Yacht Insurance or Buyer Beware!
Yacht Insurance or Buyer Beware!
By now everyone with a yacht has been through at least one renewal process with the new ‘hardening’ insurance market in place. While nearly all of our clients have been understanding and are aware that change had to come, there are still those who continue to believe that premiums should go down and down, and will only look for the cheapest option when it comes to protecting their multi-million dollar asset, falsely believing that all covers, brokers and insurers are the same.
Over the past year new players have entered the market, some of whom are not what they seem, though appear attractive because of cheap premiums and promises that seem to reduce the effect of the changing market. With more than 20 years’ specialist experience in the yacht insurance field, Colin Dawson of Expat Marine advises extreme caution where such offers are concerned. “We are aware of a recent superyacht insurance cover quoted to an owner by an agent (not a broker) with insurers’ names stated (interestingly not the insurer they purported to represent); when the agent confirmed cover to the owner the morning after expiry, it now had different insurers - some of which were unrated, and one not only unrated but also regulated from a sunny island. Think of the movie The Laundromat, and you are in exactly the right frame of mind.”
Ethically, this is monstrous. It is fairly clear that the initial security stated was a cover for the real security to coax the owner into confirming cover: in reality, those arranging cover lied to the owner’s office. This is charging into Errors and Omissions territory from the agent’s side, yet - being an agent and not a broker - what sort of protection is given the owner in this scenario?
Expat Marine strongly recommends the very careful examination of any insurance offer being made, the questioning of ANYTHING you are not sure of, and an especial look into the experience and quality of the underwriter and broker involved. It is essential that whoever is making the decision on how to buy insurance has a full understanding of the legal contract to which they are agreeing. It constitutes the protection of what is often a multi-million-dollar asset, and looks very far beyond the title and price when a decision is being made.
Is the Owner aware of the implications of changing to cheaper options? It’s very important that a decision maker understands the differences between a broker, an agent an insurer and an underwriter. Remember, there is no insurance more expensive than a cheap insurance that doesn't pay! Premiums are usually less than 5% of the annual operating cost of a yacht, so this is not an effective area in which to be cutting costs. Expat Marine only uses first class experienced insurers: please feel free to contact Colin Dawson if you require any further information or a quote. When the winter comes, it comes. And if you don’t have the right coat on your shoulders it’s gonna be so damn cold.
Colin Dawson – colindawson@tgg.com.hk