How to find the best boat insurance for your kind of cruising

We’ve all heard the stories of the automotive sector suffering from runaway premiums and major underwriters pulling out of motor insurance altogether, but the good news is that the marine sector remains more robust.

While basic ‘third party’ liability insurance is not yet mandatory for leisure craft in the UK, the world is becoming more litigious, so it’s a very good policy to have.

The Royal Yachting Association’s (RYA) trusted insurer Bishop Skinner, part of the Marsh Group, says third party claims are by far the most frequent type it receives.

In addition, marine mortgage companies will insist on comprehensive insurance to protect their investment before a loan can be made.

Most modern marinas will also demand proof of insurance to cover themselves for the costs of their berth holder’s boats sinking, colliding with the infrastructure, or catching fire.

Marine insurance has been around since the opening of Lloyds Coffee House in the late 1680s, when a group of shipowners met and formed a fund to cover the loss of their cargo through shipwreck, fire or piracy.

Nowadays, there are possibly 10 providers of marine insurance to the leisure boat owner, some of those, such as Simon Winter Marine, specialising in niche areas like classic craft and others, such as Craft Insure, offering a wide range of online services.

In the mainstream, the boat insurance market is dominated by GJW Direct, Haven Knox-Johnston, Pantaenius, Bishop Skinner, Admiral, and Navigators & General.

These providers are themselves underwritten by larger international companies such as Zurich or Allianz Commercial.

The changing face of boat insurance

A PBO contributor who wishes to remain anonymous regularly organises cruise-in-company events around the UK.

He is also a long-distance solo sailor.

Over the years, he has noticed a shift in the leisure marine insurance sector and has summarised the main changes for us here:

• A significant hardening of the market.
• Some insurers are starting to refuse cover, including third-party only, even for long-standing claim-free clients.
• A reduction in the geographical area potentially covered.
• An increase in underwriters’ demands as regards things like experience and qualifications.
• What seems to be a growth in computerised points-based underwriting that rejects applications on minor technicalities, with no human input or judgement applied.
• A shrinkage in the underwriting base, with the market dominated by a very small number of players, thereby restricting underwriting potential.

Steady market

All the major brokers we spoke to said that cover remained readily available and competitive, but the criteria are now tightening.

One of the reasons given was that the reinsurance market has all but vanished, meaning that insurers can no longer insure themselves against small to medium losses.

Historically, marine insurance brokers could pay a claim of up to £25,000 and get it all back from their underwriters, but now that figure only cuts in on claims above £1,000,000 or more.

This also has a direct impact on the way premiums are calculated.

Other factors include the higher incidence and wider reach of destructive storms, possibly the result of climate change, and more fires on large and expensive yachts.

These have usually been blamed on the number of electric ‘toys’ on board, increasingly powered by lithium-ion battery packs.

This chemistry is sensitive to abuse, such as overcharging or impact damage, and can spontaneously combust as a result.

Once a lithium fire is going, it’s very hard to put out and several yachts in the multi-million-pound bracket have been rendered a total loss.

With more people choosing to adopt bluewater cruising lifestyles, the boundaries appear to be shrinking, tending to keep people within a set area – or a restricted season – to maintain the best cover.

Apart from the more powerful but less predictable hurricanes, piracy and kidnap are other factors at play in areas that have previously been relatively safe.

Some boatowners PBO spoke to have sadly had to give up their ambitious cruising plans as no cost-effective cover was available for their particular circumstances, and for some less-cruised areas such as the Arctic, no cover existed at all.

The industry insists insurance is still available, but has tighter requirements than before.

We have polled all the key players in the sector, from boat owners, the Cruising Association, RYA and the main insurance brokers themselves for some tips as to how to ensure you have the right cover in place.

This may not necessarily be the cheapest, but should still be the type of cover you need for your style of boating.

We’ve also distilled what the greatest risks to your boat are, winter and summer, and how they can be mitigated.

What goes wrong?

Boatfix, a US-based company that offers ‘24/7/365 human customer support for all alarms’ has recorded some interesting statistics from its various sensor-triggered GSM alerts.

• 11% of alarms are for unauthorised use or theft
• 70% of boats sink whilst unattended
• 32% of assistance calls are from boats less than 6 months old
• 23% of Boat Fix alarms are for bilge pump activity
• 44% of alarms are from batteries about to go flat
• 73% of thefts are from boats left unattended on trailers
• 92% of calls for engine breakdown are at weekends or outside office hours

The company adds that 100% of calls are answered promptly in person to help the customer resolve the issue.
www.boatfix.com

Theft – a major cause of boat insurance claims

PC Richard Orriss of Hampshire Constabulary’s Marine Unit told PBO: “Marine Crime in Hampshire is dominated by theft offences which accounted for 79% of marine crime reported to us in 2021. This includes the theft of valuable marine equipment including VHF radios and chartplotters, outboard engines, and personal possessions left behind on vessels. There have also been reports of vessels being stolen and these have varied from small tenders to larger yachts. Social media has shown its worth with these jobs – the marine community is very helpful and often, when we post a stolen boat on our social media page, we’ll get a lead.”

Top tips for the best boat insurance cover

Unlike automotive insurance, where cars are usually standard within a brand’s range of models, boats can be very different, especially following a major refit.

As such, premiums for a comprehensive policy will be calculated on what it is likely to cost to repair the hull, equipment, rig, machinery, and furnishings in case of an accident or total loss.

Listed below are the main areas where insurance can be tailored to be a perfect fit for your specific needs, and to protect others you may accidentally bump into.

1. Set your criteria

As with all insurance, how much cover do you really need?

Tony Malkin, A senior yacht underwriter with brokers Haven Knox-Johnston, says third party protection is the absolute minimum you should carry, especially as these policies are relatively low in cost.

“If you sink somewhere really inconvenient, like in the middle of a harbour entrance, it could cost tens of thousands to have your vessel salvaged, let alone meeting other claims from those affected. We strongly recommend that clients should try for full insurance which would give the correct cover as some third party policies do not include removal of wreck or salvage charges,” he said.

An extreme example was when the container ship Ever Given blocked the Suez Canal in March 2021, which cost the canal authority US$15 million a day in lost transit revenue alone. World trade took a US$10 billion hit.

For more comprehensive cover, the boat owner will need to place a realistic value on the boat and its equipment, and where they intend to cruise.

Pantaenius’s Simon Hedly told us: “For many, their boat is a major investment and knowing that they have good protection should things go wrong will surely make for a better night’s sleep.

“We recommend that you check if the cover meets your requirements in terms of how you intend to use the boat and where you want to cruise and then look at the scope of the cover and what inclusions and exclusions apply.”

This is where the homework comes in. What is the absolute minimum you want covered, and what can you afford to replace yourself if something breaks or is stolen?

2. Don’t be ruled by price

When shopping around for cover, it’s very tempting to go for the most competitive quote, but this won’t necessarily give you the best policy, especially if you haven’t checked the cover against your needs.

“Each client is different,” Pantaenius’s Hedley remarked, “but most want the best cover at the lowest price. Consider looking at Google reviews for your intended supplier as these can be a good indication of what kind of claims handling and customer support you can expect to receive. Remember that the cheapest cover is not always the best!”

3. Check what’s covered

While a standard policy will cover most of the usual risks, including damage and theft of trailers, it won’t cover everything.

The insurers strongly recommend going through the policy carefully to see exactly what is included, and what isn’t.

There have been stories of owners thinking they were covered, only to find an exemption in the policy wording.

“A good example is engine breakdown,” said Haven Knox-Johnston’s Tony Malkin. “Your car insurance doesn’t cover you for that, which is why you have separate cover through a recovery service such as the AA or Green Flag. It’s the same with a boat.”

Where the confusion probably arises is damage to machinery from external causes, such as the stern gear striking a floating object, which is usually covered under a standard comprehensive policy.

Hitting submerged – but charted – objects, however, is more difficult to claim against.

The insurers will cover you for the legal costs of negligence from professional repairers, for example, or structural defects from manufacturers, but each policy needs careful checking that all needs are met.

4. Reduce the risk

Insurance is all about assessing the level of risk, something increasingly being done by algorithms, so it helps to throw in a few additional ‘risk mitigators’ to bring the premiums down.

This particularly applies to cruisers who want to venture away from the beaten track, and explore blue water, or even ice water, with cover in place for mishaps.

“When it comes to the more far-flung cruising areas, we are probably one of the most flexible providers,” said Pantaenius’s Simon Hedley.

“We have representation in 12 countries with over 35,000 trusted partners around the globe to enable us to support the cruising needs of the most adventurous sailor. When our underwriters look at the trickier cruising areas, we need to consider crew experience and numbers, vessel type, size and age, dates in the proposed areas and previous claims history. A policyholder may want to check if their insurer charges pro-rata for extending cruising limits and if they charge fees each time a change is made (we don’t).”

Another factor that will help with premiums is to eliminate the number of claims from lack of maintenance.

“With money being tight at the moment, boat owners should not scrimp on essential maintenance,” said Haven Knox-Johnston’s Tony Malkin.

“Claims that are simply the result of lack of maintenance and wear and tear are not recoverable on an insurance policy. It may seem expensive to spend hard-earned cash on boat upkeep, but it’s a good investment in the long run.”

Continues below…

5. Buy extra if necessary

It’s perfectly possible to enhance a standard policy with additional cover.

For racing boats, this could include special cover for the entire rig, for example.

More generally, with theft of equipment on the rise during the current cost-of-living crisis, extra cover for outboards and tenders, plus other ‘portable’ gear that has to stay on deck, is also a good idea.

This takes us back to the careful checking of the policy.

Does it cover what you need? If not, add it on.

“Theft has traditionally been the cause of the biggest number of owner-specific insurance claims,” said Tony Malkin. “Not usually complete boats, but mostly outboards, electrical equipment, personal valuables and other portable items.”

Simon Firth, a claims manager at Pantaenius, agrees. “Since most insurers require outboards to be secured to the dinghy, thieves simply cut it out of the transom,” he said.

“Not only is the engine gone but the dinghy is now a constructive total loss. One major theft involved an elderly catamaran being completely refitted by an enthusiastic owner. Once the high value items had been installed, thieves came along and simply cut holes in the boat to remove engines, generators, electronics, and even the deck hardware. The first action of professional thieves, following reconnaissance, is to divert the boatyard cameras. In this case, they even stole the fuel from the boatyard’s crane.”

6. Explore discounts

There may be some discounts available for specific types of use.

This could be a geographical area, such as a sailing boat only used on a land-locked lake, or a boat that is being refitted and is spending a long time ashore.

With lower risks involved, your insurer may offer a percentage discount during this low risk period.

Just be sure to tell them when the circumstances change.

7. Check your domestic options

Marine insurance policies usually cover personal possessions on board, particularly when the boat is in use, but there may also be the option to source specific cover via your household policy instead.

Many of these will extend the cover of items like bicycles, computers, and cameras to when you are on holiday, and make no real distinction to where that holiday is taking place.

It’s worth checking the cover these household policies will offer, as it could give you some useful extra cover at no extra cost.

8. Check out the specialists

Because boats are so different, even within the same model, there may be some savings – and specific cover available from a specialist ‘niche’ insurer.

These are brokers dedicated to the needs of a specific type of boat, such as a classic wooden vessel, or one powered by steam.

You’ll see them advertising in niche magazines, or on dedicated websites, and they’re certainly worth a call, especially if your boat is a bit unusual.

Mainstream insurers can still provide a quote, but the niche suppliers may have a more tailored solution.

Conclusions

Fortunately, unlike automotive insurance where the claims for expensive battery-powered cars are getting unmanageable, boating remains a fairly stable market for underwriters, although the number of claims and the cost of claims are increasing which affects premiums.

Despite the pressures from a more volatile cruising world, brokers see their customers as a generally sensible group, with just the occasional bad egg.

Some boaters even feel that premiums are too low for the cover expected, and would accept a price hike if the cover could be more wide ranging.

The industry itself, however, does not anticipate much of an upward movement in premiums.

Tony Malkin of Haven Knox-Johnston says that premiums went up by between 25-50% after the devastation left by Hurricane Maria in late 2017.

“Since that initial jump, the annual increase has averaged around 5-10%,” he said. “When calculating the premiums, we try to concentrate on the underlying trends on the cost and number of claims and avoid the peaks”

In a nutshell, the advice is: shop around, talk to your insurer about the product you need, check it carefully to make sure it suits your needs, and be prepared to add extra cover if needed.

Be honest with your insurer, give them correct information and avoid unnecessary claims by keeping your vessel shipshape, and apprising the provider of any changes to your cruising area.

All being well, this should lead to exactly the right cover you need. If nothing else, make sure you have at least third party cover.

It’s not expensive, may be compulsory in some marinas, and will give you peace of mind whenever you are out on the water.

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