We assume that as a boat owner you already have a standard insurance policy, but if you’re thinking about chartering your boat then you need to know how to remain covered in a commercial situation. As soon as you are using your boat for ‘hire or reward’ (making an income), then an unamended insurance policy is usually insufficient.
Advice on specific aspects of your boat insurance should be obtained from your insurer, but we hope the following gives you some helpful guidance about the kind of questions you should ask.
We spoke to Richard Power of Fastnet Marine Insurance Services about the process of getting your vessel covered for yacht chartering and boat hire:
Once you have paying customers on your boat, you also have an increased responsibility and duty of care for their safety. Having boat insurance is important for providing peace of mind to charterers, but more importantly, means you are covered in any event.
Develop a good relationship with whichever insurer you choose, and talk to them about your boat and the way it is used and looked after. With this information, they will be able to give you information about different policies and coverages that might be most suitable for you.
Being fully open and honest with your insurer is by far the best approach when taking out insurance. Fastnet Marine Insurance Services use the phrasing that you as the owner have an: “obligation to disclose” information which is “material to the risk”. You must tell your insurer everything you know that is relevant to providing appropriate cover.
Richard Power also issued a reminder that insured boats must also always be compliant with MCA rules and regulations including coding certification and the skipper holding the appropriate qualifications. If you are legally outside of these rules, your insurance company may have good reason to reject any claims you make.
You cannot have two separate policies i.e. one for your ‘private’ use and one for ‘charter’, they must both come under one policy. Some insurance companies do not do any kind of commercial insurance at all, so you will need to find one provider who can definitely cover for charter usage.
It may be that your existing insurer can help you add cover to your current policy, or you may want to shop around to explore all the options. The first port of call might be to ring your current insurer and talk to them about your new requirements.
If you decide to shop around, finding an insurer via online price comparison sites can be a quick and simple way to research your options, but be careful with the details, as you usually get what you pay for with boat insurance.
Some good places to start looking for boat insurance are:
Fastnet Marine Insurance Services
Yachtline Charter Boat Insurance
It is important to be completely transparent about what you and your charterers intend to use the boat for. Racing? Night Sailing? Sailing out of UK waters? Be explicit about what you need. Even if you have already stated that you as the owner will race the boat, you should reiterate if the charterers will also be racing or not.
As a very rough guide, the amendment of your policy to include cover for chartering may mean approximately a 20-25% increase of your existing insurance costs.
Always check before using a company that they are registered with the Financial Services Authority (FSA) as well as the British Marine Federation. Membership of these bodies is a good indicator of high industry standards and affiliation with respected national organisations. If the insurer is part of the Financial Ombudsman Scheme this provides additional support and a neutral intermediary should you need it.
• Third Party Liability (including Public Liability) - covers you against damage or injury to someone else or their boat. The industry standard is £3-5,000,000, and if you are racing you need to make sure that your liability covers what is required in Notice(s) of Race(s) or Sailing Instructions.
• Comprehensive Cover - many insurers provide an ‘all-risk cover’ as standard, protecting you against accidental damage, theft, fire and vandalism, except if listed in the exclusions.
• Sails: you can get a policy which includes cover for loss or damage of sails whilst racing. This is likely to come with certain conditions, such as increased excess or deduction for depreciation.
• Excess - you need to be clear what your excess is, which you can always check with your broker or insurer. Many charter companies require a damage deposit up to at least the value of the excess before letting the charterers take their boat.
• Trip Cancellation Costs - these are generally not covered under a yacht insurance policy.
• Also check for anything your policy might NOT include - there may be certain exclusions which you, your charter customers, and any employees working on the boat should be aware of. (This may also include Employers Liability Insurance).
• The conditions of charter - who, when, the payment type, qualifications needed, etc.
• Your qualifications - if you are skippering, then having recognised RYA certificates can lower your premium.
• Where and when your boat is sailed - with consideration of coding categories, distances from shore and weather conditions.
• Where and how you store your boat - in a marina, on a mooring, out-of-water, etc.
• The age of your boat
• Whether you plan to tow water-skiers, wakeboarders or “water-toys”.
• Exactly what eventualities you are covered for.
• Whether you plan to tow your boat or not.
• Whether you want breakdown and contents cover.
• Whether you are covered for racing - some will cover as standard, but some policies may charge extra for racing risks.
• Whether you opt for ‘old-for-new’ replacement schemes.
• Make sure that any paying charterers know and understand the terms of your insurance policy and when they are and are not covered.
• Consider increasing your excess to reduce premiums.
• Avoid unnecessary claims by taking good care of your boat maintenance and security.
• If you change your equipment or usage, update your insurer to check that you are still covered. Always be transparent.