Yacht Insurance: 'Coronavirus Quarantine is Putting Policies at Risk'
by Cecile Gauert
Quarantines and other protective policies against the spread of the coronavirus imposed around the world are wreaking havoc with planned itineraries. Ports along the Riviera and moorings off the French coast are off limits to pleasure vessels until further notice.
Movements are being restricted in some Caribbean islands - just yesterday (March 30), the government of Antigua and Barbuda announced it was closing its borders to yachts as a result of the COVID-19 crisis. With that, many owners are reconsidering plans to head to the Mediterranean or, stuck in quandary, yachts are simply unable to stick to their initial plans. It’s nearly impossible to foresee when restrictions will ease up, but it looks like it will be at least another month before there is a semblance of clarity. Meanwhile, the 2020 hurricane season officially starts on June 1.
“I have a concern regarding those yachts which are typically in the Caribbean and US at the moment which traditionally steam back to the Mediterranean about now for the summer,” says Allan Norton, a yacht underwriter with UK-based Cranbrook Underwriting.
“My specific concern is that their insurance policy may have a cruising area limitation which states that from March/April until November the yacht will be cruising in the Mediterranean and if they are unable to comply to these cruising restrictions, due to quarantine and a claim occurs, they may find that the insurance may be null and void or that particular claim is denied.”
Scott Stamper, managing director of Atlass Insurance confirms it is a potential issue. “Yes, some vessels will have a conflict with the navigation warranty of their policy,” he says. It may not be the case with all insurance policies, but it is worth checking.
“Every insurance policy is different so I cannot generalise,” says Nancy Poppe, North American Yacht Practice Leader for Willis Marine Superyachts, “but the large yacht insurers we work with do not tend to have windstorm area cruising limitations because fully crewed yachts should be able to move from harm’s way when a storm is approaching, and most large crewed yachts do not remain in windstorm areas anyway,” she says.
This said, more yachts than on an average year are already planning to forego the Med season and are hunkering down while the crisis continues to unfold. “Many of the vessels that would traditionally reposition to the Med for the summer charter season will remain on the US east coast. Some vessels are planning to remain in South Florida and undertake various maintenance projects,” says Stamper, who is based in Fort Lauderdale, Florida, home to many refit and maintenance yards.
While staying put or entering a yard period sounds like a reasonable solution while the pandemic plays out, it poses other risks that insurers will need to re-evaluate, especially within the hurricane belt.
“Underwriters have concern with the potential for damages to vessels from a named windstorm. Lightning is also a significant exposure in the southeast,” Stamper says. “In order to secure coverage when the vessel will stay on the US East Coast and specifically Florida, we need to present a Severe Storm plan for underwriters’ consideration. In some instances, underwriters will require additional premium, higher deductibles for windstorm and lightning.”
The best solution is, as always, to share changing plans with insurance policy holders.
“Even if your insurance policy does not have express language preventing you from being in windstorm areas during season, you probably presented an itinerary to the underwriter at some point and it likely did not include being in a windstorm area in season,” Willis says. “Remaining in a storm area is a material fact that we believe should be disclosed to the insurer. With a sound hurricane plan, we would not expect an insurer to change the terms of the policy, but upfront disclosure and agreement can prevent problems on the back end.”
The best solution experts agree is if your insurer has not yet reached out to you, reach out to them.