Alliant's leaders discuss the unprecedented insurance market

The insurance market is going through significant changes, many of which we have mentioned before: more difficulty in securing insurance, higher premiums nationwide, even non-renewals. But the situation continues to evolve, and there are early signs that the market will stabilize. To give you a clearer idea of where things stand and what the future may hold, two members of our leadership team share their thoughts. Is the current market as tough as everyone says? Cindy Zobian, EVP, Managing Director: Simply put, we have never seen market conditions like these before. In essence, it’s a capacity issue: the rate of natural disasters—and the damage caused by them—have increased exponentially while home values and rebuilding costs have gone sky high. Mark Recht, SVP: Case in point: we just got another announcement from a carrier about adjustments caused by inflation. Unfortunately, higher premiums and insurance challenges aren’t just happening to property owners in areas prone to most natural disasters, such as California and Florida. Those are countrywide phenomena. There is currently a cloud casted over the market. CZ: That said, we can see glimmers of light at the end of the tunnel! Well, that’s hopeful. What makes you optimistic about the future? MR: We saw a similar market a while back in Florida after Hurricane Andrew, but within a few years, things had shifted for the better. Homeowners learned to incorporate new and better risk-mitigation methods, the government placed stricter building codes, technology helped us to map the riskiest areas, and we incorporated more flexibility into insurance programs. Together, that all worked to stabilize the situation. As for the current moment, Cindy and I just met with reinsurers [Note: As a reminder, reinsurers assume a portion of carriers’ risks] and they told us they are in the process of figuring out how to add more capacity. If they can take on more risk, carriers will be able to as well. CZ: We have seen many insurance trends over the years, but, ultimately, they come down to finding a middle ground in the marketplace. That’s what the industry is striving for again today. I’m not saying the problems will be solved in a year, but our decades in the business have us hopeful that things will get easier eventually. At the same time, I don’t think insurance is going to be a buyer’s market again. What is Alliant Private Client doing to help policyholders in this market? CZ: We are being proactive. We don’t wait to get non-renewal notices or other surprises. Our team is constantly on the lookout for unexpected solutions to lost coverage. MR: For instance, clients are becoming more comfortable with unregulated solutions, so that has allowed us to be more creative in our use of non-admitted options. And without being arrogant, the fact that we are one of the largest brokers in the country gives us significant clout among carriers who have begun to prioritize trading partners. We are also working more with different organizations, and sometimes even direct writers, to be able to offer solutions that make things easier for our clients. And what can clients do to make things easier on themselves? MR: First and foremost, they need to recognize that it really is no longer a buyer’s market. These days, the priority is finding a suitable solution; pricing is secondary. Also, they should consider consolidating insurance solutions under one broker because carriers may, for example, be willing to take on your multi-million-dollar house in California’s brush territory if they are also insuring your less-expensive ranch in Idaho. You lose that benefit if you are dealing with multiple brokers. CZ: Also, when you get a bill, pay it on time. If you let your policy lapse, you might not be able to get it back. And be really thoughtful about making claims. Putting through even a $50,000 claim might hurt your premiums and renewal prospects. Be sure to discuss every potential claim with your broker first. Then they will help guide you on whether or not it’s in your best interest to put forth that claim. MR: And whenever you receive notice of a critical requirement—be it to trim brush or put in vents—follow through. Maybe you could ignore these in the past, but not anymore. Today, failure to comply might result in a policy cancellation. CZ: And lastly, of course, our clients should know that we are always here to help with questions and concerns about their risk management strategy. ...

After the gavel drops: protecting your investment in fine art

Perhaps you’ve been a regular at the Armory Show for decades and accumulated quite a few pieces. Or maybe you are daydreaming about the triumphant drop of the gavel at Sotheby’s. Regardless, few things match the joy of a new acquisition. But as you contemplate your next purchase, consider this reality: whether made of canvas or marble, most fine art is fragile - easily damaged, hard to protect, and alluring to steal. And if heaven forbid something should happen, it’s irreplaceable. That’s why we recommend putting together a plan and a team to keep your artwork safe. Here are some of the essential steps to properly protect your art collection. The paperwork is important— With a lawyer, figure out what entity will be the legal owner of the art: you personally, an LLC, a trust, etc. The choice depends on your particular tax and estate situation. — You want insurance in place the moment you take ownership of the art at the gallery. You have a few decisions to make first: You can get a policy that covers only scheduled items (those you identify to the insurance company) or one that covers your entire collection as it evolves. Be sure to discuss this with your broker to ensure all works are included. You also need to determine how you want to set the value for each work. Will it be the amount you paid or its market value at the time of the loss? Your insurance broker should explain the costs and benefits of all the options. Buy the real thing— There are a lot of forgeries in the art market. Avoid them by doing business only with reputable dealers and hiring independent advisers to double check. — The work may be real, but if it was stolen by someone 65 years ago, the original owner could demand it back and leave you with nothing. Carefully examine the work’s provenance to make sure you are buying it from someone who has the right to sell it to you. — Inspect the work’s physical condition. It’s silly to spend tens of millions of dollars on a painting you have only seen on the website of a foreign auction house. If you can’t be there yourself, hire an expert to check it out before you bid. Transport it safely— Even if you’re only moving the drawing from a New York gallery to your home in Westchester, don’t casually throw the box in the back of your SUV. Hire packers and moving companies that specialize in handling fine art. Similarly, if you need to store your purchase, use only warehouses that have the appropriate climate control and security. — Document the work’s pre-shipment and post-shipment condition so you can prove any damage later. Again, there are experts who can do this for you. Give it a proper home— Many homes are filled with hidden hazards for fragile artworks. Sunlight can cause fading and heat or smoke from your fireplace can be harmful. Hidden wiring and water pipes can cause heat and occasionally explosions or floods. Also, you should hire a professional to make sure you install your art in a safe location. — Not only is location in the home important but don’t forget two-and four-legged threats. How well will that statue hold up after an accidental run-in with a child or pet? Is the painting at risk of a stray elbow at your well-attended holiday party? Sometimes it’s prudent to invest in a specialized case (especially for those oversized pieces) or other protective measures. — Every member of your domestic staff should be trained in the proper care and protection of your collection so that they don’t clean the Winslow Homer with Windex. — If you and your art live in an area prone to earthquakes, hurricanes, wildfires or other periodic natural disasters, have a contingency plan in place. Do you want custom crates ready so the most valuable pieces can escape with you and your family? Is there a structure that could protect your unmovable outdoor sculpture in case of a storm? Share carefully— If the MOMA wants to borrow one of your pieces for a major retrospective, enjoy the validation and make sure your investment is protected. The museum’s insurance policy should protect the art from the moment it is taken off your wall to the moment it is returned but it can’t hurt to talk to your broker and examine the policy’s details together. [We once advised a client before loaning a piece to a prominent New York City museum and noticed a glaring exception to the institution’s very comprehensive coverage: acts of terrorism were not covered.] It is important to stay vigilant as a fine art collector. Your pieces may be eternal but the market is temporal - so having your collection regularly appraised will help document its value in case of a loss. As you add new pieces to your collection or rearrange your artwork in various homes, take note of the steps above to ensure you are properly protecting your works. And, as your annual renewal rolls around, be sure to check your insurance policy. Older policies had restrictions on coverage, exempting losses from terrorism and some international travel. Now you can get those, and other perils covered. Make sure you work with a broker, with deep experience in the fine art market, and work together to ensure each piece of art continues to bring you the same delight as the moment you spotted it. ...

The home buyer’s guide to insurance

As the home buying surge continues nationwide, we want to help clients better understand how insurance fits into today’s purchasing process. Issues like climate change and aging infrastructure have transformed the homeowner’s insurance market, making it harder to obtain a policy and more expensive to keep one in place. As such, it behooves potential owners to consider insurance options before committing to a home, no matter how great the architecture or location. By incorporating these five simple steps into your real estate purchase, you will make a more informed decision while house hunting and better protect your dream home once you have the keys. 1. Talk to your insurance broker before you sign the contract.Securing a homeowner’s policy is harder in today’s challenging market, especially if you are buying in a region prone to severe weather events. Before you submit a bid, contact your broker to get a location check so that they can let you know if either the specific address or general area is prone to insurance-impacting issues. Along with climate concerns and any claims history, carriers are looking at the type of home. For example, historic ones (infamous for costly rebuilds) and condominiums (known for leaks) can be less desirable than newer builds with up-to-date codes. You’ll have the results of your location check within a week, along with approximate premiums if coverage is possible. And if carriers have concerns about the property, you will find out what obstacles stand in your way, such as roads in fire hazard zones that are too difficult for fire trucks to access or a high likelihood of flooding. While this call is important for every buyer, it’s especially crucial for those buying a house sight unseen, as it’s another check against pitfalls down the road. Bonus tip 1: Before you make an all-cash offer or opt to forgo the mortgage clause in the contract, consider this: Banks won’t lend money to anyone without insurance (unless the buyer has permission to self-insure), and that clause provides some protection if you cannot otherwise obtain a policy. Once you sign a contract without a mortgage clause, you will have to go through with the sale regardless or forfeit your down payment even if you can’t get a policy. Therefore, an early call to your broker could help prevent such a dilemma. 2. Negotiate with insurance premiums in mind.What you learn from that location check can be used as leverage in your ongoing purchasing negotiations. In an area where insurance is hard to obtain, a seller might be willing to pay for any prerequisites to coverage—a backup generator or hurricane shutters, perhaps even fire-resistant landscaping—or reduce the asking price to compensate for the work you will have to do yourself. Either way, you can avoid incurring the additional costs connected with making the house insurable. 3. Stick with your trusted broker.Often, real estate agents suggest you talk with their insurance person to hurry the process along. In fact, that call might have the opposite effect as things can quickly get complicated when multiple brokers make inquiries to the same insurance company on behalf of the same homeowner. Here’s why: The manner in which a broker presents the property and homeowner to carriers greatly impacts the chances of obtaining insurance. And unfortunately, if a carrier declines to cover a property as a result of incorrect or badly-positioned information, your trusted professional’s hands are tied—it is legally impossible to overturn the decision. Bonus tip 2: If you are planning a major renovation before move-in, it is important that your broker knows, so they can speak to the carrier to incorporate whatever additional coverage might be necessary. Your broker should also review the insurance sections for all contracts with contractors and add any relevant certificates of liability and worker’s comp to the homeowner’s policy. 4. Don’t let cost be your sole consideration.Many people, after sparing no expense on their new house, suddenly become cost-conscious when they turn their focus to insurance. While that is understandable, you could be hurting yourself down the line. When comparing policies, you want to make sure your carrier is in good financial standing and is known for paying claims. Also ask, in the event of a catastrophic loss, whether they will replace your home to the same standards or simply fix it with whatever material is least expensive? Ultimately, the choice is yours but it’s worth knowing what you are —and are not—paying for. 5. Add as many layers of protection as you can.In the end, insurance carriers want to do everything possible to prevent loss, and it is in your best interest to consider their recommendations for how to do so. These might include clearing areas of brush, installing shutters, or strapping items down prior to a storm. Likewise, they will often suggest you install smart safeguards, from low-temperature sensors to water leak detection systems to centrally monitored fire and burglar alarms. We want you to revel in the excitement that comes with purchasing a new home. You can always rely on us to make the risk management process that goes along with that undertaking as simple as possible. ...

Don’t invite risk to your next party

Time to celebrate, and we hope it’ll be a wedding, graduation party, fundraiser or summer soiree to remember—but only in the good ways. Which is why we feel duty-bound to pause your preparations and talk about minimizing risks for (just) a few minutes. Maybe it’s the particular lenses through which we view the world, but we’ve seen too many festivities ruined by the late arrival of tort lawyers. To make sure that doesn’t happen at (or as a result of) your next celebration, we’ve compiled a list of what can (and often enough does) go wrong at celebrations - along with ways to mitigate the likelihood of that happening. You’ll also learn how to protect yourself in the event something does happen, or at the very least, how to prove that you tried your best to prevent any mishaps from occurring. How to avoid the problem of… ...someone getting injured: Use locks, guards (or both) to ensure guests and staff can’t go anywhere off limits. Pools are one of the highest risks at a celebration. Best to seal it off if no one is supposed to swim. For a pool party, we recommend hiring a lifeguard, ban diving, and clearly mark the deep and shallow ends. And we are not just talking the warning signs painted on the pool – place additional signage around the pool area for extra precaution. Trampolines are also danger zones, so unless you like to roll the die, keep guests’ feet on the ground. ...someone damaging or stealing items: If you have rare art or other valuables in the home, make sure to think through the likely flow of people to ensure nobody gets jostled into the Picasso or climbs on the Calder. Alert staff to anything needing special protection and, if you are still worried, hire someone to make sure that people keep a respectful distance for the Diebenkorn. ...damage to a rental space: While it’s a fabulous idea to have your anniversary party in the Metropolitan Museum of Art, hired staff should understand the venue’s rules. For example, no hanging the “Congratulations on 50 years” banner on the Temple of Dendur. (You laugh but....) ...a guest drinking and driving: The law increasingly holds whoever serves liquor is responsible for injuries caused by intoxicated guests, so give the bartender(s) clear cutoff instructions. It’s also a good idea to have someone watch guests as they leave so they can flag a cab for those that clearly need one. Alcohol and teenagers are a particular concern—know that whether or not you gave the okay for a keg party, you might be ultimately liable if the drinking happens in your child’s home. ...someone harassing or harming a high-profile guest: When the gossip columns are abuzz about the guest of honor at your upcoming book party or fundraiser, prepare for some unwanted attention. Have security in place to deal with paparazzi, gate crashers, or worse. And how to protect yourself in the event a problem happens... ...don’t assume you are covered through your homeowners or umbrella liability policy: Purely personal events in your home are usually covered, but it gets trickier if the event is, at all, business-related. It’s one thing to invite a few clients to your holiday party, and another to host a partners meeting. Even a fundraiser for a nonprofit organization could be iffy. Therefore, it is best to speak with your broker before the invitations go out so we can advise you on the best ways to mitigate your risk and ensure you are properly covered. ...put insurance in writing when hiring vendors: Have every contract, from renting a hall to signing on a caterer, explicitly state which party is responsible for liabilities and which policies must be in place. The expense can be significant, so negotiate insurance when you discuss other terms. A cheap catering hall with an expensive insurance bill is no bargain. Contracts should also specify that any subcontractor must have appropriate coverage. ...talk to your broker about whether you need special event policies: This coverage is typically combined with cancellation insurance. Note that these policies are precise in what they do and don’t cover. You might be able to make a claim if the bride gets pneumonia, for example, but not if it’s a case of cold feet. To sum it up, you should add checking your insurance coverage to your party planning list. Ideally you should call your broker before you sign a contract to rent a space or hire a caterer. That way you can get the details right, banish the dark thoughts of potential disasters, and go back to planning a celebration that will delight your guests and honor the occasion. ...

Risks in air: an aviation insurance overview

The majority of our clients spend a good deal of time traveling from place to place, high above the clouds. Some charter a private jet, others fly their own single engine aircraft, and many hop a helicopter to the Hamptons or LA to skip traffic. Almost all of these trips are uneventful, but as risk-management experts we know that often enough the friendly skies are not so friendly. In fact, the lawsuits and payouts resulting from crashes and other midair incidents have become so extreme that they have actually scared off some insurers. In the spirit of better-safe-than-sorry, we’ve created this brief of aviation’s inherent risks and the precautions and policies we recommend to minimize them. When you fly privateThough COVID-19 has caused havoc on commercial airline travel, it has been a boon for private charter companies. To reduce contact with the virus, travelers are flocking to charters. A majority of those bookings are being made by new customers, and industry experts believe that once those flyers experience the ease of this type of travel—check-ins only 15 minutes before boarding, no taking off shoes, direct flights, privacy—many of them will be hooked. From a risk-management perspective, however, there is a downside, and it’s one that should be addressed before one pulls up to the airport: You could be held liable should something go wrong on the trip because private flyers select aircraft providers and determine flight paths as well as schedules with the aircraft operating company. Don’t worry—there are ways to counter this concern, depending on your connection to the plane. If you are chartering:Ask for additional insured status. Once the charter company lists you in its insurance policy, you will be protected to the limits of its liability (ideally, a minimum of $25M for helicopters, $50M for turboprops and $100M for jets). This will lessen the burden on your own umbrella liability policy. If you fly private regularly, you might want to consider sticking with one charter company that will give you ongoing additional insured status. Request a waiver of subrogation. After payouts, insurance carriers often seek reimbursements from “responsible parties,” and as a charterer that could include you. Obtaining this protection limits a charter company’s insurer from going after your assets. If you own a jet—or a share of one:Make sure you are properly protected: Whether you own a piece of a plane, or all of it,—you’ve entered a higher realm of liability risk. Ownership means signing lots of contracts. Before you do, consult an aviation attorney and insurance professional to ensure you are aware of the risk and have mitigated the potential damage. When you charter a helicopterAutorotation notwithstanding, helicopters defy many of the laws of flight. If an airplane malfunctions, chances are it will glide, slowing its descent. Helicopters, which are traveling at lower altitudes to begin with, fall stone-like to earth. All of which is to say, even a minor accident in a helicopter can be very serious—causing broken backs and necks at best, disfiguring fires and death at worst. Obviously, underwriters know this, so insurance solutions are both significantly more expensive and somewhat limited. For example, one client of ours recently insured a six-passenger turboprop with $50 million in liability coverage for less than $30,000 a year; insuring a seven-seat helicopter in the same market cost a second client $130,000 annually, for a maximum liability of $25 million. So, if you’re thinking about purchasing a helicopter, you’ll likely need to consult a team of experts to get the maximum protection. If you’re chartering a flight, treat it as you would a jet: 1) get named as an additional insured and 2) request that waiver of subrogation. When you are the pilotIf you don’t get paid to fly, the insurance market considers you a hobbyist. And that means that, regardless of your training, you will be placed in a high-risk category. In other words, you’re looking at high premiums and low liability limits. A recent series of serious accidents and expensive settlements have made the market even tougher. But that doesn’t mean you can’t pursue your passion. Here’s what we suggest: If you own—or want to own—a small plane:Talk to trusted advisors first. Insurance professionals and trust and estate attorneys will make sure you and your “bug smasher” are adequately covered. It’s important to note that it will be quite a challenge to protect yourself with insurance policies alone. Your team will need to get creative to fully insulate you against potentially massive payouts. Make sure you are insured when you’re grounded too. Fire, wind, heavy snowloads, hangar collapse, accidents during handling ... there are plenty of risks attached to planes even before you get up in the air. To park your plane, airports require you to sign a contract and show proof of insurance. Some plane owners may wish to self-insure, which will necessitate providing financial statements and written commitments. If you’re learning to fly or flying someone else’s plane:Choose a flight school carefully. When you hire someone to teach you to fly, you’re hiring their plane too, and the problem with that is you can’t know how well that plane is being maintained. Once you get in the cockpit, you could be liable if something goes wrong and causes an issue. The lack of control you have in this situation can argue for a more radical solution: It may be worth buying your own small plane and learn to fly it. That gives you oversight over the insurance, so you can rest easier knowing you have the proper coverage. Consider non-owned aircraft coverage. These policies are available to pilots who borrow or rent small planes and to corporations that charter private flights or have employees and executives who fly or would like to fly themselves on business trips. Essentially, they cover bodily injury and property damage that may occur as you operate or use third-party-owned aircraft. If you want to fly a vintage or experimental plane:Prepare yourself for an even more challenging insurance market. Seaplanes, home-built, vintage models and the like are treated quite particularly by the industry. Can you obtain coverage? Sure. Will it be quite expensive? Definitely. Obviously, and rightly, there are many factors at play when it comes to protecting yourself in the air. All of them make finding sufficient aviation insurance a challenging task. Challenging, but not impossible—especially if you work with a team of dedicated experts. Should you have more specific concerns, we are always available for a more targeted discussion. ...

Market update: why premiums and nonrenewals are rising

The insurance industry is in the midst of a correction due to the historic number of catastrophic events (hurricanes, wildfires, floods, etc.) and the corresponding claims from the past several years. The results of the current market have been quite disheartening for some clients: high rate hikes at best, non-renewals at worst. Even if you have not yet been affected, we want to educate you on the current market situation. So that you can better understand what is happening, why, and what you can do to mitigate the impact on your program, we convened a group of senior leaders to answer frequently asked questions. However, before we go into the details, let’s take a step back and talk about insurance more broadly. Essentially, the market only functions because risks are pooled, and thus transferable. To cover one person’s home (or automobile or boat, etc.), carriers need to receive premiums from all their clients in an amount sufficient to offset their total exposure. The downside: Your rates are not just affected by your personal claim experience, but also by all those in the pool with you. Insurance can’t work if rates are only raised for people who’ve made claims. So even if you have a clean record with no claims, you could experience a renewal where your rates go up because you are in an area that overall has had large losses. The upside: While the ‘pooling’ of risk means you will be impacted by other people’s losses, it also means that in the event you have a major loss, you will likely be paid an amount that greatly supersedes the amount you’ve paid in premium over time. Say you pay an annual premium of $16,000 over the course of 20 years, then in year 21 lose a house that is insured for $4 million due to a fire, you have still come out ahead. Alright, now to the FAQs... Why is the market in this current state? While it can feel like a personal affront, especially when you are on the other end of a non-renewal, it’s anything but. Rather, there are two main instigators to the market. First and foremost, extreme weather events are on the rise in many parts of the country, as evidenced by the wildfires in the West. In fact, they have doubled in the past 17 years. The most obvious stricken areas are California and the Gulf Coast, but the Northeast and Midwest have not been immune, by any stretch. At the same time, major cities nationwide are also struggling with the effects of an increasingly crumbling infrastructure. Aging pipes in urban buildings have led to more costly water damage claims. For example, one of our carriers have paid nearly double this decade in water losses, and the number one reason is plumbing failures. Also, the rising cost of repair and reconstruction is also compounding already troublesome circumstances. Demand for the skilled labor necessary to rebuild now outpaces the supply, and replacing today’s high-end appliances and amenities is its own pricey proposition. In 2000, a top-of-the-line Sub-Zero refrigerator cost $7,375 (adjusted for inflation); and today it’s more than $17,000. Not to mention suitable temporary living situations are also quite expensive. Ok, so how will this affect my premiums? Where once we considered anything more than 10% on the high side, we now regularly see jumps of 20%-25% a year. We encourage you to contact your Account Executive regarding your specific program and how your premiums may or may not be affected. Does the new reality impact me if I don't live in an at-risk area? It could. Keep in mind, while you may live in an area less prone to catastrophic events, that doesn’t mean you are exempt from severe losses. Hailstorms in Wyoming, tornadoes in Texas and severe winter storms along the East, have all been areas with damaging losses over the past few years. Therefore, no area is truly immune to loss. Even if one area within a region is not at risk of catastrophic loss, there may still be a raise in rates within that state. For example, premiums may go up on a townhouse in San Francisco because of wildfires in L.A. County. The reality is, the impact of these trends is nationwide. So, it is important to speak with your insurance broker as some markets are increasing their thresholds in certain areas and others are not writing any new business. Is there any relief in sight? It depends largely on science. If major weather incidents and the ensuing catastrophic losses continue or increase, carriers will then need to continue to adjust their exposure and rates accordingly. For those individuals on the West Coast, the state of California responded to the What can I do to help myself? To keep your premiums as low as possible, and your coverage intact, make your account look as appealing as possible to underwriters. That means sustaining small losses, utilizing higher deductibles and keeping your insurance available for catastrophic, worst-case events. This will also provide premium savings. For example, data suggests that properties with one water loss will likely realize another one soon—particularly in apartment buildings. If you put in a claim for a small water loss, you may be a riskier proposition to carriers. Therefore, taking care of small claims, could work in your favor when your policy comes up for renewal. We also encourage you to comply with all the recommendations suggested by your insurance carrier and to pay your premiums on time. Brokers can no longer guarantee reinstatement if you cancel for non-pay. Also, take the time to contact your broker and review all of your coverages. When acquiring new items or properties make sure you reach out to them to ensure you have the proper protection. If you still haven’t told them that you purchased a new car for your son months ago or you started investing in a wine collection – you should place a quick call and confirm coverage has been issued accordingly. Lastly, if you live in areas with serious weather concerns and have experienced a non-renewal or a drastic rate increase, ask your broker about secondary markets. They’re not ideal, and coverage terms may not be as broad as your existing policy, but they’re better than nothing. Anything else I should know right now? If you plan to follow our advice and only put in claims for major losses, select policies with high deductibles. You can also get breaks on premiums by complying with any safety measures prescribed by your carrier. Even if you don’t think you need a leak detector or backup generator, putting one in anyway will maximize the credits. Hey, whatever it takes! Always know we are here to guide you through this correction and any other insurance concerns as well. ...

Smooth sailing ahead: what you need to know about yacht insurance

Island hopping through the Caribbean or cruising the Mediterranean, yacht ownership should be a sun-filled dream come true. But, as every seafarer knows, storms and structural mishaps can quickly turn the dream into a nightmare. Contributing to that nightmare, yacht insurance policies are notoriously demanding and their terms are extraordinarily complicated. To help you navigate these complicated insurance waters, here are our insights to help ensure that you are never left high and dry. Current ConditionsSecuring yacht insurance has been significantly more difficult since 2017, when a series of destructive hurricanes crushed the market. With payouts overwhelming the industry, several carriers were forced under and those that remained not only increased rates significantly but became extremely picky about who and what they would insure. In fact, today, many carriers would prefer to not cover first-time yacht owners at all. So, the first thing we tell people who ask about insuring a yacht is that the process will be an intricate one. Needless to say, it’s more important than ever to find an insurance professional who has the knowledge to put together a successful package, and the strong industry ties to get it done. The Right Approach For Securing Yacht InsuranceUnlike some other more pro forma coverages, this one is neither quick-binding nor set-it-and-forget-it. It will take some work to get adequate coverage, then require more communication with your broker to adhere to the carrier's demands. These suggestions will make it easier to do both: Lean into the process: To obtain insurance, your broker has to paint your circumstances in the best possible light, and that is going to require know-how (theirs) and time (yours). Our watercraft team has the advantage of having worked for carriers, so they understand exactly what underwriters need to see, but they can’t create that packet of information without your help. Be prepared to answer questions: Underwriters want to know everything, from primary mooring spot (although the bigger the yacht, the less it matters) to cruising itineraries to hurricane contingencies to who is your captain and crew. If you are buying a pre-owned yacht, you also need an accredited appraisal of its condition and value. Keep your insurance professional on speed-dial: Making sure you are properly protected means thinking beyond the vessel itself. Specifically, your insurance professional should review all contracts for marinas, shipyards and the like; few of those entities provide the blanket coverage you would expect them to, instead offloading as much liability as possible onto vessel owners. And to make sure your insurance remains valid, you will need to keep your insurance professional apprised of all operational changes, especially in personnel. Many carriers reject captains who they deem too inexperienced. It’s also important to let the insurer know, via your broker, whenever there are navigational changes. Four Concerns That Could Put You In Deep WaterYacht ownership comes with its own set of potential problems which is why proper coverage is essential. Here are some of the potential worries: Gusts and gales: When the winds blow, vessels get tossed about even when they are tied up at a marina. Big storms can rip pilings out of the ground, and that is bad whether it is your boat’s moorings or not, because once one boat is let loose, it can ping pong destructively through neighboring vessels. During those 2017 catastrophic storms, thousands of boats sank, but many others ended up on dry land, up to 1,000 feet from the water. Lightning: This is becoming more of an issue as vessels become more sophisticated. A strike can wipe out an entire electrical system, and these days that system can cost a million dollars or more. As a result, carriers have increased lightning deductibles. Fire: A bad shore power connection, an engine issue, shipyard carelessness ... any of these hazards can lead to costly damage, particularly because many boats are highly flammable. Groundings: Professional captains significantly cut down on the incidence of groundings and collisions. Nonetheless, the possibility remains, especially in crowded sea lanes such as those off the coast of Florida and in the Caribbean. A Tight Ship: What Needs To Be CoveredAppropriate coverage protects you when there is loss of property, liability claims and environmental damage. The essentials include: Hull and machinery: Think of it as property coverage for your boat, protecting not only the vessel and its infrastructure, but also some personal property, tenders and recreational watercraft, even the mopeds you use to zip around towns after you dock. However, though helicopter pads on your yacht can be included, the helicopters will require additional coverage. Protection and indemnity (P&I): This provides coverage for your liability for anything, fixed or floating, that your yacht hits. It also encompasses bodily injury to passengers or the crew, property damage and a mariner’s version of workers comp. You also want your P&I policy to reflect your intended navigation area. If you are going to be cruising internationally, your policy must be able to respond every port around the world (note: this is why a great majority of yachts are covered under one of 13 P&I clubs). Wreck removal: Should your boat sink, the local jurisdiction may mandate that you remove it. That is quite an expensive proposition. Vessel pollution liability: This is another requirement in many jurisdictions— the United States made it mandatory after the Exxon Valdez oil spill. Frequently rolled into P&I, it also covers fines and penalties incurred for causing damage to natural habitats such as reefs. Yachting is almost by definition an interstate activity, so maritime insurance is less regulated than most other coverages. One benefit of this lesser oversight is that much of it can be tailored specifically to your— and your vessels—needs. We understand the tremendous pleasure that you expect to receive from yacht ownership, so we look forward to using our all-hands-on-deck approach to make sure nothing ever rocks your boat. ...