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Guidance for yacht owners in case of claim
This article is a guidance for shipowners’ actions to be taken in case of an accident with pleasure-craft.
Regardless of whether your boat is sailing, berthed or out of water on season storage, it needs reliable insurance coverage. Marine Underwriting Services (MUS) yacht insurance combines Hull & Machinery and Third Party Liability insurance (similarly to combined CASCO and MTPL insurance for your car), that means, that the owner of the yacht protects himself from almost all possible risks that may arise with it.
The purpose of the insurance indemnity is to restore the yacht to the condition in which it was prior to the incident. According to the Marine Insurance Act 1906, the assured is entitled to the reasonable cost of the repairs. The MUS Yacht insurance policy is based on the Institute Yacht Clauses Cl.328 (further – IYC). Let us take a look at several obligations that ensure that the initial purpose and compliance to the Marine Insurance Act are observed.
An insurance case usually includes following steps:
- After the incident the insurer appoints a surveyor who holds an inspection, identifies the extent and reasons of damage, issues a survey report and provides his expert opinion on repair prospects.
- Then repair offers are collected and compared by MUS to find the most reasonable option.
- Once the best offer is identified, the investigation may be finalized and compensation agreed.
Duties of yacht owner if insurance incident occurs:
- Obligation of prompt notice of any occurrence that may give cause an insurance case (art.13.1 of the IYC). It is always a challenge both for the Owner of the yacht and the insurer to reconstruct the chain of events when some time has passed since they occurred. The surveyor cannot identify the initial extent of damage and cause, the memories of the crew members are not so fresh as immediately after the event, temporary repairs may complicate the matter even more. Reporting an incident as soon as it occurs is a duty which corresponds to the good practice of
- Based on the art.13.4 of the IYC, the Underwriters may initiate tenders or may require tenders to be initiated for the repair of the yacht. There should always be a choice of repair options to compare the prices available on the market, to take a measured decision on the provision of services. The Owner of the yacht is always in a better position to look for offers than anyone else as he or she would be dealing with their own property. We always encourage yacht Owners to apply for several repair options and take an active position in the choice and assessment.
- Duty to take reasonable measures for the purpose of averting or minimizing a loss (s. 15.1 of the rules). There are two cases when such measures are especially important. First one – when a peril arises the assured (yacht owner) shall take steps to minimize the resulting damage. Second one – when the choice of repair providers is being www.underwriting.lv made, the yacht owner shall avoid repair options of excessive prices and be prudent to find a balance of reasonable price and quality.
Further is given a possible example of this principle. At the moment of imminent damage, the insured acts prudently and arranges necessary temporary repairs. But by the time the insurer is informed, the yacht is moved to the closest yard and lifted out of water. Once a workable option of repairs is found, it transpires that moving the yacht to a new place of repairs is not economically viable, while the current yard provides an overcharge price. The result is that a good price of an alternative yard is lost and therefore the loss is not minimized even though the very first reaction was intended to saving.
The duty to minimize loss does not prejudice the Owners’ right of final choice of repairers. Nevertheless, only a reasonable repair solution can be taken as a basis for compensation.
One shall remember that a misfortune that can give rise to an insurance case may occur not only while sailing or berthed, but even when the yacht is out of water, for season storage or maintenance. The rule of prompt notice, of averting or minimizing a loss continue their effect in any type of circumstances of the occurrence.
We know that your yacht is designed for your pleasure. But accidents happen and wherein you should act right and swift in this stress state. You can always reach us 24/7/365 on a Special Emergency Line (+371) 277 14 777 / (+370) 614 40 333. We know that your yacht is very important for you. Therefore, in case of a claim, we only use yacht specialist surveyors, repair facilities and experts which treat your yacht with tender loving care. Our clients can rest assured that assistance will arrive when they need it.