, insured losses have mostly stemmed from severe storms, floods, and other weather events in North America, the Caribbean, and Europe, according to a report by broker Marsh.

Seikaly said four clients had last week been ready to buy boats but changed their minds because of the high cost of insurance.

Climate change was also likely to add to yacht insurers’ worries, Seikaly added, as it throws up more unexpected events.

“Whoever thought a storm in the Mediterranean in the month of August is going to sink a ship?”

(Additional reporting by Sinead Cruise; editing by Michelle Price and Sandra Maler)

Photograph: Italian Firefighters scuba divers bring ashore in a blue bag the body of one of the victims of the UK flag vessel Bayesian, on Wednesday, Aug. 21, 2024. (AP Photo/Salvatore Cavalli)

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Progressive Insurance confirms it's "temporarily restricting new homeowners business" in Texas and several other states. What does that mean for you?

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DALLAS — First came the rumors, and then came a report (without definitive, direct confirmation) that Progressive Insurance was no longer writing new homeowner’s policies in Texas. 

If true, that would be big  news. 

So, I did some digging and repeatedly asked Progressive about it. I specifically sought information about whether they were no longer writing new homeowner’s insurance policies in Texas and whether current homeowners policies in Texas wouldn’t be renewed when they expire. 

After initial silence, I got an answer. Well… a partial answer.

Progressive responded: “We are temporarily restricting new homeowners (HO3) business for certain agents in several states. We remain committed to the property business in these states and expect that these actions will better position us to build a stronger, more stable, and more competitive Progressive Home business for consumers and independent agents in the long run. These actions will not impact any other lines of business in the affected states; impacted agents can continue to write Personal Auto, Recreational Lines, and Commercial Lines products. Additionally, property-appointed agents can continue to offer Renters, Condo, Flood, and Umbrella.”

Just to be extra sure, I asked them whether Texas is one of those “several states” they referred to. Progressive confirmed that, yes, “Texas is one of the states in which we are temporarily restricting new homeowners business (HO3) for certain agents”. 

Now that we have that out of the way, let’s discuss some of what we still don’t know. 

It is unclear how "temporary" this is, or exactly how "restrictive" this is. I have asked whether Progressive is writing any new homeowners policies in Texas, but I have not heard back. 

Progressive also has not answered my question about whether any of this will affect potential future renewals of homeowners policies it already has in effect in Texas. 

The part of their response where Progressive maintained that this doesn't affect their other lines of insurance in Texas is significant, because according to  Texas Department of Insurance (TDI) documentation , Progressive was this state’s largest private passenger auto insurer in 2023, accounting for 18.49% of the market here. By contrast, the company handled 2.52% of homeowners multiple peril policies in Texas last year. 

That may not sound like a lot, but that made Progressive the 8th largest home insurer in Texas in 2023. 

Insurance profits and losses

Importantly, if you look at the eight largest home insurers in Texas, Progressive made a net underwriting profit of $101,694,659 from its homeowners policies last year. The state’s largest home insurer, State Farm, did well, too: $128,191,092. But the six other large insurers between State Farm and Progressive all lost between $15 million and $459 million last year on their home policy business in Texas. So, you have to wonder how those other large insurers are doing – and specifically, how they feel about the risks of doing business in this state. 

Many insurers have been raising our homeowner premiums, which,  as I reported earlier this year , went up more than in any other state last year and for the last five years, according to data analysis by S&P Global Market Intelligence. But even that extra revenue from increased homeowners premiums hasn’t been enough. 

Remember also that, in that same report, I revealed that some customers who had homeowners coverage through Farmers Insurance (the fourth largest home insurer in Texas in 2023) were getting a “Home Insurance Notice of Non-Renewal” letting them know their homeowners policies wouldn’t be renewed unless they added an auto policy with Farmers as well. At the time, Farmers explained to me that because of the “frequency of catastrophe events, increased reconstruction costs and persistent inflationary pressures, we initiated targeted underwriting actions to better manage our risk exposure in the state”.

Back to the 2023 report from TDI: If you scroll down the profit and loss column to the bottom line that includes the total amount of money made or lost by home insurers in Texas in 2023, you can see they had a combined loss on homeowners policies of $686,178,696. And 2024 so far has also been a bad year for severe weather in Texas – and, consequently, for insurance companies here. 

How bad it has been is summarized in just three crucial sentences in a 93-page SEC filing by Progressive just before it pulled back on new homeowners policies in Texas – words that, in light of the previous risk exposure comments by Farmers Insurance, are not comforting if you live in Texas and need affordable homeowners insurance.

Rising insurance risks in Texas

First, Progressive explained that they are working to reduce their “exposure to coastal and hail prone states for our homeowners products.” That's obviously not good given that we have a lot  of coastline in Texas. And then there's the fact that, as I  also reported this past spring , Texas was the runaway winner — or loser in this case — for the number of major hail events last year, with more than a thousand of them. 

Second, Progressive noted that, in the second quarter of this year, they dealt with a number of “severe weather events throughout the United States” and that Florida, Colorado, Missouri, and Nebraska combined accounted for about 30% of their catastrophic losses.

Finally, in the third sentence – really more of a clause for the second sentence than anything else – Progressive added it could credit "nearly 40% of [its] storm losses in Texas" alone.

All of which is to say this: Keep an eye on your premiums, folks. Because at this point, it's clear that insurers are paying close attention to increased risks in Texas. And even if just one big insurer is pulling back from writing new homeowners policies – however temporarily – that doesn't exactly bode well for any affordability offered elsewhere.

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Auto insurance rates are jumping the most since the 1970s, but there could be relief soon

Soaring auto insurance costs have been a principle driver behind inflation over the past year, but there could be relief on the way, according to Bank of America.

The bank’s economists see several driving factors behind the run-up in costs to ease in the months ahead, possibly taking some of the heat off a category that has  pushed the Federal Reserve  to keep up its inflation fight.

“The turbocharged increases in motor vehicle insurance premiums are a response to underwriting losses in the industry. Insurers saw losses,” BofA economist Stephen Juneau said in a note. However, he added, “There are signs that many insurers are getting back to profitability.”

Primarily, the hit to insurers, which has been passed on to consumers, arose from three sources: higher vehicle prices, increased costs for repairs and “more accidents as driving trends returned to normal,” Juneau said.

There’s some good news on that front.

Sales prices for new and used vehicles have been trending lower in recent months and are down 0.4% and 6.9%, respectively, on a 12-month basis, according to  Bureau of Labor Statistics data  through April. Also, repair and maintenance services costs were flat in April though still up 7.6% from a year ago.

Motor vehicle insurance costs, though, continued to soar.

The category rose 1.8% in April on a monthly basis and was up 22.6% from a year ago, the largest annual increase since 1979, according to Bank of America.

In the CPI calculation, auto insurance has a weighting of nearly 3%, so it’s a significant component.

The recent trends probably do not “mean that your premium will fall, but we think the rate of increase should slow,” Juneau said.

That has been the general story with inflation: prices are not falling, but the rate of increase is well off the pace of mid-2022 when inflation hit its highest level in more than 40 years. Overall  CPI inflatio n ran at a 3.4% annual rate in April.

There’s one other tidbit of good news when it comes to Fed policy.

The central bank’s primary inflation barometer is the Commerce Department’s measure of personal consumption expenditures, not the consumer price index from the BLS. In the PCE gauge, auto insurance has a smaller weighting, meaning it is less of an inflation driver.

If the BofA forecast for insurance disinflation is accurate, it could at least give the Fed more confidence to start cutting rates later this year. Current market pricing is indicating an expected first cut in September, with one more possible before the end of the year.

“We think further improvement in this aggregate is one key for the Fed to become more confident in the disinflationary process and start its cutting cycle,” Juneau said. “Until then, we expect the Fed to keep rates in park.”

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Jeff Cox is a finance editor with CNBC.com where he covers all aspects of the markets and monitors coverage of the financial markets and Wall Street. His stories are routinely among the most-read items on the site each day as he interviews some of the smartest and most well-respected analysts and advisors in the financial world.

Over the course of a journalism career that began in 1987, Cox has covered everything from the collapse of the financial system to presidential politics to local government battles in his native Pennsylvania.