August 4, 2010

Five Seaworthy Questions to Ask Yacht Owners

Savvy wealth managers are trying their best to assist clients, on the one hand, to maintain their yachts as valuable investments and, on the other hand, to recommend ways in which to lower yacht-related expenses.

While the impulse may be to recommend reductions in crew size and staff or hold off on routine maintenance, both can backfire, costing more in the end than they initially save. Rather than toss out the baby with the bathwater, here are some smart questions to pose to clients to help them navigate the difficult waters:

1. Is it possible to restrict travel this season to adjacent U.S. shorelines and not ride the high seas to the Mediterranean? If this is the case, it can reap a significant reduction in insurance premiums.

2. May I schedule some time with the insurance broker of the yacht to see if the insurance limits are commensurate with the craft's actual value? In the current marketplace, with many yachts plunging from peak values, this may garner further insurance premium decreases.

3. I want to be sure that you are fully covered for the broad range of perils encountered, from growing piracy threats to seemingly more mundane risks, like a waiter or bartender hired to serve an occasion on the ship and who is injured on board. I have some concern about potential policy exclusions that, with your permission, I would like to address with the broker. Are you agreeable?

4. Recent events have given pause over the financial stability of the yacht's insurer. May I conduct further due diligence in an effort to discern whether or not another insurance company may be a more financially prudent alternative?

5. When was the last time a certified marine surveyor assessed the vessel's condition?

The bottom line is that many yachts today are over-insured or under-protected. By asking the right questions, owners can rest assured that they have optimum insurance protection from a financially secure insurer that addresses and absorbs yacht-related risks--at a price that assumes real market value.

Andrew McElwee is executive vice president of Chubb & Son and chief operating officer of Chubb Personal Insurance. He can be reached at amcelwee@chubb.com.

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