Hurricane Season is a difficult time on the East Coast and Gulf Shores of the U.S. for boat owners as well as the marine industry in general. Officially, this period of time runs from June 1 to November 30 with peak activity between August 15 and October 15th. An excellent example of this is the Hurricane Seasaon where a record four hurricanes made landfalls in August/September causing billions of dollars in property damage.
Each year, the marine insurers keep a wary eye toward hurricane & windstorm
activity. Carriers will routinely issue a moratorium on writing new policies
or making changes to existing contracts when there is a named or numbered windstorm
developing in the Caribbean Basin. Since there is no fixed time span on a moratorium,
keep in touch with your insurance agent for updates. Those individuals that
are purchasing, selling, brokering, financing & insuring boats find themselves
in a holding pattern, unable to complete their transactions until the storm
passes. Buyers can’t buy, sellers can’t
sell, brokers & banks cannot close their deals until the market for insurance
Insurance companies manage risk. When they see the high risk of a windstorm on the horizon, they seek to limit the exposure that they already have by freezing any new liabilities. Today, most yacht insurance premiums are based on the fact that most losses and claims are of a partial nature with very few total losses. For the most part premiums are affordable under this premise.
When you throw in a large amount of total losses this formula breaks down quickly. Hurricanes cause total losses and the insurers will move to limit their exposure as quickly as possible. The best thing to consider when buying a boat during Hurricane season is that the insurability of a yacht is not a sure thing and one should consider this in the contractual obligations of a yacht purchase. Ask that an insurance clause be put in the contract that would allow you to postpone a settlement in the event of a hurricane moratorium on insurance.
For current owners of private vessels, here are a few good preparation tips for Hurricanes:
A small amount of physical & clerical preparation in advance of a hurricane
or windstorm will greatly reduce your stress in the event you suffer a loss.
This preparation will also enable you to streamline the claims process.