Money Talks


Once the decision to purchase a multi-million pound yacht has been made, the next question is how do you plan to finance it? Sanctum spoke with Bob Atkinson, Partner at B Capital, Wealth Management to learn more about the process.

Sanctum: What motivates the yacht financiers to loan such large sums of money to clients?

Bob Atkinson: When purchasing a multi-million pound yacht, a number of factors need to be considered. Perhaps the first and most obvious question is where one will seek the capital to purchase said yacht. Is it the desire to lend money to deserving borrowers for a return as “banks were supposed to” or is it a way to entice & encourage a wealthy client to open and develop a lasting banking relationship? Invariably for the majority of banks it is the latter today.

The main financiers of the larger yachts (40m+) are almost all part of private banks who wish to use this financing as a way of “developing” or “deepening” the client/bank relationship. As a result, it may be more difficult for the client to completely move away from this particular bank in the future if the client utilises more than one or two products or services. It’s a classic requirement for cross selling.

The traditional long established private banks were and some still are institutions where clients have established relationships to invest, protect and manage the client’s financial assets only. This relationship takes considerable time to develop and for trust and consistent investment management performance levels to be demonstrated through this specialisation.

Broader based private banks use the provision of debt to deepen their existing client relationships beyond investment management only to have a greater hold or influence with the client, some use debt as a means to open doors and encourage a client, none of these banks are necessarily able to provide a full world class suite of increasing diverse and complex solutions to satisfy the demands of the client.

Sanctum: Surely there was a shift in lending after the Global Financial Crisis. Are we seeing rates return to normal?

Bob Atkinson: Since the financial crisis most banks want to reduce risk and they continue to “de risk” by withdrawing from jurisdictions round the world or selling businesses (most of the banks Trust operations have now be sold to independent providers) or they do not wish to lend to certain industry sectors or for certain asset types, such as yachts, private jets, art, classic cars or even property.

With this ever changing landscape the client, Family Offices, Trustees increasingly need to consider the immediate and potential future requirements and how these can be satisfied with access to the best solutions available in the markets. This will only be provided via a number of different parties who specialise in certain areas or sectors. The clients wants to be able to cherry pick from certain banks and specialist providers the best solutions available, however the banks are increasingly resisting this approach.

Sanctum: Any other advice for those looking to finance a superyacht in the future?

Bob Atkinson: A proactive Family Office or Trust working with an appropriate finance broker/ specialist can be the most efficient and effective way to achieve the desired results consistently over time.

To arrange a level of borrowing secured against a yacht, jet, property, art or classic car could require five different financiers to achieve the most compelling result and capitalise on their specialisation, in the same way as insurance for specialised assets that require a bespoke solution to achieve the best outcome.

Preparing for a refit

With the season winding down, the customary winter yard periods are now in full swing. Whether you’re preparing for routine winter maintenance or some more serious work, it would be prudent to advise your insurers. You should disclose the yard where the work is being undertaken, what is being done (in particular any hot work), the anticipated yard period and also seek a copy of the yard’s ship repairer’s liability.

Depending on where you are in the world, yards offer a varying degree of ship repairer’s liability. In some cases, yards provide no cover and instead ask you to extend your yacht insurance to cover the yard’s liabilities by way of a ‘Waiver of Subrogation’. This means that your insurers have no recourse against the yard should they damage your yacht whilst in their care. This unfortunately increases the risk exposure for your insurers and may result in additional premium being charged.


Some other considerations to think about….

  • Whilst most work can be noted and agreed by your yacht insurers, work involving a change in the yacht’s length, a serious contract price and/or a significant time period spent in the yard (say in excess of a year), may be better suited to a builder’s risk policy.
  • If you are planning to undertake work in a facility with contractors, the chances are they will have very limited insurance and no repairer’s liability insurance so ensure you have extended your yacht insurance.
  • Likewise, if the yard is employing subcontractors, check that they fall under the yard’s ship repairer’s liability or are included within the waiver of subrogation that has been agreed.
  • If hot work is being undertaken, ensure the relevant permits have been issued with the relevant fire fighting precautions in place during the hot work. This may be a warranty that your insurers apply when noting the yard period.

If you are in any doubt, or have any questions about insurance cover whilst in the yard, check with your insurers to ensure cover is not prejudiced and the right cover is in place.

Know your cruise requirements


With the summer season winding down, it is often the case that yachts begin to look ahead to the winter season. While many opt to complete refit works during this time, for others, it means setting sail for sunnier shores. Therefore, should you be exploring instead, whether in the Caribbean, Pacific, or even further afield, each region has their own unique considerations.

If sailing east to explore the Maldives and Asia, Piracy and War coverage should be discussed with your broker. Yacht insurance policies are subject to the JWC (Joint War Committee) listed areas, which excludes War and Piracy coverage for the areas listed. With prior notice, we are able to extend coverage for the required voyage ensuring coverage remains in force. Insurers will charge an additional premium and coverage will be subject to a number of conditions , which may include registration with the MSC HOA (Maritime Security Centre Horn of Africa) and to compliance with best management practices.

When sailing west toward the USA and Caribbean, different considerations are needed. COFR (Certificate of Financial Responsibility) will need to be applied for all yachts over 300 gross tons in USA waters. It is important to arrange your COFR and supporting insurance prior to arrival. This will prevent any issues with the US Coast Guard who can detain vessels or deny entry into US ports.

The cruising/navigation specified on all policies in place will need to be checked against your cruising itinerary requirements. Ensuring appropriate coverage is in place before any voyage will prevent any coverage issues should a claim arise. So if you are not on the right plan, you might not be covered.

It is vital to check coverage is in place for your cruising itinerary. This can be done by contacting your broker or by looking at the cruising/navigation specified on your insurance documentation. If you’re unsure, please do get in touch as we’re always here to help.

Toys on board: Segways

Boston Harborside Walk, Segway Tour

Having been around for a number of years now, segways have even made it on board as the latest toy for owners, guests or even crew to run errands. However, when using a Segway, as with any equipment on board, some thought needs to be given to its use including training but most importantly, whether you are covered to take them out of the marina, whilst on a public footpath or road, and what the risks are.

You need to ask firstly, is the Segway covered by the yacht’s insurers if it gets damaged or stolen? What if you damage third party property? Or cause injury to someone else? Is this covered by the liability or P&I policy?

It is most likely that it may not be covered and you will need to check with your insurer. In addition, each country may have separate rules and regulations for use which will need to be complied with.

So if you have Segways on board, please check with your broker that you are suitably covered.

Towing tenders



Whilst the majority of yachts carry their tenders on board, an increasing number are turning to towing as a viable option. A shift in use and requirements of tenders has seen the emergence of larger tenders that are too big to be kept on board. For others, towing negates the chore of launching and retrieving the tender, but it is recommended that a tender should not be towed if the length exceeds the beam of the yacht.

However, towing tenders can create certain inherent risks, largely the fact that it may become necessary to kiss goodbye and sacrifice the tender in order to protect the yacht. This is usually achieved by keeping a knife nearby to cut the bridal or alternatively, a release line can be rigged from the shackle back to the yacht.

With this inherent risk, what are the insurance implications? In the first instance, your insurers should be advised that you are indeed towing a tender and you should also advise the towing arrangements that you plan to adopt, i.e. the configuration of the towing set up, the towing eye and the line etc.

In order to mitigate any potential loss, underwriters may apply a tender towing clause. This would be likely to include limits for a single trip length and weather conditions in addition to ensuring that the tenders have fixed covers over engine intakes.

Dependent on the size and value of the tender to be towed, underwriters may apply an increased excess for the tender whilst being towed and apply an additional premium.

Once cover has been extended, happy towing!

Crew welfare

In check
Since the introduction of the MLC, the ‘Crew Package’ has become more important to crew with additional benefit and medical insurance becoming compulsory for commercial yachts.

Most owners will look after the crew with a full medical policy and cover expenses in the event of illness or injury, however with some exclusions for pre-existing conditions. Or if the yachts insurance changes providers, previous issues may be excluded from the new cover.

It is important therefore to know the health background of new and current crew to make sure they do not fall foul of any insurance exclusion in the event of a claim. It is also vital to know in an emergency if someone has any specific history of illness or reaction to treatment.

The easiest way to do this is to make sure each crew member completes a medical health check and questionnaire as part of the employment as ENG 1 will not highlight any pre-existing conditions. Most insurers if presented with a pre-existing condition at the inception of the policy may include at a small charge or for free.

Get race ready


Going for Gap

With the race season upon us, it’s important to shed some light on this exciting sector of the industry. One of the reasons why an owner may opt for a sailing yacht, is not only the potential to explore some unchartered territories, but to unleash that competitive streak and race her in one of the many superyacht regattas held globally.

To gain that competitive advantage, owners fly in professional helmsmen and tacticians, in addition to the guests and full time crew, increasing cover requirements. As well, with the vessel participating in competitive racing, the potential for a Medical or Third Party Liability claim as a result of an accident can increase.

The declaration to your insurance broker is imperative in this situation, due to the risk changing considerably with increased bodies on board and the use of the vessel. As this is a material fact, to ensure coverage remains fully in force, your insurance brokers should have regatta participation agreed with the underwriters in advance of participation. There may also be the requirement to enhance cover to include the race crew employed for the event.

Underwriters don’t generally view regattas negatively, however some underwriters may impose an increased deductible for the mast and spar’s whilst racing for example. As most events follow the Superyacht Racing Rules, this gives underwriters some comfort due to the minimum room rule between vessels whilst underway and the staggered start based on the handicap rating of the fleet.

Overall, the priority is to have safe, competitive, fun on the water and to ensure the owner’s exposures to all on board, the vessel and third parties are fully covered. Prior to regatta participation, advise your insurance broker accordingly, or if you require any additional advice please do contact us.