YACHT UNDERWRITING RULES AND GUIDELINES

Transcription

1 YACHT UNDERWRITING RULES AND GUIDELINES These guidelines are designed to assist you in determining the types of vessels that meet our underwriting criteria. Unless the Company grants an agency authority to bind risks meeting specified criteria, an agent does not have binding authority, and each and every risk must be submitted, underwritten and approved by the Company. I. ELIGIBLE VESSELS - HULL CRITERIA A. LENGTH Vessels must meet a minimum of 26 feet 1 inch length overall (LOA). Measurement of vessels should be centerline length of hull from the forwardmost part of stem excluding booms, spars, bowsprits, gins, or any extensions, fixed or otherwise and the aft-most part of the stern of the vessel excluding swim steps, outdrives or any other extensions, fixed or otherwise. B. TYPES Vessels other than standard stock models built by recognized manufacturers must be referred to the Company. 1. No kit boats or homemade vessels. 2. No high-performance/high speed powerboats (hereafter, HPB). Identifying characteristics of HPB vessels include, but are not limited to: a needle nose hull or tunnel hull, a flush deck (no superstructure above the deck), high horsepower engines, more than two primary propulsion engines, a flat or nearly flat bottom, engines with overthe-transom exhausts, low freeboard (the height of the vessel from the waterline to its deck). Not all HPB vessels will exhibit all of these characteristics. If there is any doubt as to whether a particular vessel is HPB, submit an application with photo to the Company for underwriting review. Any vessel capable of speeds in excess of 55 mph must be referred to the Company. Form , Ed. 1/07 Page 1 of 13

2 3. No performance racing sailboats. Identifying characteristics of racing sailboats include, but are not limited to: ultra-light design, grand prix styling, sport boats (highperformance, one-design racers), carbon fiber or Kevlar materials (or other exotic composite) hull or spar construction, vessels that regularly participate in competitive regattas, cutting-edge designs such as canting keels or movable internal ballast systems, lack of interior comfort components, etc. Racing sailboats does not include performance cruising vessels or racer cruiser vessels; when in doubt refer to the Company. 4. No trimarans. 5. No special or unusual type vessels and/or motors, such as: a. Canvas vessels, amphibious (land/water) craft, airboats, hydroplanes, rafts, military surplus vessels, etc. b. Whitewater craft, jet sleds, shuttlecraft, personal watercraft (PWCs) or sailboards. 6. All vessels that appear on the attached Exhibit C must be referred to the Company. C. CONSTRUCTION 1. Standard vessel construction materials such as fiberglass, steel, aluminum, and wood are acceptable. 2. The following are declinations: a. Fiberglass over wood, unless original construction; b. Concrete or Ferro Cement hulls c. Vessels manufactured in or prior to 1988 featuring fuel tanks, constructed of fiberglass or plastic which are used to store gasoline. Including, but not limited to, fiber-reinforced plastic (FRP), polyethylene (PE and HDPE) and polypropylene (PP). 3. Vessels with more than two primary propulsion engines must be referred to the Company. D. TENDERS A vessel is considered a tender when it is attached to or stored on the insured vessel by a permanent means, such as a davit or cradle, and its length may not exceed 35 percent of the insured vessel s LOA; in those cases where the insured vessel is a sailboat a tender may also be permanently towed behind, Form , Ed. 1/07 Page 2 of 13

3 however the size restriction remains. A tender is used primarily for the purpose of transportation to and from the insured vessel. Tenders which are not specifically scheduled on the Declarations Page, do not exceed 16 feet overall length and do not exceed 50 horsepower are automatically insured at actual cash value. Agreed value coverage is available for an additional premium; full description (including HIN & motor serial number) is required and will be scheduled on the Declarations Page. Tenders greater than 24 feet in length, or requests for exceptions to the above standards, must be referred to the Company. II. SURVEYS It is always recommended that a condition and value survey be performed on every vessel purchased, regardless of age. A. SURVEY REQUIREMENTS The Company requirements for surveys are as follows: 1. Unless stated otherwise, full hauled out of water condition and value surveys are required whenever a survey is merited, as described below. An afloat survey may be acceptable if accompanied by invoices indicating haul-out and bottom maintenance within the last 18 months. 2. Acceptable surveys should be not more than three years old and performed on behalf of the prospective buyer or current insured. 3. Custom or foreign-built vessels that are new in design and/or not from a recognized manufacturer/designer should be surveyed regardless of age on new business. 4. For new business: Vessels must have a survey if ten years of age and meeting any of the following criteria: a. Hulls valued at more than $40,000 b. Hulls exceeding 40 feet in length c. Hulls constructed of materials other than fiberglass, steel or aluminum d. Policies including any commercial use endorsement Form , Ed. 1/07 Page 3 of 13

4 Vessels used exclusively in fresh water do not require a survey until 15 years of age, subject to the criteria described above. All vessels must have a survey if 25 years of age or older. 5. For renewal business: Vessels meeting any of the following criteria must have a survey if 20 years of age and then every ten years thereafter: a. Hulls valued at more than $40,000 b. Hulls exceeding 40 feet in length c. Hulls constructed of materials other than fiberglass, steel or aluminum d. Policies including any commercial use endorsement Vessels used exclusively in fresh water do not require a survey until 25 years of age, subject to the criteria described above. All vessels must have a survey by 30 years of age and then every ten years thereafter. 6. Surveys may be requested by the Company other than as stated above as circumstances merit. 7. We encourage that our insureds use either a National Association of Marine Surveyors (NAMS) or Society of Accredited Marine Surveyors (SAMS) accredited surveyor. However, use of an accredited surveyor is not required, nor does NAMS or SAMS designation in and of itself mean that the survey will be acceptable to the Company. Prior to their use, short-form and/or self-surveys must be approved by the Company. B. REVIEWING SURVEYS Every survey must be reviewed and approved or declined according to our survey guidelines (see attached Exhibit A). A vessel must be suitable for the waters it will be navigating and its intended usage. The Survey Recommendations Certification of Compliance form provided by the Company must be used to remedy any outstanding issues found within an otherwise-acceptable survey. It should be clearly indicated which recommendations must be completed as a condition of coverage. Additional findings uncovered in the course of a survey review (that may not be listed in the recommendations section of the survey) should also be clearly indicated as appropriate. Form , Ed. 1/07 Page 4 of 13

5 It is the responsibility of the agent to follow-up on survey recommendations and letter of compliance from the Insured within 45 days, unless stated otherwise by the Company. If essential recommendations or those that seriously jeopardize the intended use or safety of the vessel exist, risks must be referred to the Company. Only the Company has authority to place vessels on Port Risk. III. OWNER/OPERATOR QUALIFICATION/CRITERIA A. EXPERIENCE A minimum of three years experience with a vessel of similar size, type and operation is expected. Less than three years experience should be referred to the Company. For these purposes, similar means power to power and sail to sail, and not more than a 30 percent increase in size between previous vessels operated and the vessel being considered. Vessels 65 feet and over in LOA will require a USCG licensed Captain; requests for exceptions must be referred to the Company. Please note that captains are not automatically required for houseboats, however all other experience considerations still apply. B. EDUCATION Successful completion of a Power Squadron, U.S. Coast Guard Auxiliary, U.S. Coast Guard course and/or a Captain s license (copy of front and back must be in file) will qualify for a credit. C. CURRENT CARRIER It is important to know the previous insurance company prior to quoting. Our underwriting guidelines prohibit any agent from quoting on an existing policy written by us through another agent. This rule applies at the vessel level and applies only to policies, not quotes. Do not quote or write existing Zurich, Farmers or Foremost business without a broker of record letter and signed application. Broker of record letters must be submitted to the Company at least ten days prior to expiration date in order for a change to be effective upon renewal. Changes submitted less than ten days prior to expiration date or mid-term will not be processed until the next renewal, unless the customer chooses to cancel the existing policy and write as new business. Form , Ed. 1/07 Page 5 of 13

6 D. AGE E. MVR Any owners less than 21 years of age must be referred to the Company. MVRs may be ordered on any named operator. An operator may be ineligible and must be referred to the Company if, within the past three years, there have been: 1. Any major violations (DUI, DWI, reckless driving, etc.) 2. More than two minor violations or at fault losses F. FINANCIAL RESPONSIBILITY Owners must exhibit financial stability and sufficient means to own and maintain the vessel. Credit reports may be ordered by the Company as part of the underwriting process. An approved application, including required disclosure language, must be signed and dated. G. LOSS HISTORY Refer to the Company if: 1. Two or more paid losses within the past five years 2. Any loss totaling $10,000 or greater in the past five years 3. All total losses regardless of value or accident year 4. Any open claims H. OWNERSHIP The named insured, as specified on the application and Declarations Page, must be the titled owner of the vessel. Acceptable ownership includes the following: 1. By an individual and members of the insured s family. 2. By unrelated persons, provided they are listed on the title as coowners of the vessel; a surcharge will be applied for three or more owners (spouses listed on the same title only count as one owner for this purpose). More than three non-family members as titled owners must be referred to the Company. Form , Ed. 1/07 Page 6 of 13

7 3. Unless a vessel is corporate-owned the named insured must be identified on the title, registration and/or documentation to the vessel in question. For corporate-owned vessels the named insured must be a principal of that corporation. Exceptions must be referred to the Company for consideration. 4. A corporation or business name can be used for tax purposes only. Information on all regular operators within corporation or business must be obtained and underwritten; if more than three persons regularly operate the vessel, refer to Company. 5. It is not our intent to insure vessels being financed through installment purchase plans, leases or other circumstances involving non-titled insurable interest. Any such situations must be referred to the Company. 6. Owners must be legal United States residents or United States corporations. IV. COVERAGES A. HULL 1. Maximum $750, Deductibles Depending on navigation and/or vessel age, standard deductibles are available from 1 percent through 10 percent. Minimum values may apply. In certain areas of the country, a separate windstorm deductible will apply; this will be addressed in the Navigational Limits section of these guidelines. Other minimum hull deductibles may apply; refer to Company for details. B. PROTECTION AND INDEMNITY (P&I) 1. Maximum limit $2,000,000, per occurrence 2. Uninsured Boaters is included up to the P&I limit, not to exceed $1 million C. MEDICAL PAYMENTS $10,000 per person, per occurrence, is included as primary (requires P&I in effect); higher limits are available by endorsement or for additional premium. Form , Ed. 1/07 Page 7 of 13

8 D. PERSONAL EFFECTS $2,500 per occurrence is included as primary, subject to a standard deductible of $100; higher limits are available by endorsement or for additional premium. This coverage includes fishing gear. E. TRAILER Standard trailer deductible is $100. F. TENDER Standard tender deductible is $250. G. COMMERCIAL TOWING $500 per occurrence is included; higher limits are available by endorsement or for additional premium. H. CAPTAINS AND ADDITIONAL CREW $150 surcharge each. Copies of current licenses (front and back) and resumes, including prior loss history, are required. Optional endorsements provide additional coverage and may require additional premium. I. LIVE-ABOARD Vessel is considered a live-aboard if it is the year-round primary residence for the owner. This includes cruisers who spend the majority of the policy term aboard the insured vessel. A surcharge will apply to both Hull & P&I. Optional endorsement provides additional coverage for additional premium; see attached Exhibit B. Live aboard risks may qualify for our Quartermaster policy; please refer to the Company. If an agent does not have explicit written authorization, every Quartermaster risk must be submitted to, underwritten and approved by the Company. J. ENDORSEMENTS See attached Exhibit B. V. NAVIGATIONAL LIMITS & PRIMARY MOORINGS A. Primary (and secondary, if applicable) mooring location(s) must be accurately identified. Primary mooring location is determined by the majority location of the vessel during the policy term. Form , Ed. 1/07 Page 8 of 13

9 B. Canadian and Mexican primary mooring locations within our standard navigational territories are acceptable. Other foreign primary moorings are not acceptable risks. C. Navigational limits as delineated by the Company will be used (see attached Exhibit D). Exceptions must be referred to the Company for approval. Not showing specific navigation limits will jeopardize coverage in the event of a loss. D. Requests for navigation to foreign waters (outside of our standard navigation) must be referred to the Company. Any trip request should be referred to the Company. E. An absentee ownership questionnaire may be required and approved at the discretion of the Company or by an agent with underwriting authority. F. SOUTH ATLANTIC AND GULF 1. Unless specifically authorized, all Florida business must be referred to the Company for approval. 2. For the purposes of determining whether a risk is inland or coastal, Lake Pontchartrain in Louisiana and Clear Lake in Texas are considered part of the Gulf and therefore require coastal navigation. 3. If a vessel is moored or can navigate in the Gulf of Mexico and/or below the Virginia/North Carolina state line, during hurricane season (June 1 through November 1), a storm plan must be completed and submitted to the Company for approval. Marinas, storage facilities or other similar organizations will not generally be approved as the person or entity identified by the storm plan as being responsible for the oversight, preparation and safety of the vessel. 4. For new and renewal business, if a vessel is moored or can navigate in the Gulf of Mexico, and/or below the Virginia/North Carolina, state line during hurricane season (June 1 through November 1), a windstorm deductible endorsement is mandatory and required to be attached. The minimum windstorm deductible is 5 percent or the standard hull deductible, whichever is greater. G. WEST COAST For new and renewal business, if a vessel is moored or can navigate south of Bahia Tortugas, and/or in the waters of Hawaii, during hurricane season (June 1 through November 1), a windstorm deductible endorsement is mandatory and required to be attached. The minimum windstorm deductible is 3 percent or the standard hull deductible, whichever is greater. Form , Ed. 1/07 Page 9 of 13

10 H. TRIPS Temporary navigation extensions, or changes for six months or less, may be handled by endorsement as a trip, subject to approval of Trip Questionnaire form. Navigation extensions, or changes for more than six months may require a policy change regarding navigation territory; those changes not covered by use of our existing navigation codes must be submitted to the Company. I. HOUSEBOATS Houseboats may only be moored and navigated on inland and non-tidal waters, excluding the Great Lakes; one exception: vessels may be moored and navigated in the Northern California Delta region, not west of Carquinez Bridge. VI. LAY-UP & WEATHER A. Vessels must be laid-up per policy provisions. Lay-up credits are not available for live-aboard situations. The following information will be required in order to determine applicable lay-up credits: dates of lay-up, lay-up address (at a minimum lay-up state is required) and whether the lay-up will be afloat or ashore. B. Any vessel primarily moored or laid-up in the following states must carry either the Ice Exclusion endorsement or the Bubbler System endorsement. In the United States: AK, CO, CT, IA, ID, IL, IN, KS, KY, MA, ME, MI, MN, MO, MT, ND, NE, NH, NJ, NY, OH, PA, RI, SD, UT, VT, WI, WV and WY. In Canada: AB, MB, NB, NF, NL, NT, NS, NU, ON, PE, PQ, QC, SK and YT. C. PORT RISK All Port Risk requests must be referred to the Company for approval. VII. VESSEL USAGE A. Our standard yacht contract provides coverage for private pleasure use only. B. Our standard yacht product does not provide coverage for builders risk exposures. Form , Ed. 1/07 Page 10 of 13

11 C. No speed contests by powerboats are permitted. (For our purposes, predicted log, over the bottom and poker run events are not considered speed contests.) D. Coverage for commercial use may be available by endorsement, but must be referred to the Company. This includes fleets, bareboat charters, guideboats and six-passenger or occasional charters. Additional underwriting requirements and considerations apply. E. LAND TRANSIT 1. Over 300 miles by contract or common carrier is excluded under the terms of the policy. 2. Extended coverage may be provided by endorsement; refer to the Company for further details. Prior to issuing approval the Company will need destination, dates, reason, name of common carrier and verification that the Insured declared the full hull value. A copy of the bill of lading and the certificate of insurance will be sufficient in most cases. VIII. INSURED VALUE It is our intent to insure for current market value. In our valuation process, market value will be evaluated using ABOS and/or BUC valuation guides, among other resources. While you are not required to use these guides as your resource, you may be required to provide documentation of your valuation methods. IX. ISSUANCE OF A POLICY, ENDORSEMENT OR BINDER A. For policy issuance an original signed application by the insured or a faxed signed copy of the application is acceptable. The signed application must be received and maintained by the Company or agent. B. All applications submitted must be legible, complete in every detail and signed by the owner requesting the insurance. Applications must bear the exact date of owner s signature. Applications must also bear the producer s signature. Dating the application to be effective prior to the actual date of signature is prohibited. Use the Yacht Application provided by the Company unless approval has been extended in writing to use another application form. C. Special endorsement requests must be submitted to the Company and approved prior to use. Printed Company forms and endorsements may not be altered. Form , Ed. 1/07 Page 11 of 13

12 D. When the Company quotes a risk, that quote is only valid for 30 days. The agent must advise the Company within 48 hours of coverage being bound. E. A binder for no more than 30 days may be issued if the agent has been authorized to issue a binder. F. Policy service requests whether written or verbal, and regardless of source, should be resolved within 14 calendar days from receipt. All such requests and resolutions should be thoroughly documented. G. Complete applications should be received and acceptability determined within 30 calendar days from date of new business binder. Situations involving applications deemed incomplete or otherwise unacceptable must be resolved within 14 calendar days from receipt. If unresolved, notice must be provided to the Company within 45 calendar days from the date of new business binder; the Company will issue legal notice of cancellation to the insured within 60 calendar days from the date of new business binder. H. Complete policy forms should be issued to the insured not more than 45 calendar days from date of new business binder. I. For those agents who electronically transmit policy information to the Company, including those agents authorized to use our proprietary quoting and issuing system, all transactions must be transmitted to the Company within 45 calendar days. J. No transaction can be backdated except by referral to the Company. X. RENEWAL OF A POLICY A. Any renewal policy involving reinsurance, Quartermaster coverage or including commercial-use endorsements outside of the agent s authority must be reviewed by the Company 60 days prior to each renewal. B. All renewals must be issued at least 45 days prior to effective date. C. The policy number will remain the same with each renewal. XI. NON-RENEWAL OF A POLICY A. Send request to the Company at 3910 Keswick Road, Baltimore, Maryland , ATTN: Zurich Marine Specialty 5SW, or fax to at least 90 days in advance if a policy will not be renewed and legal notice is to be sent prior to the expiration date of the policy. Please provide non-renewal reason. Form , Ed. 1/07 Page 12 of 13

13 B. If the insured elects not to renew and a renewal policy has not been issued, a memo indicating such must be sent to the Company. XII. CANCELLATION OF A POLICY Retroactive cancellations or backdating of cancellations is prohibited. Requests for exceptions must be referred to the Company. A. At insured s request: Send to the Company, either the original policy, bill of sale, or proof of insurance, and/or a lost policy release or a signed letter from the Insured within 30 days of effective date. B. At agent's request: 1. Send request to the Company with reason for cancellation. 2. Company will prepare and mail the legal Notice of Cancellation or Non-Renewal to: a. The insured b. The lienholder, if applicable c. The agent d. The finance company, if applicable C. Requests to reinstate coverage following a cancellation must be referred to the Company. Any policy, which cancels for non-payment more than twice in any five year period, is ineligible for reinstatement. Form , Ed. 1/07 Page 13 of 13