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Deposit insurance for yacht charter: is it worth it?
Short answer
The security deposit is your share of any damage to the charter yacht, however small. Deposit insurance refunds what the base keeps, provided its conditions are met and your paperwork is in order.
Every bareboat charter starts with a security deposit, often a few thousand euros depending on the yacht and the area. It is not a cleaning bond. It covers the excess on the charter company’s hull insurance, so if the boat is damaged during your week the base keeps the cost of repair up to the amount of the deposit. A bent stanchion, a damaged propeller or a torn tender is often enough to lose most of it.
Deposit insurance reimburses the amount withheld. It is sold for a single charter or as an annual policy, and the premium follows the size of the deposit. Some bases also offer a non refundable damage waiver that reduces the deposit, which is worth comparing with an independent policy before you book. Whether either pays off depends on how often you charter and how well you know the boat and the area.
The conditions matter more than the price. Check whether gross negligence is excluded, whether a written damage report signed by the base is required and how quickly a claim must be notified, whether the tender and outboard are included and whether an excess of your own remains. Without a damage report signed by the base very few insurers will refund anything, so it belongs in your bag before you leave the marina.
Single trip or annual yacht charter deposit insurance
Deposit insurance is sold for a single charter or as an annual policy. Single trip cover is usually bought with the booking or in the days before you travel and runs for that charter week. An annual policy covers every charter in the year up to a fixed deposit amount, which suits people who sail in Greece in spring, in Croatia in summer and perhaps take a long weekend on the Solent in between.
With an annual policy the sum insured is the figure to watch. It should match the highest deposit you expect to pay during the year. A catamaran or a larger yacht can carry a much higher deposit than last year's boat, and anything above the sum insured stays with you. Check the amount each time you book a new charter, not when you hand the keys back.
Comparing deposit insurance: the conditions that matter
When you compare yacht charter deposit insurance, read the conditions before the price. Check whether you carry an excess of your own, whether gross negligence is excluded and whether the tender, outboard and sails are included. Some policies also refund a deposit withheld for lost equipment, others just for damage to the yacht. Ask too whether several incidents on the same charter are refunded together up to the full deposit.
The second thing to check is what you must do after an incident. Almost every policy asks for a damage report signed by the charter base and for notification within a set period. Once you are home it is hard to obtain a report you forgot to collect at check out. Even a well written policy is of little help if the paperwork it asks for is missing.
Deposit insurance for boat hire, motorboats and canal boats
Charter bases for sailing yachts are not alone in asking for a deposit. Companies that hire out motorboats, day boats, canal boats and river cruisers also hold back money after damage. Deposit insurance works the same way in principle, but some policies cover yacht charters of a minimum length and leave out short hires. Read whether hired motorboats and single day rentals are expressly included before you buy.
On hire boats the deposit is often lower, but bumps in locks, narrow canals and crowded harbours are common. Photograph the boat all round at handover, including the hull, propeller and fenders, and make sure any existing damage is written on the handover sheet. That helps with the hire company and with your insurer if there is later a question about when a scrape happened.
What deposit insurance does not pay: loss of use and cancellation
Deposit insurance refunds the deposit withheld and nothing more. If damage ends your trip early, or the base charges for the days the yacht cannot be chartered while it is repaired, that is a loss of use claim. Separate charter loss of use cover exists for this, and not every deposit policy includes it. Ask about it specifically before you buy, especially for longer charters in high season.
Cancellation is another separate risk. If you have to cancel before the charter starts, for example through illness, you need charter cancellation insurance, because deposit insurance starts to apply once you have taken over the yacht. Many providers sell deposit, loss of use and cancellation cover as a package. Read the limit and the excess of each part separately rather than relying on the package name.
When the charter base calls in a surveyor
For minor damage the base usually prices the repair itself and deducts it from the deposit at check out. For larger damage, especially to the keel, rudder or rig, the charter company may call in a surveyor before agreeing a figure. That can take longer than your flight home allows, so make sure you leave with a signed damage report, a copy of the check out inventory and a note of who will send the final repair cost.
Ask the base for the surveyor's report and the repair invoice once they are available and pass them to your deposit insurer. If the amount withheld seems high for what happened, the report is where you see what was assessed. Keep photographs you took yourself, both at handover and after the incident, because they are often the clearest record of the condition of the yacht when you had it.
Worth remembering
Every
bit of damage comes out of the deposit first
The report
decides whether it is refunded
Deposit insurance is only as good as its conditions and the damage report you bring home.
Questions
What owners ask us about this
When is deposit insurance worth buying?
Mainly when the deposit is high, when the yacht is new to you and when the itinerary includes crowded harbours with many berthing manoeuvres. If you charter several times a year, compare an annual policy with single trip cover.
What do I need to make a claim?
Usually the charter agreement, the check in inventory, a damage report signed by the base and proof of the amount withheld. Photographs of the damage help as well.
Is a damage waiver the same as deposit insurance?
No. A damage waiver is a fee paid to the charter company to reduce the deposit and is not refunded. Deposit insurance is a separate policy that reimburses the amount withheld under its own conditions.
Does deposit insurance cover a hired motorboat?
Often, but not always. Some policies apply to yacht charters of a minimum length and exclude short hires. Check that hired motorboats and day rentals are expressly included.
Does deposit insurance pay if I cancel the charter?
No. Cancellation before the trip needs charter cancellation insurance, and lost charter days after damage need loss of use cover. Deposit insurance applies once you have taken over the yacht.
Related
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