Everything you should know about boat insurance in Hong Kong

Boat insurance covers any damage, loss, and legal liabilities of your boat caused by accidents, including the following three types:

Compulsory third-party risks insurance

Mandatory for all boat owners in Hong Kong, this type of insurance only covers the liability for death or bodily injury to third parties, with the minimum compensation of HK$5,000,000.

Third-party liability insurance

This type of insurance only covers property and liability risks. The commonly used Institute Yacht Clauses includes the following benefits:

• Coverage of specific perils such as perils of the sea, fire, lightning, and explosion.

• Exclusions include:

(i) Outboard motors dropping off or falling overboard.

(ii) Personal effects.

(iii) Consumable stores, fishing gear and moorings.

(iv) Ship’s boat not permanently marked with the parent vessel’s name.

Hull and machinery insurance

As its name suggests, this type of insurance covers breakdowns and accidents of the yacht’s hull and machinery.

When purchasing boat insurance, it is important for you to specify which type of insurance you are after. If you just say ‘third-party insurance’, the insurer may purchase ‘compulsory third-party risks insurance’, which only covers the liability for death or bodily injury to third-parties.

Apart from the three types of insurance mentioned above, some insurers go the extra mile by offering extra coverages, such as:

Pleasure craft protection

It covers all financial loss due to theft, malicious damage, latent defect, repairer's negligence, third-party liability, fires, poor weather, lightning, or piracy.

Third-party protection

Damage to other properties or accidents caused to other people during the boat trip is also covered.

Property protection

It covers loss, damage or theft of specific contents, personal possessions or sporting equipment.

Post-accident protection

It covers relocation, salvage, search, vessel inspection, and motor cleaning expenses when the craft is damaged or in distress.

Size and volume of the boat

The bigger the boat is, the more passengers it can carry, and the higher the premium will be.

Materials of the boat

The insurer will impose a higher premium for yachts made of wood. However, most yachts nowadays are made with glass fibre.

Engine power of the boat

Much like automobiles, boats with higher engine power can travel faster and face greater risks, and thus are charged with higher premiums. You can refer to the ownership/operating license for your engine’s type and power.

Use of the boat

If you’re not only cruising in Hong Kong waters, but also going to other places such as Macau, attending sea races, or lending the yacht to others (remember to declare it to the insurer beforehand), the premium will be more expensive.

Yacht club membership

Boat owners with a yacht club membership can moor their boats there, while others have to anchor their boats in public typhoon shelters. On a typhoon day, the shelter may get full and the boat owner may have to risk anchoring their boats elsewhere.

Boat owner’s history

The boat owner’s experience in sailing a boat, and whether his boat has been involved in an accident in recent years will also affect the premium.

If the Observatory has hoisted or expects to hoist the typhoon signal no. 3, depending on the insurance policy, some boat owners may be required to moor their boats at the typhoon shelter within a specific time period as stated in the terms, otherwise their claims may be rejected.

Besides, new boat owners will usually hire a full-time employee to sail or take care of the boat. Under this circumstance, the owner must purchase an employee compensation insurance for his staff.