Everybody wants a taste of the luxury life, and some are lucky enough to enjoy it. Luxury is defined as “a state of great comfort or elegance, especially when involving great expense.” People work hard and smart to gain those luxury perks, even if it is just for a few days. In a city like Hong Kong, many can afford the luxury life and enjoy it through various assets such as big houses, vehicles and more.
One of these assets includes yachts. Those beautiful boats that we see when we look over the harbour. It is well known to practise in Hong Kong to rent yachts from the owners or businesses and enjoy our luxury life for a few hours (charter). However, owning a yacht comes with many risks in Hong Kong due to the weather, crowded docks, expensive equipment and more. Therefore, yacht owners have to be extremely careful when renting or using their yachts. The outcome of these risks can be costly and would have a damaging effect on their luxury life.
Risks and consequences are why Yacht Insurance is crucial to any owner of the yacht(s). Especially in a city like Hong Kong, yacht insurance can save the owner a large sum of money and help them during challenging situations the yacht may experience. This article will accurately explain why yacht insurance is essential and the factors that affect the insurance.
What is Yacht Insurance?
The size of a yacht can range from about 10 meters up to 50 meters in length. Most yachts sizes fall in the middle. Any vessel over 50 meters is known as a -Superyachts. Owners can use yachts for either racing, travelling, charters or pleasure.
Yacht insurance is a luxury policy that provides protection and services at any time for the vessel and the valuables associated with the yacht. Much like car insurance, when an owner buys a yacht, third-party liability protection is mandatory. The protection is a must for such vessels in Hong Kong due to typhoons, the number of boats in the sea and unpredictable situations an owner may face. In addition, the insurance will repair or replace your yacht and also provide emergency towing.
The insurance company can also tailor the insurance to insure boats and provide similar coverage.
The Best Coverage Of Yacht Insurance Cover
Protection Against Unpredictable Events
We all know some incidents are drastic and unpredictable, ranging from weather crises to uncontrolled fires. These incidents can be a significant risk to a yacht, and the owner as a typical typhoon 8 in Hong Kong or a surprising fire could result in severe damages to the yacht and crazy high repair costs.
In Hong Kong, typhoons are regular from July to October; they result in harsh seas and blustery wind. In these situations, owners fear the safety of their yacht and hope there is no damage. Owners can still avoid a force of a typhoon due to shelters and practice, but fire is something that can never be predicted or avoided. For example, in June 2021, in Aberdeen, Hong Kong, a shocking fire at the typhoon shelter spread all over the stationed vessels and sunk at least 20 yachts/boats and damaged 12 plus. These disasters can cause significant financial damage to the owner and would take weeks to repair.
In these situations, the best solution is to have yacht insurance beforehand. Yacht insurance will cover the yacht damage caused by these unpredictable events. In addition, the insurer will provide the cost of repair or replacement to the owner as soon as possible. Although, if the observatory has hoisted or expects to hoist the typhoon signal no. 3, many yacht insurance policies will expect the owner to park their boats at the typhoon shelter within a specific time as stated in the terms; otherwise, the insurer may reject their claims. The insurance can save the owner of the yacht a large sum of money and time and allow them to remain calm during typhoons.
Post Accident Support
Accidents can honestly happen anywhere, may it be on the road or the ocean. If you think parking your car is tricky, parking a 10-meter vessel can be one of the greatest challenges in the sea. Small boats, fishing vessels and many other yachts crowd most docks in Hong Kong. Accidents can happen at any point during docking or even while sailing on the harsh sea. A personal accident can result in damages from scratches to the engine needing immediate repair or worse.
An example of a damaging accident is when a yacht carrying 37 passengers lost control at night while leaving Sai Kung Public Pier, Hong Kong. It crashed into the pier near the lighthouse and then was stranded on the breakwater nearby. The body (Hull) of the yacht was damaged and could not move anywhere.
These kinds of events can be scary and costly, especially at night. When the owner has yacht insurance, they will worry less when facing these situations. The insurance will pay for repairing the damages caused by the accident and may even replace parts when needed. When insured, the services will be quicker, too; high-quality yacht insurance will inspect and pay the owner within only two days. Additionally, when insured by yacht insurance, the owner can make one call to the insurance company, and they will provide towing services immediately. These factors are why owners need to purchase high-quality yacht insurance for a safer future.
Accidents damage the owner’s yacht and cause severe damage to the pier, other boats, and, most importantly, the passengers. It is the yacht owners/businesses worst nightmare when they are getting blamed by a third party for a large amount of damage. It can cost a significant amount and could result in the third party suing the owner. Third-party damage can also be damage to the environment due to oil spilling from the yacht, which will be breaking the pollution law and result in the government suing the yacht owner.
Regarding the previous example, the yacht that crashed into the pier, the government could ask the yacht owner to pay for the damage caused to the dock and possible lawsuit as there could be an oil leak when the hull was damaged.
Yacht insurance will protect the owner from most third-party claims and provide the cost of third party repair or compensation. The insurance will protect the owner from financial loss and also help settle damage lawsuits. However, basic yacht insurance will not cover cases due to owners breaking the law, such as environmental pollution. High-quality yacht insurance will provide legal defence costs, pollution liability coverage to the owner to defend themselves against harming the environment and costs to solve the environmental damage caused.
As you can imagine, there are no service stations or convenient shops in the ocean when travelling on a yacht. Therefore when there is a small or big emergency, it can be an awful situation, and at times one may not know what to do. Especially during the night times, it is almost impossible to spot nearby boats and get assistance. The only option is to call the coast guard, which can take time and cost the owner an additional amount.
In all examples mentioned above, the boats would need to be towed to shore to be repaired or inspected. Additionally, yacht insurance makes that fear disappears instantly, as when one buys yacht insurance, they can give the insurer a call, explain the situation and get towed at any time.
The insurance company will contact the nearest towing company and arrange everything needed with no payment on the policyholder’s side. Additionally, suppose an owner feels they will not be able to reach the typhoon shelter during that upcoming typhoon due to an accident or poor operational engine. In that case, the insurer will provide towing services to the yacht as soon as the owner has informed them. Furthermore, the insurance can contact people who can also offer a yacht oil and battery change service while on the water. All these services make the owners’ life much easier and stress-free when in an unpleasant situation.
Factors That Affect Yacht Insurance Premium
A few factors may affect the insurance premium and the cover they can provide for the yacht owner. These factors are:
- Purpose of the Yacht: The policyholder can use the yacht for various purposes such as racing, pleasure or long-distance travelling. Each purpose has its risks, which an insurer will need to evaluate. For example, when an owner/business rents out yacht(s) for charter, more people interacting with the boat. Hence yachts that owners charter will have a higher premium as the risks increases with the number of people use the vessel.
- Age of Yacht: The older the yacht is, the higher the risks of breakdown and need of repair. Therefore the owner will need to pay a higher premium the older the luxury boat.
- Yacht Size: In this case, size does matter, as the bigger the boat, the more risks it could face while docking or travelling through narrow ways. Also, bigger boats can carry more passengers, increasing the liability risks. Hence the premium for larger yachts or superyachts will be higher compare to smaller vessels.
- Yacht Condition: The owner will have to explain their experience in sailing and whether the yacht has been in any accidents in recent years. The owner will need to provide a detailed history of the vessel to help calculate the accurate premium.
Additional Benefits Of Yacht Insurance
High-quality yacht insurance will provide the vessel owner with the best connections needed during an emergency or an annual repair. In addition, with yacht insurance, the owner will feel safe knowing that the insurance company will use their experience to provide the owner with expert connections at any time.
When the owner uses a yacht for commercial reasons, such as charters. The owner or business need to hire employees to take care of and run the vessel. A larger yacht will need more help, and the owner/ business will be liable for their safety and well-being during the job. Owners or companies purchase employee compensation alongside when hiring employees to work on their charter services. Therefore, the owner will not constantly worry about his employees or deal with financial loss or lawsuits.
Another brilliant aspect of high-quality yacht insurance is that it will protect the valuables on the yacht or affiliated to the yacht experience—for example, water sports and fishing equipment. In addition, the insurance will repair or replace the value that may be damaged or stolen during the use.
Insurance companies will provide quick solutions to any emergency regarding the yacht. An expert yacht insurance provider will solve the issue within 48 hrs and first make sure that you and the passengers are safe. The insurance provided will inform the policyholder step by step what should be done by the owner to fix the possible problem and won’t stop till the case is solved.