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Megayacht News Radio introduces luxury-yacht enthusiasts to the leaders who bring cruising dreams to life: yacht builders, premier design studios, and even superyacht owners. As the official podcast of MegayachtNews.com, we feature real stories of real interest, not boring blather. Ultimately, we help American yacht owners and their representatives better navigate their way around the yachting lifestyle, getting more enjoyment from it.
Megayacht News Radio
Yacht Insurance: What Every Owner Needs to Know
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"It only takes one hurricane, one accident, or one equipment failure to change everything." Those sobering words set the tone for this essential conversation with risk management expert Rob Carron about protecting your yacht investment and the people who help you enjoy it.
For example, yacht owners face critical insurance considerations when planning yard periods during hurricane season in high-risk areas. Rob explains how timing these maintenance periods without proper insurance consultation can lead to shocking premium increases, doubled deductibles, or even complete coverage exclusions. His practical advice includes early planning and transparent communication with your broker before making commitments.
The discussion takes a deep dive into emerging concerns around lithium-ion battery fires, which have plagued the industry recently. Rob outlines how independent risk assessment surveys can identify potential hazards before they become disasters, and details how some insurers are now requiring specific battery management protocols. Similarly, owners planning to tow tenders need awareness of the specialized insurance requirements that apply, from tracking devices to weather limitations.
Beyond physical assets, Rob emphasizes that crew protection remains paramount through proper employment agreements. These documents should clearly outline obligations during illness or injury, providing security for both crew and owners. On a positive note, the conversation highlights how crew wellness programs are increasingly recognized by insurers as valuable risk mitigation tools, improving safety while boosting morale.
Whether you're a seasoned yacht owner or considering your first vessel, this episode delivers crucial insights that could save you from significant financial and personal headaches. Listen now to ensure your yachting passion remains protected through proper planning, documentation, and insurance coverage.
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Welcome everybody. It only takes one hurricane, one quote-unquote lesser but no less destructive storm, or one accident involving a water toy or a crew member God forbid to change everything. You might actually know this from firsthand experience. While yachting is, of course, a passion for all of us, pursuing passion doesn't take place in a bubble, so the smartest thing to do is to ensure that you are protected and that everyone else is protected well before anything can possibly have a chance to take place, even if you're confident that you've thought of everything, or that your representatives and your captain have thought of everything.
Speaker 1:Good, solid advice always bears repeating. So joining me today to share guidance is Rob Caron, who is the US practice leader at Aon Private Risk Management. Rob has had more than 20 years of experience working with people like you and tailoring solutions to ensure that you have the right protection plan. On another note, I have had the pleasure of knowing Rob for nearly 20 years, I think, in the superyacht sector. We've both been members of the US Superyacht Association for many, many years and also members of the International Superyacht Society. So, rob, welcome to Megayacht News Radio. I'm really glad to have you here today.
Speaker 2:Yes, well, thank you, diane. I'm happy to be here. Thank you for having me on.
Speaker 1:Absolutely. This is a really, really important conversation. Like I said, good advice always bears repeating. So even if people who listen can, at the end of the conversation, say, yep, we've ticked all those boxes, I'm going to be really, really happy. As we speak, it's hurricane season and it's pretty common for some owners to plan yard periods at this point of the year in South Florida. That can, of course, pose a challenge if a named storm comes along. What would you say are some options that owners and their captains have for when the yacht might be in a shed or even out on the hard?
Speaker 2:That's a good question, because what we tend to find out is when yard plans are put into place. A lot of times the idea of being in the middle of hurricane season doesn't really come as the first thought, it usually comes as an afterthought or maybe not at all. And so what we find happens is that the yard period is planned, they're getting paperwork together, they run it by us as the insurance broker to take the insurance company to get their approval and upon that conversation with the insurance company, the insurer underwriter, even though they may cover hurricane damage for that particular area of the country that the yacht is in, they find that the yacht it may be an additional premium, a pretty substantial additional premium to cover their exposure. We may also find that the insurance underwriter may double the hurricane deductible.
Speaker 2:In some cases we've found that the insurance underwriter, if the yacht's going to be completely out of the water and out of commission during the duration of the project and into, you know, storm season of commission during the duration of the project and into, you know, storm season, we find that the underwriter may in fact exclude all damages resulting from hurricanes or named windstorm which can then pose a very serious problem. So that throws the yard period plans skew a little bit and it's always good, in my opinion, and my recommendation is, when you are planning a yard period in the very first instance and sometimes they're unavoidable, you know damages happen. Things come up in the middle of the year. But if you're planning a serious refit or maintenance period in South Florida or any other hurricane prone area, to really have that conversation as early as possible with your insurance broker to make sure that all the avenues of coverage are there in place.
Speaker 1:Broker to make sure that all the avenues of coverage are there in place. It also seems like, unfortunately, every few months we at Magyat News are publishing stories about fires, and they've been largely lithium-ion battery fires. Maybe a water toy wasn't charged properly, a battery was taken out and put somewhere it perhaps shouldn't have been. As a result, some of the insurers seem to be adding clauses requiring that specific steps be taken to be more proactive in terms of how batteries are charged, how they are stored. That makes perfect sense, but are there any other things that owners can do and their captains can do, other than waiting for an insurer to send through a policy change or add something to the policy?
Speaker 2:Generally what happens when insurance underwriters add exclusions to the policy. That means that there's been a pretty significant amount of those similar losses occurring throughout their book of business. So to get out in front of that, there's a few things that clients can do, and some insurers do this already. They will require a risk assessment survey to be performed after binding coverage and within a certain timeframe. And what that does? The risk assessment is performed by a separate independent Marine surveyor and they take a look at all aspects of the yacht's operation, including interviews with the crew, interviews with the books, the log books, maintenance discussions with the engineer and things of that nature.
Speaker 2:And also a part of these risk assessments have now started to include how the yachts handle lithium ion battery storage usage and charging on board, and in most cases, what we find is that the report will come back either stating that this action should be taken to ensure that the batteries are safely stored or there may be requirements to address certain battery usage issues within a certain timeframe. So while that insurer may not be instituting an exclusion or clause to be followed, they are proactively taking a look at their exposure at that point in time. Other things that I've seen recently as well is that Certain flag states are now requiring standard operating procedures for smaller personal lithium ion devices, and that can usually be attributed to how guests and crew are storing and charging and using their items on board the yacht, which is a great thing. Once a flag state is involved, then the insurance companies tend to lean on the flag states that they require the client or the insured to follow, whatever flag state protocol is in place.
Speaker 1:Right. Right, to get back to what you just said about the risk assessment survey. Does the insurance company tell the client here are the surveyors who are the best to choose from, or does the owner have to go out and find a surveyor and then run that person by the insurance company?
Speaker 2:So the surveyors are actually funded or paid for by the insurance company and they're chosen. They usually have a contract with one preferred vendor that will go out to their yachts and perform this service, so they have some familiarity with them perform this service, so they have some familiarity with them.
Speaker 1:Okay, good. Good Now, when you and I spoke recently, you mentioned that towing tenders and how tenders actually are towed has become a pretty big deal in the insurance world. Talk a little bit about how the towing has become a bigger issue and how adequate coverage is important and really knowing what the requirements are for coverage.
Speaker 2:So when a yacht purchases a separate tender to be towed so not a tender that's kept on board but an actual separate vessel and the intention is to tow the tender between locations the yacht insurance policies most of all not all of them will exclude towing of a separate vessel until a tow plan has been reviewed and approved by that insurance underwriter. Once that's been approved, typically additional conditions, deductibles and premium may apply. So it's imperative, when you're setting up your tender towing operations to develop a plan that will be approved by the insurance company, but that also typically will also follow whatever that insurance company's tender towing conditions may be. Usually your insurance broker should know, depending on what insurer the yacht is placed with, how their tender towing conditions will read and what they require. For example, some insurers require that there's no nighttime towing and so as part of your planning, you need to incorporate that into your towing operation procedures.
Speaker 2:Other insurers may require separate tracking devices to be installed and operational. Not only is that a requirement under insurance, but I also think that should be a risk mitigation step to begin with. So there's certain companies out there that provide these towing tracking services. Other insurers have increased deductibles, so it's and other requirements that the yacht is not to leave if the wind forecast is above a certain standard, a certain mile per hour. So it's good to really just review, prior to even purchasing the tow tender, how the insurance company will typically institute their conditions and how those would respond in the event the tow plan is approved.
Speaker 1:We need to talk about the people aspect too, because, at the end of the day, the people are the most crucial key to the entire experience. When it comes to crew, I know that you feel very strongly and I agree that crew employment agreements are the way to go. They need to spell out any of those God forbid, what-if scenarios. What are some of the things that crew agreements should spell out? In terms of accidents, in terms of insurance?
Speaker 2:spell out in terms of accidents, in terms of insurance, yeah, so, in my opinion, any crew member that's stepping foot on board a yacht to work should have a CFARE employment agreement in place, effective that day, because an accident can happen at any time. Those agreements should spell out and usually do spell out what the owner's obligations are to that crew member should they either become injured or fall ill, and many times those obligations are in line with whatever the prevailing jurisdiction may be of the yacht, if it follows an MLC, or it may also spell out what the owner should provide the crew in terms of medical insurance and personal accident disability wage replacement or accidental death and disability insurance. Those establish, then and there to that employee that this is your salary, this is your number of days you will be paid for if you're injured or fall ill and this is the type of insurance that will be provided to you.
Speaker 1:It's never pleasant to talk about those accident scenarios, but it really is crucial, I think, to remind people that these can and do happen and that there are provisions that are available to make sure that everything goes smoothly as possible. On a positive note, in terms of crew, insurers are encouraging owners to make well-being programs available to them. It makes sense on a number of levels, particularly in terms of morale. What are some of the factors that the insurers like to see in these programs, and are there any? Not necessarily out-of-the-box programs, but are there any structures maybe out there that they particularly think are well done?
Speaker 2:Yeah. So firstly, a solid crew health and wellness policy, medical policy and accidental disability policy is paramount. Having that in place can serve not only as a benefit to crew but also as an incentive to perform your job well. Some of those policies and some of those providers also provide some sort of wellness and or crew-focused incentives to them. But there are other programs out there.
Speaker 2:There's a group called Supriyat Fitness that they have been engaged by certain actually whole insurance underwriters, which is interesting because typically when you think of true health and wellness you tend to lean more towards the liability, the protection and indemnity side of things. That's where you would see majority of claims for true injury or wages be placed. But the whole insurers in this instance they've. They deem that the crew wellness and overall wellbeing is a helps yachts, helps yachts perform better, helps them, helps the crew perform better, minimizes accident exposures, things of that nature. So one insurance company that we, that we place business with, has an agreement with a group called Super Yacht Fitness, which is an organization that takes the crew of a certain yacht. It provides the fitness programs. It gives them various goals to work as a team to achieve, has little challenges between the crew members for exercise goals and generally the idea is to help promote morale and wellbeing.
Speaker 1:Yeah, I like that a lot. That's a good point. Well, last but not least, I want to ask you a question that I ask everybody who comes on this podcast. If you could use just one word to sum up what yacht owners want, what would it be?
Speaker 2:It's really not one word, it's's three, but it's ease of doing business. That's four words, but it's uh, it's. That's a short phrase, but in my world, as an insurance broker, I work on behalf of the yacht owner and and their team to make sure that the yacht is fully protected, something that they've worked hard for and earned. Make sure that it's fully protected in the event of the unforeseeable, and a lot of times in our world we see that things get held up because of certain issues regulatory otherwise. So, as an insurance broker and provider of a service, in my mind it's our job to make sure that the owners' dealings with us are seamless, you know, to make things as easy as possible, while making sure the boat is fully covered, both physically and for their liabilities.
Speaker 1:Well said, well said Well. You know, as human beings, we're always averse to talking about risks and those types of scenarios, but it's crucial to plan ahead, and that is peace of mind at the end of the day. So thank you so much for joining me for this really important episode. Rob, I really appreciate your insight. I think you've succeeded in not only helping to give peace of mind, but also really explaining how to get there.
Speaker 2:Well, wonderful, thank you. Thank you for having me.
Speaker 1:Well, everyone. To learn more about what Rob can do for you through Aon Private Risk Management, you can visit their website, which is aonprivateriskmanagementcom, and Aon is spelled A-O-N. Until next time, I'm Diane Byrne.
