Insurance for commercial use (similar to bareboat charter)

[Gedimin]

I'm really struggling to find an insurance company in the UK that would insure a sailing boat used commercially (very similar to bareboat charter, but not quite). I talked to almost every insurer in the UK and the answer is always the same: sorry, we can't insure charter use. It's easy to understand if some companies don't do it, but my research shows that nobody is doing it! So how do other charter companies exist in Britain at the moment? My business does have its own features which make it slightly different from regular charter, but insurers always appeal just to the charter nature of it. Or is it just to mask the fact that they don't want to take a newly formed business?

A few foreign (European) insurers told me they are fine with charter nature of the business, but can't provide cover for a British flagged vessel.

If anyone owns a boat that is chartered: how do you insure it? If you work in an insurance company - can you shed the light on the market situation? I'm getting desperate.

 

[dom]

I'm really struggling to find an insurance company in the UK that would insure a sailing boat used commercially (very similar to bareboat charter, but not quite). I talked to almost every insurer in the UK and the answer is always the same: sorry, we can't insure charter use. It's easy to understand if some companies don't do it, but my research shows that nobody is doing it! So how do other charter companies exist in Britain at the moment? My business does have its own features which make it slightly different from regular charter, but insurers always appeal just to the charter nature of it. Or is it just to mask the fact that they don't want to take a newly formed business?

A few foreign (European) insurers told me they are fine with charter nature of the business, but can't provide cover for a British flagged vessel.

If anyone owns a boat that is chartered: how do you insure it? If you work in an insurance company - can you shed the light on the market situation? I'm getting desperate.

Didn't we already have a thread on this? Either way, I think you have answered your question.

Your "slightly different" business model is clearly a red flag to industry-standard insurance norms.

If you can precisely describe your business then someone can perhaps offer more substantive advice.

 

[jwilson]

Lots of insurers insure charter boats. The premium and excess are higher - considerably - than non-chartered boats. Also lots of other commercially operated boats such as tugs, workboats and fishing boats are insured by many companies. What are you planning to do that the insurers don't like - there is probably a reason they don't want your business?

 

[Gedimin]

Last time it was mainly about finance This is sorted now, and the only bottleneck is insurance. I did not expect this to be a problem - hence a severe frustration...

The business is a crossbreed between a yacht club (with own boat) and charter (where crew and skipper are club members). There are plenty of companies declaring they insure yacht clubs and/or charter businesses, but all of them are refusing to cover, most commonly saying we can't cover charter. I can't understand this. My main guess for now: they simply won't bother reading and understanding the information that I'm providing with the request for a quote.

 

[Gedimin]

Lots of insurers insure charter boats. The premium and excess are higher - considerably - than non-chartered boats. Also lots of other commercially operated boats such as tugs, workboats and fishing boats are insured by many companies. What are you planning to do that the insurers don't like - there is probably a reason they don't want your business?

Maybe they just won't bother with a single boat business? But I can't buy 3 boats straight away, nobody starts a business like this nowadays.

 

[dom]

Last time it was mainly about finance This is sorted now, and the only bottleneck is insurance. I did not expect this to be a problem - hence a severe frustration...

The business is a crossbreed between a yacht club (with own boat) and charter (where crew and skipper are club members). There are plenty of companies declaring they insure yacht clubs and/or charter businesses, but all of them are refusing to cover, most commonly saying we can't cover charter. I can't understand this. My main guess for now: they simply won't bother reading and understanding the information that I'm providing with the request for a quote.

Perhaps they can't be bothered but I doubt it. More likely there is a red flag in there somewhere, whether it be corporate structure, creditworthiness, skipper qualifications, or something else.

Why don't you ask the insurance companies/brokers what you need to do to obtain cover?

 

[northwind]

What sailing qualifications do you bring to the table? Experience of running a similar operation or having worked for one?
Insurance is about risk, you are basically operating in a similar model to an rya centre, and they would want to see your experience in running something similar to satisfy the underwriters that you aren't going to cost them money.

 

[westernman]

The boat is coded right? MCA Cat 2 or whatever?
If it is not a bare-boat charter then the "crew" members on board have the proper commercial endorsements?

May be the insurance companies are not happy because something is not right with the above???

 

[Tranona]

Last time it was mainly about finance This is sorted now, and the only bottleneck is insurance. I did not expect this to be a problem - hence a severe frustration...

The business is a crossbreed between a yacht club (with own boat) and charter (where crew and skipper are club members). There are plenty of companies declaring they insure yacht clubs and/or charter businesses, but all of them are refusing to cover, most commonly saying we can't cover charter. I can't understand this. My main guess for now: they simply won't bother reading and understanding the information that I'm providing with the request for a quote.

Similar hybrid operations have existed in the past and seemingly had insurance, so there must be something about the way you are setting this up which rings alarm bells with insurers. Note the use of the word "existed".

 

[Wing Mark]

Most of the 'yacht insurers' seem to be not much more than website 'front ends' for one or two big insurance companies.
I think the OP needs to talk to a real broker who does marine and marine business insurance and actually talks to real underwriters in person.

Rather than adding 'business use' to a yacht policy, look for a business policy. The business is the risk, not the yacht.

 

[PhillM]

I think I understand what you are trying to do, is it to setup a club where members can join cruises and pay a small fee to cover costs *but a little more also* to make a profit? If that is the case, then the problem is the *little bit more*. Clubs will not need to be commercially endorsed and nor will the skippers (or crew). But as soon as it becomes profitable then then whole operation needs to be coded, including the skippers. Which is where your problems may lie.

 

[Gedimin]

What sailing qualifications do you bring to the table? Experience of running a similar operation or having worked for one?
Insurance is about risk, you are basically operating in a similar model to an rya centre, and they would want to see your experience in running something similar to satisfy the underwriters that you aren't going to cost them money.

That's a good point. I'll try to prove to them that I know what I'm talking about. Although it is of course quite limited experience as I'm only starting. Also probably a good time for me to get a higher formal qualification as my old Coastal Skipper is probably not sufficient for them, I was delaying YM Offshore exam for too long.

 

[Gedimin]

I think I understand what you are trying to do, is it to setup a club where members can join cruises and pay a small fee to cover costs *but a little more also* to make a profit? If that is the case, then the problem is the *little bit more*. Clubs will not need to be commercially endorsed and nor will the skippers (or crew). But as soon as it becomes profitable then then whole operation needs to be coded, including the skippers. Which is where your problems may lie.

That's an interesting thought. The boat will be coded for sure and I will get commercial endorsement myself. But I don't think club skippers will need it. They are not paid to sail with passengers. They are paying to take the boat out just like other members on board. It's more like a shared charter if you like.

 

[northwind]

That's an interesting thought. The boat will be coded for sure and I will get commercial endorsement myself. But I don't think club skippers will need it. They are not paid to sail with passengers. They are paying to take the boat out just like other members on board. It's more like a shared charter if you like.

The issue for insurance is how do you prove the skipper is competent?
Your model sounds the same as Topsl Solent sailing and yacht share - Tops'l Sailcruise however you would own it. The clever bit with their model is that the members own it, thus have a buy in and shared responsibility for the boats.

 

[Tranona]

That's a good point. I'll try to prove to them that I know what I'm talking about. Although it is of course quite limited experience as I'm only starting. Also probably a good time for me to get a higher formal qualification as my old Coastal Skipper is probably not sufficient for them, I was delaying YM Offshore exam for too long.

I doubt it is your lack of qualifications that is the problem. Generally speaking, unless you are getting insurance for something that requires formal qualification such as skippered charters they are more interested in experience and claims record.

Why don't you just ask the insurers for the grounds on which they are rejecting your proposal? If as you say they are all (how many and which?) rejecting you then there is clearly something fundamentally flawed about your proposition.

 

[PhillM]

That's an interesting thought. The boat will be coded for sure and I will get commercial endorsement myself. But I don't think club skippers will need it. They are not paid to sail with passengers. They are paying to take the boat out just like other members on board. It's more like a shared charter if you like.

I would go and have a serious chat with the MCA so that you do not get the wrong side of commercial operations, or if you are a commercial operation, you know the options and limits. TBH my (limited) experience is that by talking to the authorities and being up-front, you get good advice, often in writing, that you can then use to help you to fulfil your ambitions. There are several business models that you could use to develop your club, so it is worth developing a few so that when you have your MCA chat they can give you an appraisal of which one(s) might work from their perspective. Then armed with you can have a chat with insurers.

BTW is this the club that advertised on FB and then did a survey? If it is, I like the idea (and responded to the survey) but I can see how the model will need to be refined to make it work. I have some marketing experience in this area. Feel free to PM if you would like a chat,

 

[Canopy Locked]

That's an interesting thought. The boat will be coded for sure and I will get commercial endorsement myself. But I don't think club skippers will need it. They are not paid to sail with passengers. They are paying to take the boat out just like other members on board. It's more like a shared charter if you like.

Had to read this a couple of times.. If a boat is coded commercially and the crew have the relevant qualifications, then the boat can operate charters (dive, fishing, work and so on) You are saying that the club skippers are not paid to take passengers.. they (the club skippers??) are paying (who - assume the boat owner?) to take the boat out. Surely this is Hire as opposed to charter. Obviously other people on board cannot be paying clients otherwise it's a charter? seems a bit unclear to me

 

[V1701]

The issue for insurance is how do you prove the skipper is competent?
Your model sounds the same as Topsl Solent sailing and yacht share - Tops'l Sailcruise however you would own it. The clever bit with their model is that the members own it, thus have a buy in and shared responsibility for the boats.

The Brighton Belle operates in a similar way, own a share of the boat and pay as you sail, the idea of it is quite appealing...

 

[Tranona]

There seems to be a fundamental difference between these well established clubs that own boats for members' use (and many similar operations going back to the Island Sailing Club) in that the OP, from what one can glean from his scant explanations, plans to buy a boat for his own use and finance it by running it as a club rather than just as a bare boat charter operation. As he seems to have no experience of owning a boat and sailing plus no previous experience with insurance it is perhaps not surprising insurers are not falling over themselves to insure him and his boat.

Of course I may be wrong, but if he explained in detail what he is proposing he might get better and more appropriate responses.

 

[Daydream believer]

I think I understand what you are trying to do, is it to setup a club where members can join cruises and pay a small fee to cover costs *but a little more also* to make a profit? If that is the case, then the problem is the *little bit more*. Clubs will not need to be commercially endorsed and nor will the skippers (or crew). But as soon as it becomes profitable then then whole operation needs to be coded, including the skippers. Which is where your problems may lie.

Profit should not be a dirty word.
Surely there are yacht clubs that own boats & club member share them, paying a fee when they do. I believe Benfleet yacht club do so. Our club owns some dinghies & charge members for their use. The fact that it makes a profit is irrelevant. You can form a club whenever you want & have whoever you want in that club.( sign up the crews for long/short term for a membership fee) If you find that you are making a profit from the boats just pay yourself a fee as club steward, or as a maintenance engineer. Pay the wife a secretarial fee etc. then break even.
You can also make a profit from the catering on the boats- supply food etc, which is not the charter of the boat itself. There are other ancilliaries you can charge for- transport home etc. Profit on providing personal insurance to the crew member for the holiday as broker to the insurance co. Loads of "extras"
I place moorings with my launch. I cannot charge for hire of the launch, but I can charge a contribution for the use of the airbag & other beach equipment that I use to carry the moorings to the mooring site. Insurance co is happy with that.
Just think laterally.