As most agents have come to understand, yacht manufacturers can be held liable for undetected damage to craft that they build or repair that can often go unnoticed at first. While they may perform tests with the intent to ensure that the boat is seaworthy, and all parts are working properly, there is always the possibility that issues may become apparent at some later date.
Once a boat owner reports or claims that there was a malfunction of some sort, the manufacturer needs to address the issue. Coverage through a yacht builders insurance program would help to cover the cost for repairs. Keep in mind, however, that a hidden defect could also be viewed as either 1) a manufacturers defect, or 2) a latent defect.
Marine insurance provides coverage for a variety of losses
With proper marine insurance coverage in place, any losses will be covered, unless there is a specific exclusion that applies. Most policies provide sufficient coverage for all types of exposures.
Many policies may also exclude latent defects, but will still cover any damage that is a result of a latent defect if its determined that the defect was the cause of the damage to the insureds property in the first place. Brokers should speak to clients to determine their individual circumstances and which risks and exposures may adversely affect their company to determine the proper coverage needed.
Other types of coverages to consider
One of the more important policies for yacht builders to invest in is builders risk insurance, which covers a vessel from the start of construction through the final delivery to their customer. Yacht builder insurance coverage also includes launching and sea trials area, as well as collision liability for accidents occurring while piloting a vessel, and protection and indemnity (P&I).
In addition to builders risk, your client will likely need general liability, products liability and may also need various property coverages, including commercial auto coverage, inland marine coverage, pollution coverage, and employers liability coverage. These policies can all be purchased through any one of several yacht builders insurance programs in the area.