Chartering a yacht comes with certain legal implications related to how you use the boat. Included is the legal responsibility to make good on any damage you or your passengers do to the vessel. This is accomplished through yacht charter insurance. Not only is this something you should have, but most chartering companies do not give clients a choice. Insurance is mandatory.
Yacht charter insurance is very similar to the car insurance you might purchase at the desk from a car rental company. You cannot bring your own charter insurance policy to the table though like you can with car rental. The insurance on the yacht you are chartering has already been purchased and paid for by the chartering company. What you are required to cover is essentially their deductible.
NauticEd, a reputable sailing school and yacht charter agency known the world over, explains that yacht charter insurance protects both you and the chartering company in the event of damage to the vessel. As the boater, you are protected against significant financial loss even if you should end up sinking the vessel.
How Yacht Charter Insurance Works
When you charter a yacht, the chartering contract will include language stipulating that insurance is already in place. Your invoice should show a certain amount billed as a damage deposit. For sake of argument, let’s say that amount is $5,000. This is the maximum amount you would pay should you damage the vessel.
Before the chartering contract is approved, the chartering company will run your credit card to ensure the account is good for the entire $5,000 – just in case. The company does not charge your card at that time. It is only charged should you do damage to the boat. If you return the boat without damage, the contract is satisfied and the charge authorization is revoked.
How much will your card be charged in the event of an accident? That depends on the amount of damage done. Remember that the $5,000 amount is the maximum. If you and your fellow sailors caused $500 in damage, the entire $500 will be charged. If you sink a $100,000 vessel, you would only be charged the maximum of $5,000.
Reducing the Damage Deposit
NauticEd says that the damage deposit included in a chartering contract can be reduced by purchasing a damage waiver. Because the damage deposit is essentially the chartering organization’s deductible, the damage waiver is you paying extra to reduce the deductible.
For the sake of this discussion, let us say that you can purchase a damage waiver for $300. Paying that extra $300 up front reduces your damage deposit from $5,000 to $1,000. Now you can sink that vessel – by accident, of course – and your credit card would still be billed only $1,000.
Purchasing a damage waiver is a good deal in most cases especially when you have others on board. You don’t want to get in an argument with friends and family over who is responsible for the $5000. All sharing the $300 extra damage waiver cost to reduce the damage liability from say $5000 to $1000 is a good idea. Yet, still you must communicate this to your crew upfront also. Generally it is a good idea to get everyone to agree prior to the trip that they will chip in on the damage costs if there are any. It is unfair to expect the skipper of the boat (you) to pay all the damage costs.
You should now have a better handle on how yacht charter insurance works. Insurance is something that comes with the territory regardless of your skill level as a sailor. Every sailor, regardless of how long ago he or she learned to sail or how much experience the sailor has, needs to understand that damage is always a real possibility and insurance is a good and necessary way of life on the water.