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Types of charter boat insurance with practical examples  

Boat insurance can be quite complicated. Especially if damages on a yacht occur and you find you are not adequately covered. What to do in those cases?

You’ve decided to set sail in Croatia, and that is wonderful. But we aren’t going to talk about this country’s abundance of beauty; we are here to shed some light on situations that might occur in navigation and issues with insurances that come after that. Together with some practical examples, we’ll explain why boat insurance is so important, especially in the yacht charter.  

We are sure your mind is occupied with sailing plans, provisions, what to take on board and all the fun you’ll have. We are also sure you cannot wait to step on the yacht, unfurl the sails or start the engines and go.  

While in the carter base, don’t rush things. We are sure you are in a hurry to start your vacation, and the charter base employees are in a hurry because you are not the only guest on the base. But have patience and do the check-in properly so nothing is left unchecked, especially paperwork, registration papers and charter insurance policy.   

In charter insurance policy, we want to emphasize the importance of skipper liability insurance and insurance of your deposit. Keep in mind that if you do insure the deposit left in the charter base, it’s a guarantee that you may cover less damage if it happens.  

If you are at any time in any doubt or there are details you don’t quite understand, our advice is to ask the charter employees to explain it. If you or they miss something essential, you might regret it later.   

Whatever you choose or whatever you consider as "I am covered" through boat insurance, it can often not be enough.

How to choose boat insurance?   

Whatever you choose or whatever you consider as “I am covered” through insurance, it can often not be enough.   

The most crucial boat insurance that every vessel needs to have is liability insurance for damages caused to third parties. This basic boat insurance is often a reason for confusion. In this case, when the insured vessel causes damage to another vessel, the insurance doesn’t cover the injured people on the vessel itself.   

What does all this mean, actually? It means that if your vessel damages another vessel, you will not be insured for the physical damages done to the boat. The part where it says “to third parties” is not transparent enough; people usually think they will be covered for all that may happen in navigation.   

A third party is a person who has the right to claim the damages, but it’s not the policyholder or a person related. So, by this, if you do cause damage to someone else in a boat, by the liability policy, the owner of the damaged vessel has the right to claim compensation, but you don’t

The problem usually arises with the limit of the boat insurance for damages to third parties, even though it doesn’t seem like it.   

Whatever your vessel’s purpose, whether it’s a boat for private purposes or for renting it in the charter, in Croatia you must take out obligatory liability insurance. But this kind of policy only covers damages caused to divers or swimmers caused by the insured vessel and not other vessels.  

However, you should be covered if you have an insurance policy for your boat that covers damages done to other vessels. Just the basic boat insurance policies don’t protect you enough.  

Skipper has a significant obligation in navigation, in the end, if and when damages occur, not knowing all the boat insurance policy terms will cause many issues

What is a skipper’s obligation in boat insurance?  

Skipper has a significant obligation in navigation, in the end, if and when damages occur, not knowing all the insurance policy terms will cause many issues. As they say, ignorance will not save you. The best is to be sure in advance. 

You, as a skipper or anyone else navigating a chartered vessel, must be aware of the following:  

  • If the vessel has a valid insurance policy (paid for and active)  
  • What kind of insurance does the vessel have  
  • What precisely does the insurance policy cover   
  • What situations or items the insurance policy doesn’t cover  

Unpredictable situations are always possible, and we have many real-life examples that we can cite in order to explain in more detail what can happen. This is just one example we encountered as insurance broker experts and as support to skippers, owners and yacht charters. We will leave out the details but will give you the generals:  

As a guest in the charter, the skipper charters a yacht after signing all the paperwork required. He is informed that a vessel is insured against all risks. And all is according to the country’s law under the flag registered under. Not knowing what this actually means and thinking he will be covered entirely; he takes the insurance policy on board and sails for a long-awaited vacation on the Croatian coast.  

After a few days of beautiful weather and enjoying the Adriatic Sea, a usual sudden storm finds them near an island. He tries to take cover and find a secure position in a secluded bay. He’s trying to stay safe while the rain and the wind pass, but he finds it difficult to maintain position with the anchor only. Near him, another vessel tries to take cover in the same bay and not paying attention to the surroundings, they collide with the first vessel and cause substantial damage to the hull.  

Both skippers help each other in the storm, make friends and ignore the damages thinking the vessel is fit for sailing and has adequate boat insurance. So, whoever is to blame here, doesn’t matter to them. Both skippers think they are insured “against all the risks according to the country’s law under the flag which is registered under”.  

But it turns out both vessels don’t have anything more than obligatory insurance according to Croatian laws. So, what to do? Who is responsible?  

Whose obligation is the damage which occurs during sailing?

Boat insurance responsibility   

The responsibility in this situation to us is clear. But the charter company may hold the skipper responsible for the damage to the rented vessel. And there is where the problem arises.   

Whose obligation is the damage? Skipper’s, because the vessel wasn’t moored properly in the sudden storm? Or the charter company didn’t insure the boat adequately and also (deliberately) bring misapprehension to the skipper?   

Did the skipper make a grave error because he didn’t check the insurance policy properly and in detail?  

Our experience with boat insurance tells us that the charter company must insure every vessel in the fleet so that guests who book their yachts don’t have any problems and inconveniences if the damages happen by accident or carelessness.  

But there is no legal rule that makes charter companies take any other insurance policy besides the obligatory one. All different types of boat insurance are their goodwill, and besides that, a wise business decision.   

We can repeat that, sadly, ignorance doesn’t justify anything in the eyes of the law or the insurance company. The skipper who rented a yacht from a charter should know the policy details and what it entails. And what it doesn’t.   

Professional insurance brokers in this kind of situation, when it comes to maritime insurance, can and will ensure that the policy has all it needs. So you are sure you are covered in all situations and for all damages. Insurance broker also gives full support to the skipper and can advise them in any case what needs to be done.   

An old Dalmatian proverb says, “the ship should be moored in a calm sea”. One can use this proverb in any life sphere and also in maritime insurance. Check every little detail before you set sail so that later “we didn’t know” situations don’t happen.   

One thing is certain for skippers in charter – must be fully informed!  

Luckily, there are options considering skippers, such as skippers’ insurance. It’s said that a good skipper should hope for the best but always be prepared. So, there are options in which boat owners, individuals, and charter companies can protect themselves from risks and finical losses for their vessels.   

Also, skipper insurances protect the person managing the vessel from all the legal ramifications and financial compensations that can happen if the boat wasn’t adequately insured.   

The most important is the insurance of the skipper’s liability for damage to third parties or third-party liability for a skipper. As a person managing the vessel, this means that the skipper is responsible for any damages caused by his actions. That includes damages to the other vessels, including injuries to the crew of other yachts. It also includes the people on board the yacht he was navigating, as the vessel is his responsibility. One important thing – this kind of insurance doesn’t cover gross negligence.  

Again, to elaborate further, we give you a couple of examples of similar situations we encountered in real life:   

Example 1 – While manoeuvring in the marina, a skipper damaged the aft platform. The damage didn’t seem as substantial at the time, but on return to the charter base, it’s determined that the repair costs were over 2000 EUR.   

The skipper was “charged” for damages from the security deposit, which was close to the cost of repairs amount. He asked for the receipt for the occurred damages, and together with the pictures he took of the damage, he reported the damage to the insurance company to get his deposit amount back.   

He protected himself in advance with insurance, and by calculating that the insurance premium would be 1/10 of the deposit left to the charter. So, it seemed like a good investment, and on the plus side, he protected himself as a skipper from any possible damages.   

Damages occurred while sailing to the vessel managed by the skipper.

Example 2 – Damages occurred while sailing to the vessel managed by the skipper and another nearby vessel. The deposit was automatically taken for the repair of the damages by the charter company. The other damaged vessel’s owner sued the skipper for all the costs incurred after the sailing season.  

Even though the insurance company paid the damages, and all repairs were finished, the owner sued because he believed that the damage significantly reduced the value of his boat. 

The skipper on the first vessel was a Croatian citizen, and the other was British. The first vessel was registered under the Croatian flag, and the other Under the British flag. You can already see where this goes. The British owner sued the Croatian skipper at the British court, so he had to get a foreign lawyer in a foreign country, and the whole situation became rather complicated.  

So, there is one thing that we can advise: take the skipper’s legal protection insurance, which can sometimes really come in handy. But this fact is often omitted by skippers and sailors, thinking the worst will never happen and they don’t need such things. But you never know whom you may encounter at open sea and under what flag their vessel is sailing

Legal protection insurance covers the cost that may occur during legal procedures, such as lawyers and court fees.   

In conclusion, boat insurance can be extensive, but it is essential, especially if you want to be covered in all situations and protected from all sides. You need to be fully prepared and know exactly what boat insurance covers. And then take measures and make additional policies to be covered completely, if possible. Insurance broker can be your best ally in every case – if you doubt some issues of boat insurance or need advice.