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September 2026

Steer Clear of Uncharted Risks: How to Safeguard Your Yacht in the Shipyard

Understanding insurance pitfalls and contractual risks to protect your yacht during refits and repairs.

Summary

  • Shipyard repairs could involve risks, including damage and injuries, which might affect your insurance coverage.
  • Contract clauses like liability limits and waivers of subrogation may limit your ability to recover damages if something goes wrong.
  • Hot work, like welding and grinding, needs clear communication with your insurer to make sure you’re covered.
  • Planning ahead—reviewing policies and yard agreements with your broker—could help avoid surprises and protect your yacht.

“A ship in harbor is safe, but that’s not what a ship is built for,” wrote John Shedd. You’ve probably heard this quote before, but for those of us in insurance, we don’t take it at face value. We know that a ship in harbor faces risks, just like a ship at sea.

Your yacht is taken to shore and the shipyard yearly for maintenance or repairs. This process is necessary but could be complex, involving crane lifts, hot work like welding, dozens of workers around your yacht, and additional risks.

While insurance might not be your first thought, it’s an important safeguard. A report showed that between 2019 and 2023, most yacht owners saw their premiums increase significantly. There are several reasons for this, but the two main factors behind hull premium increases are natural disaster losses and reinsurance costs. Whether your yacht is at sea, docked, or in the yard, it’s essential to understand your coverage. Many sailors overlook yard agreements, which could leave gaps in coverage. For example, yards often shift or limit liability, making owners responsible for damage or injuries caused by negligence.

So, who’s really responsible if something goes wrong? Usually, it depends on your contract terms. Knowing these details and having the right insurance could help protect your investment and provide peace of mind.

Hot-To-Go: Shipyard Repairs and Insurance Conditions for Hot Work

Picture this: Your $25 million yacht is scheduled for haul-out and hot work repairs at a busy shipyard. To reserve your spot, you sign their standard contract, which says they’re not liable for any loss or damage over $300,000.

The issue? Neither the yard’s liability limits nor the yard period details are shared with your insurer. If a fire happens during hot work and destroys the yacht, what does that mean for your insurance?

  • Your insurer might deny the claim if you don’t follow refit and hot work clauses.
  • Signing a yard contract that waives your rights to recover damages without your insurer’s approval could put your claim at risk.
  • Your ability to recover damages from the yard depends on your contract terms.

This example shows why it’s important to understand your coverage and contracts before repairs. Good planning may help you be better prepared if something unexpected happens.
 

Saving Lives and Belongings

  • A client was on their yacht during a family vacation when it started taking on water. Quick action was needed to rescue everyone on board.

  • Making things more complicated, the yacht also carried the family’s artwork, which was very meaningful to them.

  • The client called our PCS team, and we immediately responded to coordinate efforts to get the family to safety. Our claims leader also arranged for a temporary replacement vessel so they could continue their planned trip.

  • As for the artwork, our team organized a complete restoration of any pieces damaged during the incident. This stressful and emotional experience ended on a positive note.

In-“shore”-ing Yachts in the Yard

Getting ready for your yacht to be on shore and in the yard is important, since underwriters usually need detailed information and advance notice before any work starts.

Many yacht insurance policies have specific conditions for refits and hot work—failing to follow them could lead to coverage denial. As we’ve already noted, the time your yacht is on shore and in the yard may also be risky.

The Waiver of Subrogation clause might not let you waive your recovery rights unless your insurer approves in advance. Signing yard waivers or limiting liability without prior approval could cancel your coverage. Also, yacht policies usually exclude liabilities you assume through contracts. Unless explicitly approved, taking on responsibilities for others isn’t covered.

Hot work—like welding, cutting, grinding, or any activity that produces heat or sparks—could ignite flammable materials. Some policies specify hot work explicitly, while others don’t. If you’re unsure what your policy covers, contact our PCS Yacht Specialty Group to schedule a review. We are here to help you understand your policy details, including the specifics related to hot work.

Understanding these details could help protect your yacht and prevent unexpected costs during yard periods. Clear communication with your insurer is important.

What can I do to protect myself?

Before signing a yard contract or starting work, review your policy conditions and the yard’s terms with your insurance broker. This review process could help you understand responsibilities, spot potential coverage conflicts, and find possible solutions.

Skipping these steps could leave you financially responsible without insurance coverage when you need it most. Being proactive helps ensure your yacht is protected at every stage.

Smooth Sailing with a Broker

We are one of the few insurance organizations with dedicated claims professionals whose only focus is our clients and their yachts. Our clients are able to call our emergency line anytime—24/7/365—and speak with a caring, knowledgeable client advocate. Our PCS Yacht Specialty Group has extensive yachting experience, which helps us address risks like shipyard-specific issues and handle uncommon situations.

If you want help reviewing your policy and understanding your coverage while your yacht is in the yard, reach out for guidance. Our team is made up of insurance professionals who also personally love sailing and being on the water. They are on deck to help you as you navigate your policy’s details and spot “awash” conditions that could leave you and your boat sitting, not sailing.

Take James Bishop as an example. He taught himself how to sail when he was five-years old, raced sailboats throughout high school and college, and delivered yachts from the East Coast of the U.S. to the Caribbean. Prior to getting into the yacht insurance business, he managed base operations for a global yacht charter company in both the U.S. and in Grenada. 

Today, he manages the Yacht Specialty Group with his dedicated and passionate team who work to support our clients' yachts and protect their yachting lifestyle.

Request an insurance review with an experienced Personal Risk Advisor to ensure you're adequately insured for whatever life may bring.

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