Piracy off the Somali coast has been a threat to international shipping since the Somali Civil War entered its most devastating phase in 2005. Not only have the rising acts of piracy contributed to an increase in shipping costs and impeded the delivery of food aid shipments, it has resulted in hundreds of millions of dollars paid as ransoms–more than $150 million in 2008 alone.
But, piracy is not just a risk confined to the Somali coast and commercial shipping. According to the Web site “Yacht Piracy: Information Centre for Bluewater Sailors,” the number of attacks on yachts in recent years is believed to have “dramatically increased.” Actual numbers aren’t possible since many cases simply go unreported. Nevertheless, the organization estimates that some 300 yachts have been attacked since 1996.
While piracy attacks are still rare in most areas of the world, the Information Centre warns yacht owners to be wary of regions considered to pose a higher risk of piracy, such as the Sulu Sea (Philippines), the China Sea (especially the South China Sea around Indonesia), the coastline of Somalia and the Gulf of Aden, considered the most dangerous part of the world for piracy attacks. In April 2009, the yacht Tanit, crewed by two couples and a young boy, was sailing between the coast of Somalia and the Seychelles in the Gulf when it was attacked by pirates. All five crewmembers were taken hostage by what are believed to be pirates from Somalia. Three other yachts in 2008 and 2009 cruising the same waters also were attacked. Waters outside the countries of Brazil, Venezuela, Nicaragua, Honduras, Guatemala and Ecuador also are believed to be pirate havens.
Not all insurance policies cover theft and property damage losses caused by piracy attacks, with some insurers deftly excluding the coverages. Be sure to sit down with an insurance broker to dig into the details.
Andrew McElwee is executive vice president of Chubb & Son and chief operating officer of Chubb Personal Insurance. He can be reached at [email protected].