Luxury yacht insurance policies vary in nature, but there are common coverage sections included in a vessel insurance policy. These coverages are Hull and Machinery Insurance and Protection & Indemnity Insurance (P&I). All policies are customized to some degree and are subject to definitions, terms, conditions, exclusions, and limits contained in the actual written policy and endorsements to that policy.

Hull and Machinery (H&M)

The Hull Insurance section of the vessel insurance policy includes coverage for the Hull of the yacht, the Machinery & Equipment onboard and the Personal Effects of the passengers and crew. This is the most important section of the yacht policy, as it protects the physical aspect and value of the yacht.

Protection & Indemnity (P&I)

Protection and Indemnity is the most comprehensive form of marine liability.
P&I provides liability coverage for the insured for bodily injury and property damage to third parties, liability to hired crew, defense cost coverage and wreck removal when required by law.

Medical Payments:

The medical payments section covers bodily injury caused by accidents, sickness or disease, and includes the required care, loss of services and death resulting there from. Coverage for the captain and crew is available 24 hours a day during the entire insurance period.

YACHT INSURANCE TERMINOLOGY

Agreed Value Policy:

An Agreed Value Policy stipulates the amount of payment to the insured in the event of a total loss to the vessel. You, the insured and the insurance company agree to this amount of insurance at the outset of the policy. The agreed value is usually the purchase price of the hull and equipment. In the event of a total loss, the agreed amount is paid without regard to depreciation. For partial losses, reasonable repair or replacement is made without subtracting for depreciation except for certain items such as bottom paint, sails, canvas, fabric, batteries, tires, outdrives, and machinery.

Actual Cash Value:

Actual Cash Value policies will apply depreciation at the time of loss or damage. In a total loss situation, usually the settlement is the lesser of the coverage amount or the actual cash value of the property at the time of the loss.

All Risk:

All risk form provides coverage for any loss, unless it is specifically excluded from the policy. This is the most common type of insurance form for superyacht policies. Make sure you read the policy so you know what is covered and what is not as this insurance term is often misunderstood.

Named Peril:

A Named Peril Policy provides coverage for only specific losses listed on the policy. This type of yacht form is not that common.

Deductibles:

Deductibles can be a cost savings measure. When you take a higher deductible, your insurance premium is less. Deductibles are usually applied when there is partial loss or damage. Depending on the policy terms, when there’s a total loss, the Hull Deductible is applied to cover all other policy sections deductible amounts, (i.e. prevents you from paying the peronal effects deductible in addition).