Thomas Gibson is head and authorised signatory at Firmenich yacht insurance. The trained shipping agent is an enthusiastic sailor himself and has been involved in the construction and technology of boats since his youth. He has been selling policies for water sports enthusiasts for over 25 years. In his day-to-day work, he repeatedly encounters cases in which boat owners make partially or completely incorrect assumptions about their insurance cover. Gibson has therefore summarised and corrected the ten most common misconceptions for YACHT.
Misconception 1:
As the law in this country does not require liability insurance for boats, it is not necessary. If the worst comes to the worst, my personal liability insurance will cover any damage I cause with the boat anyway.
Wrong! As a rule, private liability insurance does not pay for damage resulting from the use of a sailing yacht with an auxiliary motor. Some insurers exclude surfboards or smaller dinghies. Other personal liability insurers, on the other hand, explicitly exclude certain sporting activities and the use of corresponding equipment or vehicles from liability.
Example: A skipper misjudges the mooring manoeuvre and damages the sea fence of the next mooring with the anchor. As if that were not enough, the skipper also breaks his foot trying to keep the incoming yacht away. As a result, the person responsible for the accident has to pay for all the damage, which can be very expensive due to the personal injury. Without boat liability insurance, he is liable with his personal assets!
Misconception 2:
The fixed rate is always fixed, even if the ship is already old and the insurance has been in place for many years.
The term "fixed premium" means nothing other than the determination of a fixed amount or a lump sum insured. The term "fixed premium" is sometimes misleading, especially as it is hardly known in common usage. The bottom line is that it serves to avoid disputes in the event of a claim. However, this only works if the insurance conditions are clearly formulated and cannot be interpreted differently. Trouble can threaten, for example, if the conditions provide for a time-limited "fixed rate", for example for a period of five years. After all, what happens in the event of a claim that occurs after this period? Formulations such as "if the sum insured corresponds to the value of the boat when the insurance is taken out, this is deemed to be a fixed rate" or "the sum insured must correspond to the value of the boat when the insurance is taken out" can also be critical.
Example: The owner of a yacht that has been insured for a long time suffers a total loss. However, the insurance company only pays out the significantly lower current value of the yacht instead of the originally agreed sum insured. It invokes a clause in the contract according to which the "fixed valuation" only applied during the first five years of insurance.
Misconception 3:
I don't need a hull policy for my boat. If someone else damages my boat, they or their boat liability insurance will have to pay for it.
Anyone who damages their boat themselves, for example because they ground it or collide with the jetty when mooring, would have to pay for the repairs out of their own pocket without a boat hull policy. Some people may consciously take this risk. However, it should also be borne in mind that even if damage is supposedly caused by a third party, liability cannot automatically be derived in accordance with Section 823 BGB. This is often the case when damage occurs as a result of a technical failure. This is because, in contrast to motor vehicle insurance, the principle of fault-based liability still applies in large parts of water sports insurance. This means that if the party responsible for the damage is not liable due to legal regulations, the injured party is left to bear the costs - unless they have hull insurance. Finally: Liability insurance not only satisfies
claims of third parties, but also defends against unjustified claims. It can therefore take years to obtain justice. Even in such a case, you are better off with your own hull policy.
Example: As a result of a short circuit in the professionally installed navigation electronics, a fire breaks out and spreads to the neighbouring yachts. Or: During the mooring manoeuvre, the new Bowden cable of the throttle breaks, causing the yacht to ram and damage another vessel without braking. In these cases, the owners are not necessarily liable for the damage to the other boats!
Misconception 4:
I never have to worry about insurance again. Not even if I buy additional equipment.
As a rule, additional equipment purchased for a hull-insured yacht is automatically insured as part of the existing sum insured. However, if the value of genuine additional equipment is relatively high - for example, the new teak deck - the total value of the yacht is actually increased. The sum insured should then be adjusted upwards accordingly. If, on the other hand, only an existing item is replaced, for example an old engine is exchanged for a new one, the value of the yacht does not change because the old engine was also younger at the time the insurance was taken out. A distinction must therefore always be made between value retention and value enhancement.
Example: A cruising yacht is extensively equipped for a long-distance cruise. The additional equipment (trade wind sails, wind steering, solar panels, watermaker, etc.) reaches a high five-figure value, but the original sum insured is not changed. Some time later, the ship sinks. The insurance company then only pays the agreed sum insured. There is no additional compensation for the additional equipment that has been lost.
Misconception 5:
Previous claims that my old boat insurer has settled are none of my new insurer's business
Yes, they do, and by law (§19 VVG)! Before taking out any insurance policy, the new insurer has the right to obtain information from the customer about previous claims or "risk-relevant circumstances" at the customer's active request. On the basis of this information, the insurer then checks whether and, if so, under what conditions it wishes to accept a risk. Anyone who wilfully and knowingly withholds relevant information on previous damage or other conditions that are relevant to the assessment of the risk, even though they have been asked, may risk a dispute with the insurer in the event of a claim.
Misconception 6:
If my ship sinks, my insurance covers all the costs.
In addition to the pure sum insured (fixed premium), standard comprehensive policies usually also cover salvage, wreck removal and wreck disposal costs to a sufficient extent. However, caution is advised with older policies where these costs are only additionally insured in the amount of the sum insured. The lower the sum insured, the greater the risk for the owner of being left with part of the costs in the event of a claim. We recommend at least two million euros in addition to the sum insured to be on the safe side. There is also a risk of trouble if the costs of salvage and removal are only covered if this is done "by order of the authorities". This is because even a private marina operator will require the owner of a
owner of a sunken ship to raise it. Nevertheless, the costs for the removal or prevention of environmental damage as a result of an accident are always covered by boat liability insurance.
Example: An owner brings his boat into the water himself in a private harbour. It slips off the trailer so unfortunately that it tips on its side, takes on water and sinks. Although the hull insurance pays for the damage to the boat, it refuses to cover the damage with reference to a corresponding contractual clause.
clause in the contract to also cover the costs of salvage. After all, the removal of the boat from the harbour basin was not requested by an authority, but by the private harbour operator. As a result, the owner is left with the cost of salvaging the boat.
Misconception 7:
If my yacht is damaged in winter storage, the party responsible for the damage or the storage operator must pay for it.
Only in the case of clear fault or proven grossly negligent behaviour on the part of the winter storage operator (see § 3) can they be held liable under certain circumstances - for example, if their own lighting and power systems have not been maintained or checked for years and a short circuit then occurs. In the worst case, it can take years to provide evidence of this. And even if the operator has public liability insurance, this usually excludes damage to stored boats or only covers them to a very limited extent. If you don't have your own hull insurance that covers damage regardless of fault, you will be left empty-handed in case of doubt!
Example: A short circuit in the hall lighting through no fault of the hall operator leads to a devastating fire, which also destroys the yachts parked in the hall. Owners who have not taken out hull insurance for their boats will not receive any compensation in such a case. The same applies if a winter storage facility is broken into and equipment or entire boats are stolen. Or in the event of arson or a fire whose perpetrators cannot be identified.
Misconception 8:
Even if I am grossly negligent, my hull insurance now has to pay in full for any damage I cause to my boat.
Wrong! Only in the case of newer cover available on the market do insurers waive the defence of gross negligence for minor damage up to around 10,000 euros. However, if a comprehensive insurer now assumes "gross negligence" in the event of serious damage, settlement will no longer be rejected outright, unlike in the past. However, in accordance with the Insurance Contract Act (VVG), which has been in force since 2008, the insurer will probably only reimburse the damage proportionately. The clear proof of gross negligence is legally difficult anyway. The degree of gross negligence is determined in a complex procedure. Experts refer to this as "quoting".
Example: A yacht collides with an already moored vessel in a lock and both boats are damaged. The water police are called and discover that the person responsible for the damage has been drinking alcohol. As a result, his hull insurer claims gross negligence and only pays for part of the damage to his boat. His boat liability insurer pays the full amount for the other person's boat, but he must expect that they will take recourse against him.
Misconception 9:
Claiming minor damage from the insurance company is usually not worthwhile because of the excess.
Yes, you can! The better insurance policies available on the market waive the excess for many - mostly no-fault - events such as lightning strikes, burglary or collisions caused solely by third parties. The premium downgrade in the following year after a claim has been settled is also limited at an average of ten per cent of the annual premium. It is therefore worth taking a look at the small print before signing the contract.
Example: Thieves break into a yacht and steal valuable equipment. Although a deductible of several hundred euros was stipulated in the insurance contract, the insurance company reimburses the damage in full. In the following year, only the sum insured increases by around ten per cent.
Misconception 10:
As with motor insurance, years without claims automatically have a positive effect on the amount of the comprehensive premium.
Unfortunately, the traditional no-claims system, as we know it from motor insurance, has been watered down somewhat by the granting of advance discounts. Insurers usually grant a 40 per cent discount right at the start of the contract. However, there is no further reduction in the premium afterwards. In addition, there are only so-called "no-claims discount savers", which are credited to customers after several claim-free years and which protect them from a downgrading of the premium in the event of a subsequent claim. In addition, a few providers reward long-term claim-free customers over time with a reduced excess in the event of a claim.
Example: An owner takes out a new hull policy for his ship and receives a 40 per cent discount on the annual premium right at the start. In subsequent years, the premium does not fall any further. On the contrary: if the policyholder makes a claim in the first few years, the premium increases by around ten per cent. Only after five claim-free years does the owner benefit from a discount saver, which protects him from such a premium increase in the event of a subsequent claim.
It's worth comparing!
Individual advice should always be sought before taking out boat insurance. The information contained in this article is no substitute for this and, in particular, does not constitute legal advice or a comparison of the products available on the boat insurance market. However, it does provide good pointers for checking your existing or new policy.
