Yacht liability exposures to consider before setting sail on a charter

Thinking about taking the plunge into the exciting world of yachting? Before diving in headfirst, many people dip their toes into the yacht life by chartering a yacht for a week or two. Whether it’s a winter vacation in the Caribbean or cruising around the Mediterranean for a summer getaway, chartering can be a great way to test the waters of yacht ownership.

Before setting sail on a chartered yacht adventure, there are some insurance considerations to keep in mind.

What’s at risk?

One of the most overlooked exposures within the marine industry is the liability you face when chartering a yacht. Here are some scenarios where charterers’ liability coverage would protect you:

• A guest loses control of one of the yacht’s jet skis and injures a swimmer. The injured party seeks compensation from both the yacht owner and the charterer.
• A family member accidently injures a crew member, who in turn sues the charterer for compensation.
• Guests don’t possess the proper visa documentation and port authorities fine the yacht. The yacht owner will be liable to pay the fines initially, but will most likely pass these fines along to the charterer.

In each of these situations, a charterers’ liability policy would cover the cost of the claims brought against the charterer.

What is a yacht charterers’ liability policy?

A charterers’ liability policy provides coverage for liabilities assumed by the charterer, their immediate family members, and guests; and it also offers protection against third-party liability claims. The yacht owner’s protection and indemnity (P&I) coverage would likely extend to you, the charterer, but it may not extend to your immediate family members and guests. Additionally, the yacht owner’s P&I coverage may not respond to other charterer liability obligations included in the charter agreement. 

Many charterers’ liability policies also include protection for hull damage, crew liability, fines, and environmental damage. Coverage solutions and liability limits can be customized to fit each charterer’s specific insurance needs.

What else can I do to protect myself?

Engaging a maritime attorney and an expert yacht insurance advisor to review the charter agreement can be highly beneficial before signing a charter agreement. These professionals have the expertise to offer advice on charterer’s responsibilities and applicable insurance requirements. This will help you avoid running aground and allow you to truly enjoy your yachting experience.

For more information, please request a personal risk review.

Katie Johnson is a senior member of the Marsh McLennan Agency Private Client Services Yacht team and is responsible for managing some of the most complex yacht risks in the world with values over $175 million. Katie offers risk management advice to yacht owners in all stages of new build projects and refits. Her area of expertise also includes managing yacht fleets owned by multi-generational families. Katie is a member of the International Superyacht Society, the Florida Yacht Brokers Association and the U.S. Superyacht Association.