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Triton Survey: Yacht insurance and hurricanes

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By Lucy Chabot Reed
Statistics/graphics by Lawrence Hollyfield

After Hurricane Irene wreaked havoc on the northeast, so much so that the Erie Canal looks now to be out of commission for not only the remainder of this season but next season as well, we wondered what sort of hurricane provisions yachts operate under. 

In recent years, as weather patterns have changed, hurricanes hit in many latitudes. But insurance has traditionally found certain areas in the southeastern United States and along the Gulf Coast to be more susceptible and thus charge a higher premium.

But as Irene showed, even being far inland doesn’t protect vessels from hurricanes and possible damage.

So this month’s survey asked yacht captains about the insurance policies that drive so much of what they do in yachting, particularly hurricane insurance.

We started with the yacht’s basic cruising area. Does the yacht visit areas that, at some point of the year, have a storm season?

Most of our 64 respondents this month — nearly 97 percent — do travel to hurricane- or cyclone-prone areas. 

A large portion, 82.5 percent, do so even during storm season. Just 14.3 percent don’t visit the areas during storm season.

And just 3.2 percent don’t enter storm areas ever.

And we wanted to know about the yacht insurance’s basic tenets. Does the yacht’s insurance require the yacht to be outside of a storm box (a certain latitude) by a certain date?

The answer to this question was surprising. Most — 65.6 percent — do not have a storm box outside of which they must remain. 

“We submitted a hurricane plan to the insurance company several years ago detailing the location and steps we would take to protect the boat,” said the captain of a yacht 100-120 feet in the industry more than 15 years. “As a result we have no limitation within the U.S. East Coast (Florida to Maine) as to time of year or itinerary.”

“We have no restrictions with Chubb but we must have a hurricane plan,” said the captain of a yacht 80-100 feet in the industry more than 30 years. 

Just 34.4 percent do have a box inside which they cannot be during storm season unless they agree to a higher premium or reduced benefits. We thought that would be higher, considering how many captains complain about hurricane insurance and this box.

“The insurance requirement that requires yachts be out of an area for six months a year is neither realistic nor beneficial to the yachting community or marine industry, especially refit and charter companies,” said a captain in the industry more than 30 years. “It generates unfounded fear and is only further crippling our already-failing industry here in Florida.” 

We were curious if insurance companies all use the same latitude, for example, Beaufort, NC. They don’t, though they are mostly in that general area.

Captains listed the following locations as their box boundary: Coinjock, N.C.; Orient, N.C.; Hatteras, N.C.; Beaufort, N.C.; and Morehead City, N.C.

Others are a little farther afield: Baltimore; the Florida-Georgia border, which is St. Marys River; Georgetown, Bahamas; Bermuda; North Carolina-Georgia border.

“The premise that storms only happen in Florida and Gulf waters is created by the same people who believe trailer parks magnetically attract tornados,” said a captain of a yacht 8

less than 80 feet in the industry more than 30 years. “Storms and inclement weather happen everywhere. I find it incredible to be told that we must vacate an area that might have 20 or more knots of wind six times a month and move to an area further north that has 40 knots or more eight times a month during the same period. Look at the pilot charts.”

“I weathered Hurricane Irene in Freeport, Grand Bahama, without any problem,” said the captain of a private yacht of 140-160 feet. “For those who were not there, the wind was not as fierce as was reported on TV. The Internet sites such as Windfinder.com and Windguru.com were much more accurate.”

And we were curious to know if the box restrictions coincided with storm season. In the United States, for example, the North Atlantic hurricane season is June 1-Nov. 30.

Most of those who responded are required to be outside their box by June 1, though a few are given until June 15 and June 30. One has until July 15.

On the return, most noted either Nov. 1 or Nov. 30, though some return on Nov. 15 and two return on Oct. 15.

One captain who noted he must be outside Florida for the entire hurricane season of June 1 – Nov. 30 said, “We are always back in Florida before Nov. 30. Sometimes we’re even in St. Maarten by then.”

Because we assumed more yachts would be restricted by a latitude issue, we asked several more questions about it. Interestingly, though, most of our survey takers answered these questions, as well, not just those few who are restricted by the box. 

Is the yacht ever inside the box during storm season?

The largest group — 41.7 percent of respondents — said they are allowed to be inside the box by paying a higher premium.

“I have operated in the Caribbean year-round for 10 years,” said the captain of a private yacht 180-200 feet in the industy more than 25 years. “In that time I have experienced three hurricanes: two in Ft. Lauderdale and Irene in Connecticut. None in the Caribbean. You can find underwriters for any policy; you just have to pay for it.” 

The next largest group — 38.3 percent — said that even though they are not specifically allowed, they accept the added risk and agree to pay a higher deductible and/or take fewer benefits in case of damage.

Just 20 percent of respondents said they plan their cruising to avoid storm areas until the date their insurance allows.

If you are in the storm box during the season, do you pay a higher premium?

The answers to this question were also interesting considering the conversations we’ve had with captains in South Florida in the summer (the peak of hurricane season) who say they sometimes just don’t tell the insurance company where they are.

Most of our respondents to this questions are more responsible than that.

Nearly 40 percent say they notify the insurance company at the beginning of the year of the time they plan to spend inside a storm zone.

“We are based in South Florida year-round, storm or no storm,” said the captain of a yacht 80-100 feet in the industry more than 30 years. “Presumably, that was factored into the premium but it is not separately itemized on any paperwork I have seen.”

The remaining 60 percent are evenly divided between notifying the insurance company when they breach the box and paying the extra premium at that time, not telling the insurance company at all and accepting the risk, and having no idea how it’s handled. (Presumably, the owner handles this aspect of the yachting experience.)

“Our policy deductible is doubled for a named storm and only if the boat is hauled out,” said the captain of a yacht 80-100 feet in the industry more than 15 years. 

“We don’t pay any additional premium nor have a higher deductible,” said the captain of a yacht 120-140 feet in the industry more than 25 years. “We stay in Florida and the Bahamas year round, which may be factored into the premium.”

“Insurers will not cover a vessel moored in Miami for the storm season, except Lloyd’s and the cost is twice the cost of mooring north of Miami in, say, Jacksonville,” said the captain of a yacht less than 80 feet in the industry more than 10 years. “Any coverage is hard to get for my 50-foot sportfish.”

But insurers charge what they charge for a reason, so we wanted to know how many captains and yachts are required to justify their plans. Does the yacht’s policy require a storm-preparedness plan?

Close to half of respondents said their insurance policies require a formal storm-preparedness plan submitted in writing.

The next largest group — more than a quarter of respondents — are not required to provide a plan, but are expected to diligently protect the vessel.

About 20 percent have a plan, but it’s informal.

And just below 10 percent simply e-mail the insurer when storms are near so they know where the yacht is and what the captain plans to do.

With storms recently following untraditional paths, we were curious to know Have you or the owner ever tried to negotiate the time or location requirements with the insurance company?

Most — 54.7 percent — have not.

“We’re already in Ft. Lauderdale during the season,” said the captain of a yacht 120-140 feet in the industry more than 10 years. “Our insurance carrier does not care where we are during the season. There are no riders based on weather or location of the yacht. This is premium insurance, but the client does not wish to have any restrictions.” 

Nearly a third of our respondents have tried to negotiate the policy’s terms.

A full 14 percent didn’t know.

Of those who have tried to negotiate terms, most received a favorable response, getting the following:

An earlier date to head south. 

“We asked the insurance company. They required a hurricane evacuation plan. The deductible went up. Very simple process.” 

“We just renegotiated our policy to allow us to travel south of Morehead City in order to get to Florida earlier than usual. If we agree to stay inside and have a storm-preparedness in place, we pay the premium during that time.” 

Deduction of annual premium at a fixed amount.

Permission to stay in the Caribbean. “It was accepted, but still had the standard three-times the normal deductible.”

Some haven’t, however.

“I think we need some flexibility in the travel dates, and if necessary, a sliding premium increase or higher deductibles for named storm damage if in the restricted areas during the prohibited dates,” said the captain of a yacht less than 80 feet in the industry more than 30 years.  

In light of the damage Hurricane Irene caused in the northeast United States, we were curious if it made a difference. Since Hurricane Irene’s passing, will you or the owner handle things differently for the rest of this storm season?

Most — 56.5 percent — will not, saying the storm didn’t impact their cruising season.

The next largest group — more than a third — said the storm didn’t really impact them, but they have dusted off their hurricane plans and making sure their equipment and supplies are ready.

Just 8 percent are altering plans, most paying the extra premium to get to Florida sooner and the rest changing their itinerary altogether.

And with the industry’s largest boat show coming to South Florida at the end of October, we wanted to know Are you heading to Ft. Lauderdale before Nov. 30 (the official end of hurricane season)?

Nearly three quarters of respondents replied that yes, they will be in traditionally hurricane-sensitive South Florida during hurricane season — insurance restrictions or not. 

“We do not pay a higher premium and the deductible was based on our choice of 1, 2 or 3 percent of value, not on the time of year or location,” said the captain of a private yacht 100-120 feet in the industry more than 15 years. “We are always back in Ft. Lauderdale before the boat show.”

Lucy Chabot Reed is editor of The Triton. Lawrence Hollyfield is an associate editor. Comments on this survey are welcome at lucy@the-triton.com. We conduct our monthly surveys online. All captains and crew members are welcome to participate. If you haven’t been invited to take our surveys and would like to be, register for our e-mails online at www.the-triton.com.

About Lucy Chabot Reed

Lucy Chabot Reed is publisher and founding editor of The Triton.

View all posts by Lucy Chabot Reed →

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