DON’T FORGET THE RISK
Michelle Van De Merwe discusses insurance considerations during a superyacht refit period and asks if you’ve assessed your current policy
Superyacht refits are increasingly complex projects, and for owners, captains, managers, and shipyards, insurance has become one of the most challenging elements to navigate. As the marine insurance landscape evolves, driven by major industry losses and stricter insurer attitudes, understanding how risk changes during a yard period is essential. This article outlines the key insurance issues surrounding refit work and provides practical guidance for ensuring yachts remain properly protected throughout.
A yard stay represents a fundamental change in risk for the insurer and the owner. The work being performed, the duration of the stay, the chosen shipyard, and the contractors involved all influence the exposure. Major incidents, such as the well-known Lürssen shipyard fire – which resulted in losses far exceeding annual builders’ risk premium income—have reshaped the market. Today, insurers scrutinise yard liability limits, waiver requests, hot-work protocols, and contractual structures far more closely than before.
Because of this increased sensitivity, owners and managers have a clear duty of disclosure. Insurers must be notified of any planned refit so they can evaluate the risk and adjust cover accordingly. Last-minute calls stating a yacht is entering a yard “tomorrow” are becoming far more problematic, especially when a yard requires insurers to sign waivers or accept additional risk. Since yard periods are typically arranged months in advance, early engagement with insurers is the most effective way to avoid delays, unexpected costs, or disputes.
Hull Insurance: Protecting the Physical Asset
Hull underwriters require detailed information about a refit, including the scope of work, contractors involved, the selected yard, hot-work plans, project timelines, and most importantly, the yacht’s value at each stage. An incorrect or outdated valuation exposes owners to the risk of underinsurance – especially during major refits where value increases incrementally.
Insurers may request copies of refit contracts, particularly when owners agree to waivers of subrogation, recourse, or similar provisions. These waivers shift liability away from the shipyard and onto the yacht’s insurer and often require additional premium. Shipyard Repairers Liability (SRL) policies are also reviewed, as the insurer’s limits typically cannot exceed those carried by the yard. While ICOMIA recommends €10 million SRL limits, many yards still operate well below this, presenting challenges for insurers.
Full “ground-up” waivers are becoming rare. Some insurers now prefer to cancel or decline cover rather than accept inadequate yard liability limits. Owners are therefore strongly encouraged to verify all insurance-related costs before committing to refit contracts to avoid hidden expenses.
P&I and Crew-Related Liabilities
Protection & Indemnity (P&I) cover remains in force during refit periods, but insurers still need to be informed. In some cases, premiums can be reduced if crew numbers drop significantly or if certain high-risk activities (such as water sports) are paused.
P&I cover remains essential, as the owner retains liabilities toward crew, contractors, subcontractors, and third parties while in the yard. Overspray damage, fire spreading to adjacent vessels, or harm to workers can all generate substantial liabilities. Owners employing their own contractors must ensure that contracts are “back-to-back” with the yard’s requirements, particularly when the yard asks for waivers relating to third-party contractors. Ensuring these contractors carry adequate liability insurance is also critical.
International refits add another layer of complexity. Some jurisdictions impose wider liability frameworks—for example, the U.S. Jones Act and Longshore & Harbor Workers’ Compensation Act—potentially increasing exposure for owners.
How Captains and Managers Can Help
Captains play a central role in creating a smooth and transparent process for all stakeholders. Best practices include:
- Never signing yard documents before receiving insurer approval.
- Sharing complete refit plans, timelines, contractor lists, and hot-work details as early as possible.
- Confirming whether crew or day workers will perform tasks during the yard period.
- Verifying that contractors carry adequate liability insurance.
- Ensuring waivers correspond to realistic yard liability limits.
- Clarifying the type of hull policy in place and understanding the owner’s exposure.
- Updating insurers on any changes in schedule, scope, or vessel value.
For help with insurance requirements on refits or winterisation plans, please contact Michelle Van der Merwe in the Monaco office of Pantaenius.
For more details visit: www.superyacht.pantaenius.com
