1. The owner is liable for crew insurance
For example, if there are paid crew onboard the yacht, the owner is liable for the well being of this crew. For British flagged yachts, including those within the red ensign group, it is compulsory to buy employer´s liability insurance with a minimum level of GBP 5 million sum insured per crew member. This even applies to seasonal workers and/or deck hands. The question that often arises is “At what point is somebody considered to be employed?” A crew member does not always need to have a written employment contract to fall under the requirements for employer’s liability. To make things even more complicated the owner must also be aware that crew protection varies according to the nationality of the crew member. Therefore, it is very important to assess the risk properly and buy the right insurance, as well as the right level of insurance, when it comes to crew liability.
2. Manager´s Non-Liability is a must have
Moreover, yacht owners should understand the issues where third parties want to be noted as co-assureds on their yacht policy (for example, professional yacht management companies or marinas). In the case of a yacht manager there are many good reasons why they should be mentioned on the policy. They could be held liable for their actions in connection with the yacht as they may be considered as the owner or captain´s representative on shore. On the other hand as they are professional subcontractors they normally should have their own insurance and these costs should not be carried by the yacht owner. Finally, the owner must make sure that mistakes of the professional yacht managers will not prejudice his/her insurance cover. This so called “Manager’s Non-Liability” clause is a must have for the owner.
3. Waivers of subrogation
Another important point is the issue of “Waiver of subrogation”. What is this? It is a means by which the shipyard or marina avoids any liability for damage to the yacht whilst in its care unless that damage is caused by gross negligence or a willful act. Often a shipyard´s insurance is not sufficient to cover the high values of today´s superyachts. Therefore, the shipyard protects itself by requesting a waiver of subrogation from the owner and their insurers.
Yacht owners must be very careful if required to sign one of these as they could affect their insurance cover if unless their insurance provider has been made aware of it and provided they have issued the appropriate endorsement.
With insurance companies like Pantaenius this kind of endorsement is calculated on a case by case basis and depends on the length of stay, scope of refit work, professionalism of the shipyard and the scope of the waiver of subrogation itself. The costs vary from no additional premium to 0.1 % of the sum insured. To the displeasure of the yacht owner these are mostly hidden costs that are popping up after the refit deal has been signed. Therefore, the owners should confirm costs with their yacht insurance provider before starting a refit.