Selling a boat: why hull cover may follow the boat and liability may not

Autumn is a busy time for used boats. The season is over, storage costs money, and owners who want something bigger or smaller sell the sailing yacht or the motor boat before the winter. The sale contract lists the hull identification number, the engine, the inventory and the price. What becomes of the insurance is usually not in it. Yet the answer can differ sharply between the two main types of cover, and a buyer who assumes that everything simply carries on may find out otherwise at the worst moment.

Start with the hull cover. Many wordings contain a clause on the sale or transfer of the insured property, and it is worth reading closely. Under German law, section 95 of the Insurance Contract Act (VVG) provides that the buyer steps into the existing contract in place of the seller at the moment ownership passes, and German hull wordings commonly repeat that rule. Other markets handle it differently, and some policies simply end when the boat is sold. The practical questions are the same everywhere: does the cover transfer, from exactly when, and what counts as the moment of transfer. Where it follows ownership, a signature, a sea trial or a deposit is not that moment.

Where hull cover does transfer, the details matter. Under the German rule, seller and buyer are jointly liable for the amount due for the current insurance period. Both sides can usually get out: the insurer may give the buyer notice within a set period after learning of the sale, and the buyer may cancel with immediate effect or at the end of the period, again within a deadline. Look for who pays for the rest of the period if either side cancels. For the buyer, a transferred hull policy means a contract the buyer never chose, with the previous owner's sum insured, deductible and cruising area, which may not fit the new plans at all.

The next clause to find is the duty to report the sale. Wordings based on the German rule require the sale to be reported without delay and in writing, by either seller or buyer. If nobody reports it, the insurer may be released from paying a claim, but typically only under narrow conditions: the loss happens more than a month after the report was due, and the insurer shows it would not have insured the buyer. Check what your wording says, and remember that a short email with a copy of the sale contract on the day of handover removes the question entirely.

Liability cover often works the other way round. Many third party liability wordings state that the contract ends automatically when the insured boat is sold. The cost is then usually settled pro rata to the date the insurer is told, and any balance is refunded to the seller, who may be asked for proof of the sale. For the buyer this is the gap that matters most: from the moment ownership passes, the buyer is out on the water without liability cover unless new cover is in place. On the delivery trip, when launching at a new marina or when berthing for the first time in a strange harbour, a claim by a third party is not something hull cover will answer.

For the seller, the sequence is simple: record the date and time of handover in the contract, report the sale in writing, attach a copy. For the buyer of a used trailer boat, jet ski or yacht, a transferred hull policy is at most a bridge. It rests on someone else's details, may end at short notice and brings no liability cover with it. The safer route is to arrange liability and hull cover to start at the moment ownership passes, then decide within the deadline whether to cancel the old contract. Before handing over the keys, both sides should know which clauses in the policy govern a sale.