Top Ways of Protecting your Yacht

| 7 Sep 2012 | 1 Comment

The best ways to protect one’s yacht is a recurring subject posed by yacht owners worldwide. With heightened risks of pirate activity, financial disasters, and stricter maritime regulations, vessel protection has become a frequent topic of conversation in the yachting industry. Irrespective of whether you own a private or commercial vessel, understanding the key elements to protecting it is fundamental to ensuring the yacht holds its value and avoids unnecessary exposure to risks, and financial constraints. This article aims to identify the top ways of achieving asset protection over your vessel.

Qualifications, certificates, and essential knowledge

protect yachtGeneral boating knowledge is vital for the smooth running of your yacht, and by having a basic grasp of maritime rules, regulations, and safety measures; you can significantly enhance the level of protection achieved over your vessel. Taking courses on safety “codes of practices” and first aid will help to prevent unnecessary risks, and prepare you in the event of onboard injuries and accidents at sea.

Depending on the speed of a vessel, its intended use and voyage routes, owners may be obliged to obtain certification and licensing before the vessel can be used for private or recreational purposes. Oftentimes, boat licenses are only applicable to vessel owners who have motorized powerboats, however, the general ethos of the yachting industry is to be as educated as possible with regards to operating a yacht.

A popular method of demonstrating your ability as a skipper is to undertake the RYA (Royal Yachting Association) Day skipper course, after which you will obtain the International Certificate of Competence (ICC) -a widely recognized certification. The RYA is a recognized UK sailing organization and statutory body, in which the training standards and programs are carried out worldwide.

Yachtmaster Qualification: This form of qualification demonstrates the holder’s competence and ability in operating a sailing boat or powerboat in certain conditions. There are three licensing options:

1)  Yachtmaster Coastal: Permits the skippering of a yacht on coastal cruises of up to 60 nautical miles offshore.

2)  Yachtmaster Offshore: Permits the skippering of a cruising yacht of up to 150 nautical miles from the harbor.

3)  Yachtmaster Ocean: This qualification is the most advanced and permits the skippering of a yacht on routes of any length in any location in the world.

Obtaining a Yachtmaster qualification from the RYA effectively proves to the required authorities in the yachting industry that you show due diligence, skills, competence, and knowledge to operate your vessel safely.

Vessel Checks

Asides from preparing yourself as a skipper, it is important to prepare your vessel before any voyage on water. This extends to having regular vessel MOTs, and obtaining certification to show the vessel meets the appropriate maritime health and safety standards. A Safety Vessel Check (SVC) ought to be carried out periodically; this type of safety measure identifies the vessel’s ‘seaworthiness’ and can be used to demonstrate due diligence to marine insurance companies.

Yacht Registration

yacht registrationDeciding on the jurisdiction to register your vessel is integral to achieving effective asset protection over your craft. In theory, registering your vessel in a flag state that offers low registration costs and ease of registration is beneficial for any yacht owner, however, many other factors should be considered in order to ensure your asset is protected to the highest of standards.

The level of privacy that a registry can guarantee is key in protecting your vessel. It is also advisable to conduct thorough research on the legislations and regulations enforced and followed by your selected registry to ensure that the intended use of your vessel complies with existing boundaries. For example, some registries restrict commercial activity on their registered vessels.

Another factor to consider is the tax implications of your selected flag state. Many jurisdictions entice yacht owners through low or zero taxes and favorable tax systems. Although tax planning may not be the sole concern in choosing a flag state, owners can profit significantly from effective tax planning over their vessel.

Protecting your yacht through a corporation

Yacht owners should be aware that personal assets, such as a yacht, are at risk where the vessel owner faces bankruptcy or severe financial difficulties. Usually, persons who declare bankruptcy, and who own a yacht, are forced to sell their vessel in order to pay off creditors. In cases where the vessel is purchased on finance, the yacht finance broker has the right to repossess the yacht if payments are not made.

One way to significantly enhance the level of protection, and effectively shield your vessel from financial crisis, is to purchase the yacht under the name of a limited liability company. A good example of an effective corporate structure for this purpose is a Delaware LLC. Yacht owners will not only benefit from a highly favorable tax climate and high levels of privacy, but they will also be exempt from personal property tax, stock transfer tax and sales tax.

Marine Insurance

In a similar way to covering a car for damage, or damaging other vehicles on the road, yachts require the same form of insurance protection at sea, and it is paramount that the necessary insurance precautions are taken.

marine insuranceObtaining marine insurance is an absolute necessity if you are to achieve asset protection over your vessel. Although it is not a legal obligation to insure your boat, yacht finance companies and banking institutions usually request that you provide proof of insurance before they will provide any form of finance. Further to this, many marinas now require vessels to have, as a minimum, third party coverage, before they will allow them to dock.

It is advisable for all yacht owners, regardless of the size and intended use of their vessel, to obtain comprehensive marine coverage for theft, damage, collision, fire, hurricane, and third party liability. This type of coverage will help to protect both you as a vessel owner, and the vessel from liability in events of accidents, loss, and damage at sea.

Although marine insurance can be costly, as a yacht owner, you may qualify for large discounts on your marine insurance premium if you hold certain marine qualifications. It is therefore important to research heavily into the best marine insurance companies available to obtain a favorable insurance rate and wide coverage policy. It is also important to obtain an insurance policy based on the agreed value of the vessel and not the actual cash value; this is because the agreed value policy will pay out the total market value of the vessel. Actual cash value policies however, take into consideration depreciation over time and other factors, meaning that if your vessel is destroyed, you will not receive the full market value price of the yacht.

Popular marine insurance policies include:

  • Voyage policy
  • Hull Insurance
  • Protection & Indemnity (P&I)
  • Liability insurance
  • Port Risk policy
Protect your valuable asset from theft with the additional tips below:
  • Keep a detailed inventory of the equipment onboard the vessel including electronic equipment
  • Get a hull identification number (HIN)
  • Install an alarm system on the yacht
  • Secure and store all valuable equipment and tools

Marine asset protection solutions are essential to the profitable maintenance of a vessel

The purchase, and ongoing operation costs of a yacht, whether it is used for private or commercial use, can be a heavy financial pressure on yacht owners. The financial commitment of owning a vessel is ultimately huge, and when compared with the immeasurable risks at sea when the yacht is on a voyage or when docked, the importance of asset protection becomes significantly apparent. It is therefore crucial for vessel owners to adopt the necessary asset protection measures as mentioned above to ensure they are personally and financially covered from liability and financial loss.

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  1. Ian says:

    There’s this thing they have called the US Navy and the Royal Navy. They alradey mantain a proximity presence in those waters. More ships are going in with armed guards too.This whole pirate thing is being completely blown out of proportion anyway. You know how many ships use those waters every day compared to how many attacks have taken place ? 50 ships a day use those sea lanes, and on average, there have been 5 attacks a year.

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