While the word “yacht” may evoke images of leisure cruising and carefree living for many people, vessel owners know there is much to consider when it comes to protecting their maritime investment. This is particularly true for those who sail to, or keep their vessels in, areas threatened by destructive storms like seasonal Atlantic hurricanes. A good-faith effort to prepare for catastrophic weather events before they happen can go a long way in helping yacht policyholders ensure coverage for storm-related losses that may incur.
The fine print
The language in yacht insurance policies providing hull and machinery coverage is notoriously specific, and adherence to policy wording is imperative. Many plans that cover vessels in zones likely to see hurricanes and other catastrophic weather patterns require approved named-windstorm plans as part of their application and include stipulations about the due diligence for which vessel owners are responsible in order to minimize losses associated with storm damage. For instance, are they prepared to quickly protect their vessel when a storm approaches by anchoring it, seeking safe harbor in a nearby marina, having the vessel hauled out and blocked, or properly manning it during the storm?
Being a prudent policyholder
In my opinion, and as is often shared with me by policyholders, some insurance carriers have unfairly earned a reputation for not covering yacht damage losses — especially those that insure higher-risk vessels or locations and therefore use the strictest policy language. However, in all my years as a marine adjuster and surveyor, I’ve found that most carriers in the yacht space want to provide a positive customer experience and help their policyholderswho act responsibly and prudently, even if vessel owners have technically violated the stipulations of their policies. This is particularly true in cases where storms have veered off the predicted course and unexpectedly hit other areas.
Here is a real-world example: Recently, the Sedgwick marine team supported a carrier client on yacht claims associated with a fast-moving, rapidly intensifying and erratic storm. This storm did not follow the course meteorologists thought it would and ended up doing the most damage outside the forecasted target area. This unpredictability left owners in the storm’s path scrambling to secure their vessels.
On behalf of the carrier, we met with the insured owners to assess the storm damage their vessels incurred and get a true representation of the protective measures they were able to take under less-than-ideal conditions. More important than uncovering that an insured didn’t follow their policy language to the letter, our client wanted to know that they acted like a “prudent uninsured” — the way they would have if they didn’t have yacht insurance and were personally responsible for any damage or loss.
Of that storm’s yacht claims we managed, the majority were approved for coverage. The carrier could have denied many more, reasonably arguing that nearly every policyholder had breached their plan language. However, they opted instead to give the benefit of the doubt to the vessel owners who showed they had acted responsibly and prudently amid unpredictable circumstances.
Policyholders can have confidence in every claim being handled on its own merit, with an eye towards prudent actions taken amid fluid circumstances leading to the loss. However, this good faith should not lead to complacency. Policyholders who are not prepared with the appropriate plans and locations on file with their carrier cannot presume that their misrepresentation will simply be overlooked due to some level of diligence in alternative preparations and securing arrangements. It is the sole responsibility of the policyholder to ensure that all information on file with their carrier provides an accurate and up-to-date representation of their true intentions regarding their vessel.
Preparing for hurricane season
The Gulf of Mexico, Florida and Caribbean regions — where much of our yacht practice is focused — are in the midst of Atlantic hurricane season. Carriers that offer yacht insurance policies, as well as the vessel owners they insure, should be planning now for what may come to those areas in the weeks ahead.
The erratic nature of the last few hurricane seasons has shown us to expect the unexpected. Despite continual improvements in weather-tracking technology, the trajectory, timing and intensity of storms seem to be harder than ever to predict. With so many variables at play, it’s not enough for carriers to advise insureds to keep their vessels out of certain areas at certain times. Before accepting a hurricane plan, a carrier must have a clear understanding of the plan details to determine their appropriateness and enforceability for the identified location and vessel. Additionally, helping insureds stay well informed leads to better preparedness and vessel protection.
Vessel owners should carefully review their yacht policies and submitted plans so they understand exactly what’s expected of them from a coverage, navigational limit, preparedness and personal loss standpoint. They should also be sure their plan information is current; people may forget to update their policies when they relocate, for example, and most yacht plans are location-specific due to varying risks. Policyholders need to have thoroughly researched named-windstorm preparedness plans — and backup plans — in place before disaster strikes so they can comply with carrier requirements, protect their vessels from storm damage, and demonstrate their diligence. It is always better to address these things before a loss occurs, rather than after the fact.
The Sedgwick yacht practice team is ready to take care of carrier clients and their insureds throughout hurricane season and beyond. Our marine experts are well versed in not only assessing damages, investigating claims, and reviewing policies, but also in doing the right thing for all parties and bringing a dose of empathy to difficult situations. We may specialize in property damage, but the human element of claims can never be forgotten.