What You Need to Know About Yacht and Pleasure Craft Insurance

Yaz Alibaşoğlu
Sep 3
3 min read

Owning a yacht or pleasure craft opens the door to freedom and unforgettable journeys at sea. However, maritime navigation always involves unforeseen risks: storms, collisions, fires, machinery breakdowns, theft, and even liabilities towards third parties. For this reason, yacht and pleasure craft insurance is not merely a formality; it is one of the key instruments for safe and secure navigation.

What Is Yacht Insurance?

Yacht and pleasure craft insurance policies provide coverage against physical damage to the vessel as well as liabilities towards third parties. In international practice, such policies are generally structured under three principal headings:

Hull & Machinery: Covering physical damage to the hull, machinery, and equipment of the vessel.
P&I (Protection & Indemnity): Covering third-party liabilities, environmental pollution, injury or death of passengers and crew.
Special Clauses: Provisions that either extend or restrict coverage, such as speedboat clauses, racing clauses, or charter clauses.

Scope of Coverage

Depending on the insured’s needs, yacht policies may include a wide range of risks, such as:

Natural Perils: Storms, hurricanes, lightning, waterspouts.
Casualties: Grounding, collision, sinking.
Fire and Explosion: Damage to the vessel and its equipment caused by fire.
Theft and Vandalism: Theft of the vessel or its equipment.
Machinery Damage: Engine breakdowns, propeller damage, electronic failures.
Third-Party Liability (P&I): Personal injury or property damage to third parties, as well as pollution liabilities.
Salvage and Towage Costs: Expenses incurred for assistance, towage, or salvage operations.

Common Special Clauses

In addition to standard coverage, marine insurers often rely on specific clauses that define or limit the scope of insurance:

Speedboat Clause: Imposing specific conditions on vessels exceeding certain speed limits.
Racing Clause: Determining whether damages sustained during regattas or races are covered.
Charter Clause: Introducing additional provisions when the vessel is used for commercial chartering.
Navigation Limits Clause: Defining the geographical limits within which the policy remains effective.
Crew Clause: Setting out the legal rights and coverage afforded to crew members.

Frequent Mistakes Made by Yacht Owners

Yacht owners often fall into common pitfalls when arranging their insurance policies:

Signing without review: Overlooking exclusions and uncovered risks.
Providing inaccurate speed information: Which may lead to denial of indemnity under the speedboat clause.
Incorrect navigation limits: Coverage applies only within the geographical limits specified.
Failure to declare chartering activity: Using the yacht for charter without disclosure may result in loss of coverage.
Underinsurance: Insuring the yacht for less than its actual value may reduce indemnity in case of loss.

Key Considerations When Choosing a Policy

Ensure the maximum speed and intended use of the yacht are correctly stated.
Confirm the navigation area (e.g., Mediterranean, Aegean, Black Sea, or international waters).
Check whether machinery breakdowns and technical risks are expressly included.
Always include third-party liability (P&I) coverage.
Consider extensions of cover by paying additional premium.

Legal Framework

In Turkey, yacht insurance is governed both by the Turkish Commercial Code and by international marine insurance standards. For foreign-flagged yachts, policies are often subject to English law and incorporate the Institute Yacht Clauses. Accordingly, the interpretation of yacht insurance contracts frequently requires knowledge of both domestic and international maritime and insurance law.

Conclusion

Yacht and pleasure craft insurance is an essential component of maritime safety. Selecting the right policy is not merely a matter of comparing prices; it requires careful assessment of risks, clauses, and legal consequences.