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Lightning strikes, collisions, crew misadventures. Smart yacht owners know they need to be prepared for all of them.
Yacht ownership brings unmatched freedom—quiet anchorages, open-water adventures, and the pride of running a yacht that is uniquely yours. But with great freedom comes great responsibility, and one of the smartest decisions a yacht owner can make is securing proper insurance. Believe it or not, yacht insurance is not legally required for private use, yet in practice it is highly inadvisable to function without it. John Jarvie is the managing principal of Fort Lauderdale’s Oversea Yacht Insurance, and the man IYG turns to for its insurance needs. He explains,
Insurance is not a legal requirement like car insurance if the boat is being used privately. You won’t be able to bring it to a marina or get crew or haul it out, but technically you don’t need it.”
Translation: You definitely need yacht insurance.
Insurance in the Blood
IYG chooses to work with Jarvie because he is the best. He was basically born into the niche world of insuring boats. His grandfather founded the family’s business, and Jarvie entered the field in 2006 in his hometown of San Diego before moving to Fort Lauderdale in 2009 to expand into the large-yacht sector. “This is a specific niche of the insurance space that you can’t go to school for,” he says. “You just need to get reps, make mistakes, learn the hard way, experience hundreds of claim scenarios, and have a mentor. I got lucky, I had the best mentor: my dad.”
Today Jarvie’s firm insures more than 10,000 boats worldwide, a scale built through persistence, networking, and industry relationships. He jokes that when he first arrived in Fort Lauderdale, he expected the phone to ring off the hook: “Forgetting that we were in a recession, I thought as soon as I plugged the phones in, people would be calling me nonstop to insure their yachts. It took a little longer than that, but we made it happen.”
The Two Pillars of Yacht Insurance: Property and Liability
Ever since yacht insurance became centralized in 17th-century London at Edward Lloyd’s coffeehouse, policies have maintained similar basic structures. According to Jarvie, a policy is made up of two major components: property and liability.
Property Coverage
This covers the yacht itself—its hull, machinery, fixtures, tenders, toys, and equipment. It can even include items many owners don’t realize can be insured. “Fine art and cash can be insured on a yacht policy,” Jarvie says.
Furs, valuable clothing, jewelry, those too. But they’re typically excluded unless you specifically request and ‘schedule’ it. A yacht policy won’t cover your chopper or submarine unless you ask for it. Just the yacht itself.”
To avoid over-insuring or under-insuring, the yacht’s value is typically insured for what you paid, adjusted over time. “If you paid ten million for your boat, that’s what it will be insured for, accounting for depreciation of course. There are exceptions to every rule, but this is the standard protocol,” he says.
Liability (P&I) Coverage
Liability, also known as Protection & Indemnity (P&I), protects owners against claims involving injury, environmental harm, or property damage caused by their yacht. Surprisingly, extremely high limits are available at relatively low cost:
You can get up to a billion dollars of liability for $15,000,” Jarvie explains.
This affordability exists because of longstanding P&I clubs. These massive global pools are funded by commercial marine operators like Carnival and Exxon. Their contributions partially subsidize yacht coverage, making high limits accessible.
But this is not unlimited protection. In most cases, Jarvie says, “under the Limitation of Liability Act (LOLA), the most a boat owner can be held accountable for is the value of your boat after the loss,” with certain exceptions due to negligence or fraud. When negligence is involved, liability can skyrocket far beyond the yacht’s value.
Real-World Stakes
Jarvie tells the story of a yacht involved in a major liability case after an assault occurred aboard while it was at a shipyard. The victim was awarded $70 million in the county in which the sexual assault took place. The yacht had only $6–7 million in liability coverage; the insurer paid that, but the remainder was pursued through the yacht itself. They even tried to pursue the owner personally. In this case, the yacht was accused of “negligently hiring, selecting and retaining crew members with dangerous propensities.” This nuclear verdict scenario is exactly why yacht owners, typically those spending more than $15 million, should look into higher P&I limits.
Modern Risks
Yachts and boats today are bigger, faster, and more technologically complex than ever. Four- and five-engine outboard setups, once rare, are now common. They are eye-popping for sure, but not all insurers are comfortable with them.
The obvious reason it’s a problem is because more engines typically makes the boats go faster,” Jarvie explains. Some vessels can reach 95 mph, speeds approaching true go-fast territory. “Even if you keep your Ferrari in the garage and never race it, you still own a racecar, and you need to insure it that way,” says Jarvie. “Watercraft insurers are more attentive to the maximum speed compared to auto insurers.”
Beyond high-speed problems, there are other unfortunate instances insurers see quite a bit. Injuries to crew are often unavoidable and they can get quite expensive, especially when the Jones Act is applicable. Tenders get lost while towing, and are historically one of the most common insurance claims Jarvie has seen. And lightning strikes have become of growing concern as yachts have become more and more computerized and dependent on electronics. And then of course there is theft (particularly in Florida), which also heavily targets electronics.
Conclusion
Yacht insurance protects owners from all sorts of hindrances, up to and including personal financial catastrophe,” says Jarvie.
“And a good broker knows this, and will be involved from the very beginning making sure their clients are safe and sound. That’s one thing I’ve always admired about the guys at IYG. They are always on top of this stuff. They get involved in the insurance process early, and their diligence sets them apart.”
