The post-Covid economic is here. Some sectors are negatively impacted, when others are growing… This is the case for Yachting, which after having been almost paralysed over the past few weeks, offers the premises for a growth this summer with an increase in private yacht bookings. What about consequence(s)?
Charles Croce-Spinelli, our PSPI Yacht Insurance expert, analyses the phenomenon for us and provides us with two solutions to best protect ourselves from the risks of this growth
What trend(s) is (are) emerging for the sector in the coming months in this difficult “(post)Covid-context” ?
The last few weeks have been very difficult due to the ban on berthing in certain ports, with maritime constraints so high that many vessels have been – and still are – blocked at berth. Moreover, no one was, and still is, allowed to disembark.
However, in this very complicated context, the sector is showing positive signs of recovery, which go beyond expectations. For example, as a recent article in Agefi showed: “Since the start of the Covid-19 crisis, there has been a 23% increase in demand from customers who would traditionally opt for a hotel or resort holiday, and who are now interested in the alternative of a stay on the water. “A yacht offers a level of seclusion that no other accommodation can offer, with absolutely everything on site, including swimming !
But this growth also involves risks…
What risks are you talking about?
Increased bookings mean an increase in potential accidents. But we are talking about properties worth several million francs, and whose financial and sentimental value is very important to their owners. We are talking about damage caused by the lessee to the ship, to the hull, to the interior fittings, to tools, furniture, etc., and to the ship’s equipment.
What solutions are then available to yacht owners who would like to take advantage of this growth opportunity, while protecting themselves from the associated risks?
I’m thinking of two solutions in particular. The first is directly related to the problem of damage to the property, and the second concerns booking cancellations.
In the first case, you have to take out what is known as a “Charterer liability”, i.e. an insurance policy that covers all potential damage caused by the tenant. This cover can be charged to the owner or added directly to the cost of the rental, and therefore borne by the tenant. It generally covers up to the general deductible of the contract, so that in the event of a claim, the owner does not have to pay out a single franc. In addition, it preserves the owner’s loss ratio in the event of damage, as the burden will be charged to the tenant. This is very useful in negotiating the terms of policy renewals, especially in the current period when annual increases are the norm.
In the second case, we talk about “Loss of Hire” insurance, which protects the owner from rental cancellations if his boat is not in a condition to receive clients. For example, a boat suffering an engine failure that requires a month of immobilisation but which had a charter week planned for – for example – 150’000 USD, will not be able to honour the contract. Typically in such cases, the “Loss of Hire” cover fully covers the owner’s loss of earnings, thus paying the 150’000 USD he would normally receive.
For more information on these types of insurance, you can contact us by phone or email.