MyYachtsInsurance - Yacht Insurance Community

Reviewed by Alex Short, Independent Yacht Insurance Risk Analyst

TL;DR

All-risk hull and machinery policies cover all losses except those specifically excluded, such as war, pollution, or mechanical breakdown under [IHC-2003]. Named-peril coverage, like under [IYIC-1985], only protects against listed risks, excluding unlisted perils. Coverage under all-risk is void if the loss results from an excluded cause or breach of warranty, while named-peril coverage is triggered only when the loss matches a listed peril.

Trigger Conditions

Trigger	Policy Impact	Consequence
Material change not disclosed	Breach of warranty under all-risk policy	Coverage void [IHC-2003]
Class suspended or withdrawn	Non-compliance with classification requirements	Excluded under all-risk policy [ITC-H-1983]
Refit/lay-up not notified within 30 days	Failure to notify underwritten changes	Coverage void under all-risk policy [IHC-2003]
Navigation limits breached	Breach of warranty on voyage or area	Excluded under all-risk policy [MIA-1906]
Hot work without approval	Breach of safety conditions	Excluded under named-peril policy [IYIC-1985]
Survey overdue	Non-compliance with inspection requirements	Coverage void under named-peril policy [IYIC-CLAUSE-10]

Underwriter's Checklist

Survey report: Underwriters verify the vessel’s physical condition and valuation to assess risk exposure, particularly for all-risk coverage which has broader liability [IHC-2003] [IYIC-1985] [MIA-GUIDELINES].
Class certificate: Ensures the vessel meets recognized safety and construction standards, which is critical for hull coverage under both all-risk and named-peril policies [IHC-2003] [IYIC-1985] [MIA-1906].
Maintenance log: Reviews regular maintenance and repairs to identify potential vulnerabilities that could lead to claims under all-risk or named-peril coverage [IHC-2003] [IYIC-1985] [MIA-GUIDELINES].
Refit/modification records: Confirms that any structural or mechanical changes are properly documented and do not void coverage under all-risk or named-peril policies [IHC-2003] [IYIC-1985] [MIA-1906].
Crew qualification certificates: Verifies that the crew is properly trained and licensed, reducing the risk of human error claims under all-risk coverage [MIA-GUIDELINES] [IHC-2003] [IYIC-1985].
Navigation area endorsement: Ensures the vessel is operating within the policy’s defined geographical limits, which is essential for coverage under both all-risk and named-peril policies [IHC-2003] [ITC-H-1983] [MIA-1906].
Loss history declaration: Reviews prior claims to assess the likelihood of future losses, especially under all-risk coverage which includes a wider range of perils [MIA-GUIDELINES] [IHC-2003] [IYIC-1985].
Deductible schedule: Confirms the deductible amount and type (absolute or franchise) as specified in the policy, particularly relevant for named-peril coverage [IYIC-CLAUSE-10] [LSW-3000] [MIA-1906].

Policy Wording Traps

Clause Type	Trap Mechanism	Scenario	Coverage Result
Named Peril Coverage	Exclusion of unlisted perils	A vessel sustains damage from a fire caused by an electrical short, which is not listed in the policy	Claim denied as fire is not a named peril under the policy [IHC-2003]
All-Risk Coverage	Latent defect carve-out	A yacht sinks due to a hidden hull defect that existed at the time of policy inception	Claim denied under the "inherent vice" exclusion in all-risk policies [IYIC-1985]
Deductible Clause	Deductible applies to named perils	A storm causes damage exceeding the deductible, but the storm is not listed in the policy	Claim partially paid after deductible is applied, but only if the storm is a named peril [LSW-3000]
Faulty Workmanship Exclusion	Excludes damage from poor maintenance	A vessel's engine fails due to improper maintenance by the owner	Claim denied under the faulty workmanship exclusion [IYIC-CLAUSE-10]
Material Change Warranty	Breach of warranty voids coverage	The owner modifies the vessel's use without notifying the insurer, increasing risk	Policy becomes void, and any claim is denied [MIA-1906]
Wilful Misconduct Exclusion	Excludes intentional acts	The captain intentionally runs aground to avoid a storm	Claim denied under the wilful misconduct exclusion [ICA-2015]

Operational Reality

Yards and operators often misinterpret the scope of coverage when submitting claims, particularly between all-risk and named-peril policies. For example, an owner may assume that a hull damage incident is covered under a named-peril policy, but the yard may proceed with repairs without verifying the specific perils listed, leading to a denied claim [IHC-2003]. Documentation requirements include a completed marine insurance claim form, surveyor’s report, and proof of loss, typically submitted within the policy notification period. Surveyors are generally engaged post-incident to assess damage and determine cause, though some underwriters require pre-approval for repairs exceeding a certain threshold [IYIC-CLAUSE-10]. Class societies may also be involved if the damage affects classification status. A common mistake is failing to notify the underwriter promptly, which can void coverage under s.21 of the Marine Insurance Act 1906 [MIA-1906]. Another is not securing a surveyor with the appropriate expertise, especially in cases involving general average, which requires adherence to the York-Antwerp Rules 2016 [YORK-ANTWERP-2016]. Delays in reporting or incomplete documentation can lead to protracted claims processing or partial coverage. Underwriters may also reject claims if the deductible is not properly applied, particularly in policies with named-storm deductibles [LSW-3000].

Related Risks

Ambiguous wording in all-risk policies → May lead to disputes over coverage scope under the Marine Insurance Act 1906 [MIA-1906] principle of interpretation
Exclusion of war risks in named-peril policies → Requires additional war risk insurance under Institute Time Clauses Hulls [ITC-H-1983]
Deductible application in named-peril coverage → May trigger deductible clauses such as Institute Yacht Clauses (1.11.85) the relevant policy clause [IYIC-CLAUSE-10]
Constructive total loss claims under all-risk coverage → Governed by the Marine Insurance Act 1906 the abandonment provision [CTL-CLAUSE] and general average principles [YORK-ANTWERP-2016]

Questions for Your Broker

Does the policy provide all-risk coverage or named-peril coverage, and how are perils defined under the relevant clauses [IHC-2003] [IYIC-1985]?
Are there specific exclusions that apply to the insured peril, and are these exclusions clearly outlined in the policy wording [IHC-2003] [ITC-H-1983]?
What are the notification requirements for a claim, and what is the time frame for reporting under the policy [IHC-2003] [IYIC-CLAUSE-10]?
What documentation is required to substantiate a claim, and does the policy reference specific forms or standards [IHC-2003] [LLOYDS-OPEN-FORM]?
Under what conditions is the deductible triggered, and does the policy reference a named storm deductible clause [IYIC-CLAUSE-10] [LSW-3000]?
Does the policy require compliance with warranties, and what are the consequences of non-compliance under the Marine Insurance Act [MIA-1906] [CTL-CLAUSE]?

References

International Hull Clauses (01.11.03) (framework) — http://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/International%20Hull%20Clauses%202003.pdf
Institute Yacht Clauses (1.11.85) (framework) — https://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/Institute%20Yacht%20Clauses%201.11.85.pdf
Institute Time Clauses Hulls (1.10.83) (framework) — https://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/Institute%20Time%20Clauses%20Hulls%201.10.83.pdf
Marine Insurance Act 1906 (UK) (legal) — https://www.legislation.gov.uk/ukpga/1906/41/pdfs/ukpga_19060041_en.pdf
Institute Yacht Clauses (1.11.85) the relevant policy clause (Deductible) (framework) — https://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/Institute%20Yacht%20Clauses%201.11.85.pdf#clause10
MIA Guidelines (other) — https://www.marineinsurance.org/
LMA/IUA Named Storm Deductible Clause (LSW 3000) (framework) — https://www.lmalloyds.com/LMA/Wordings/Marine/Marine_Cargo/LMA_Marine_Cargo_Clauses.aspx
Insurance Act 2015 (UK) (legal) — https://www.legislation.gov.uk/ukpga/2015/4/pdfs/ukpga_20150004_en.pdf
York-Antwerp Rules 2016 (General Average) (framework) — https://comitemaritime.org/wp-content/uploads/2018/06/2016-York-Antwerp-Rules-with-Rule-XVII-correction.pdf
Constructive Total Loss (MIA 1906 s.60) (legal) — https://www.legislation.gov.uk/ukpga/1906/41/section/60
Lloyd's Standard Form of Salvage Agreement (LOF 2020) (framework) — https://www.lloyds.com/market-resources/salvage-arbitration-branch/lloyds-open-form-lof

Disclosure

This content is provided for informational purposes only and does not constitute insurance advice. Coverage terms vary by policy, jurisdiction, and underwriter. Consult a licensed marine insurance broker for guidance specific to your vessel and operations.

All-Risk vs. Named-Peril Coverage: Key Differences in Insurance Policies