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Planning to Charter a Yacht? Why You Need Yacht Charterers Liability Insurance

Posted September 29 2015


yacht chartererMany people consider chartering a yacht one of the most luxurious ways to go on a vacation, or see different parts of the world. Sailing the open seas while having a crew cater to your needs can be the ultimate way to relax. Until disaster strikes! Accidents can happen anywhere, and that is one reason why we purchase insurance. Who wants to be liable for a yacht that they don’t even own?


You Are Not Covered! 

Some may assume that they have all the protection they need from the owner’s insurance policy; however that is not the case. That insurance policy only covers the owner, and in some ways the crew working onboard. Under a standard AYCA or MYCA yacht charter, the yacht charterer is not covered under the owner’s insurance policy, and therefore cannot benefit from the owner’s insurance. Meaning you must get your own coverage! 

No Protection from Third Parties

It’s no secret that yacht charterers tend to be people of a certain status who have a large portfolio of personal and/or business assets, which means that third parties know they have deep pockets. Since the charterer is not protected against third parties, they are unable to stop the owner’s insurers from exercising their right of recourse.  Also, many decide to charter the yacht personally rather than through a limited company, which makes them even more of a target for third parties and insurance companies to collect reimbursements for any claims made.

You Are Responsible for Your Guests

According to clause 27, the charterer is required to indemnify the owner of the vessel for any losses or claims he/she causes. Something you may not know is that the charterer also accepts responsibility for any injury, loss or damage to or caused by charter guests. 

Example 

You charter a yacht valued $10,000,000 and it sinks because of damages you or one of your guests caused. In a matter of moments you went from having the time of your life to possibly being on the hook for millions of dollars in damages to the vessel, and that doesn’t include any injuries crew members may have sustained when reacting in the emergency situation. Don’t regret not getting covered.

How Much Coverage Do I Need?

We recommend that as an absolute minimum, the charterer should buy a policy that includes third party liability and liability for damage to hull with a combined limit of at least twice the value of the yacht chartered or $20,000,000, whichever is higher. The cost of the insurance is usually no more than 2 or 3% of the cost of the charter. Considering the amount of protection and money that charter liability insurance can save you, the cost of the policy makes this a no brainer! 

Liability is often unavoidable in life, which is why you need to have protection in all stages of life. Our ‘concierge service’ can assist you in finding the proper coverage for all aspects of your life. Our insurance specialists have the experience and knowledge to get you the best life insurance, health insurance, marine crew insurance, marine general liability insurancebusiness insurance, expatriate insurance, or travel insurance for your budget. Contact us at +1 954 828 1819 or +44 (0) 1624 678668 or visit us online at mhginsurance.com. For more information on marine general liability, read our previous blog, “What is the Difference between General Liability and Marine General Liability?