Smooth Sailing: Navigating Watercraft Insurance

By Holly Stallons, Director, Insurance Advisory

For many families, the joy of being on the water, whether it’s aboard a sleek motor yacht or classic sailboat, is more than just a pastime. It’s a lifestyle, a gathering space, and often, a generational tradition. But just as you would protect your home, your business, or a meaningful investment, your watercraft deserves the same thoughtful attention.  

Here’s what individuals and families should consider when it comes to watercraft insurance and safety. 

More Than a Policy: What Proper Coverage Should Look Like 

Watercraft insurance is not one-size-fits-all. While basic liability coverage is standard, families with complex holdings and unique risk profiles often require far more comprehensive protection. 

A well-structured marine insurance policy should address:

• Agreed Value Coverage: This ensures your vessel is insured for a fixed amount, eliminating depreciation surprises if there’s a total loss. 
• Worldwide Navigation Limits: If you plan to cruise internationally, or even between coasts, your coverage should follow. 
• Crew Liability & Jones Act Exposure: If you employ a captain or crew, you are entering the realm of maritime labor laws. Without the right coverage, personal liability risks can escalate quickly. 
• Environmental Liability: Fuel spills, accidental discharge, or grounding can lead to significant financial and legal consequences, especially in protected waters. 
• Tenders and Toys: Jet skis, seabobs, and inflatable slides often need separate riders or inclusion in your primary policy.

Integrating Watercraft Into Your Wealth Strategy 

A vessel is a lifestyle asset, as well a financial one. Your watercraft should be incorporated into a comprehensive estate plan to help maximize tax efficiency and ensure proper liability protection. 

Key considerations:

• Ownership Structure: Should the boat be owned individually, by an LLC, or held in trust? Each option has legal and tax implications.  
• Chartering and Use: Occasional charters or third-party usage introduce commercial liability risks, something your policy must explicitly cover. 
• Succession Planning: What happens to the vessel in the event of a death or sale? Who will manage or inherit it? Clarity today avoids confusion tomorrow. 
• Tax Optimization: Depending on usage and structure, certain expenses may be deductible or depreciable. But this requires careful coordination with your CPA and legal team. 
• Asset Protection: Holding your vessel in the right entity, such as a limited liability company, can shield personal assets from liability.

Like an estate or a family business, a yacht can carry both emotional and financial value. Managing it properly protects not just the vessel, but the legacy it represents. The best watercraft experiences are those free from worry. Protect your assets by taking a proactive, holistic approach to managing the nuanced risks that come with wealth. 

Contact Cresset to ensure your vessel, and the people who matter to you most, are fully protected.