Franchise

In insurance, whether it concerns cars or yachts, there is such a thing as a franchise. For example, we own a yacht worth 1 million euros and want to insure it against any damage, theft, and everything in the world. The insurance company will always offer us several options. One of them is full insurance. That is, no matter what happens — from a small scratch to complete destruction — you will be compensated for everything without any “ifs,” “ands,” or “buts.” Such insurance can be called franchise-free.

The second option is franchised insurance. This is when the insurance company says, “Okay, we insure your yacht, but you pay off any damage up to a certain amount yourself.” For example, up to 5,000 euros, and everything above 5,000 is paid by the insurance company. If a yacht worth 1 million euros runs aground and the hole is so large that it is impossible to restore the hull (they say, “the yacht is full”), you will pay your 5,000, and the insurance fee will pay 995,000 euros. Obviously, such a coating is much cheaper than a franchise-free one because many minor risks — small chips and scratches on the paint — will not have to be extinguished by insurance. It is profitable for charter companies to buy just such insurance for their yachts, transferring minor risks to the client.

In fact, the amount of deposit you leave when you charter a boat is the amount the charter company must cover itself in the event of an insured event. But, of course, you are at risk. ‍

In cash or by card

Many people will roll their eyes now, but experience shows that it is necessary to remind them of this —— don't forget to pay attention to the deposit amount before you start your charter! You should have this money with you when you pick up the yacht. The amount usually varies between 1,500 and 5,500 euros. All charter brokers show this information on the boat's profile, but if you book directly from a charter company or individuals, don't be too lazy to ask for the information yourself. The best way to make a deposit — cash or by card — depends on several factors.

Firstly, not all companies accept cash; you should discuss this in advance. If they do take cash, the advantage is that most companies will give you your money back immediately after checkout. This comes in handy when you have 5,000 euros in cash freely available rather than in your credit card account. If you pay with a credit card, this actually means that you are using bank money. When a charter company freezes money on a credit card, it is not used in any way, and no interest is charged since this is not a withdrawal. Before the first charter, it makes sense to apply for a credit card with a limit that covers most charter deposits, conditionally 500,000 rubles.

If the card is not a credit card and you're using your own money, keep in mind that the refund rate can take up to four to five weeks, depending on YOUR bank. That is, the charter company has unfrozen them, but you will physically be able to see them on the map in a month. As a rule, there is no point in stopping your broker or charter company from getting your money back — they have nothing to do with it; call your bank directly. If you use a mobile or internet bank, find a frozen deposit in the list of payments. Most banking apps will show it with an hourglass icon or something similar to show you that this payment is being processed. Processing is an incomplete or “frozen” transaction. Only the payment's completed status, that is, if the payment has been fully processed, can cause concern. In this case, you should contact the charter company and clarify what is going on.

If you use a bank card to deposit, I HIGHLY recommend that you paint the CVV code on the back side of it with a marker in advance. The fact is that charter company employees love to ask you for a card and copy its details into their system or simply onto a piece of paper. This is VERY dangerous for your money, so remember or write down your CVV and the charter company; if asked, say any 3 digits other than the correct ones.

Non-insurance claims

Of course, there are situations when the insurance company will not work or cover expenses. To summarize, there are three such situations. The first is alcohol and drugs. If something happened to the yacht at a time when the skipper, and sometimes the crew, were under the influence of substances, and there were witnesses to it, there is no chance of getting a refund. The insurance company, of course, will look for ways not to pay.

A more abstract case is what is called criminal negligence, any highest-level idiocy that has led to problems. For example, you started the engine, steered the yacht into the rocks, and went to bed. So you had every opportunity to avoid an insurance event, but you didn't. Or you sail out of the marina into a wind of 70 knots, and you're hurled at rocks. This situation was easy to prevent. All you had to do was go to the bar, not to the sea. So before you do something stupid, think a few times, even if you are motivated by noble motives; for example, you want to shoot someone aground and run aground yourself. The examination may recognize this as criminal negligence, and you will be responsible for the full amount of damage.

A special kind of accident is at seemingly harmless anchorages. De jure, even when anchored, you are at sea. This means that they must put up a watchman. If the whole team slept well, it's your fault! Either don't spare your sailors, or use your imagination when something happens. However, when picking up a boat from each individual charter company, it makes sense to clarify your duties at anchorages. With the development of the charter business, many insurers have ceased to associate anchor with navigation and have no problems extinguishing such damage.

And the fourth chance not to get a refund is to race. Remember that the basic charter contract only includes recreational (recreational) voyages with family and friends. Any competitive element should be completely excluded—even the most amateur or friendly. Roughly speaking, if there is someone who notices you and another boat taking off or “butting” at a sign, then in the event of an accident, you will not receive insurance compensation. Some charter companies allow their fleet or part of it to be used for regattas, but at sports rates and separate insurance rules.

Cancelling a deposit

Some charter companies offer customers not to leave any deposit at all for an additional fee. This is usually referred to as full insurance or deposit zeroing, in English — damage waiver. This way, you remove all risks (except shame!). Again, with the exception of drug, alcohol, and criminal negligence situations. To understand the order of numbers, canceling a deposit of 2,500 euros will cost about 350-400 non-refundable euros. This is a good option for complete peace of mind during the charter; plus, you don't have to prepare a decent amount of cash or use a credit card.

Deposit reduction

The second option offered by charter companies is to reduce the deposit. If you charter a boat with a deposit of 4,000 euros and pay an additional 250 euros on top, the deposit will be reduced to 500-600 euros. This is the amount you will be risking in the event of any accidents. The main player in the market that offers only this option is Dream Yacht Charter, the largest charter company that owns about 1,500 boats around the world.

When choosing this option, you should remember that drowning or burning a boat is quite a difficult task; in theory, you can break the mast, bend a geek, break all the sails, and all this is really very expensive. But, as a rule, losses for a regular charter can average 150-300 euros. Small chips from careless mooring, scratches on doors, etc. Situations that cost even 600-700 euros are extremely rare (and by paying 250 euros for the reduction and risking another 500, you will still de facto pay for all the damage, as if you were not reducing anything). Companies are well aware of the statistics of breakdowns, which is why they offer this option.

Some skippers reduce the deposit when there is no place to get the money to deposit it in full — this is probably the only time this option makes sense. In all other cases, reducing the deposit simply increases the cost of your charter and brings additional profit to charter companies.

When you buy a deposit cancellation or reduction, read the contract to see what is and isn't covered by these special options. Most likely, you will have to pay separately for all attachments if you lose them — a dinghy, an outboarder, a life raft, etc.

Deposit insurance in insurance companies

The deposit insurance option from third companies is always cheaper than zeroing it out through a charter operator. Of course, you will have to leave a deposit, but the insurance company will return everything (or almost everything, if the insurance is franchised) withdrawn from it in the event of an insured event. There are quite a few such insurance companies; some of the most famous ones are Yacht-Pool, Pantaenius, Schomacker, and EIS. The last two work with Russian citizens; the others do not. You can buy insurance directly from them on their websites. For those who often charter yachts, there are one-year packages available.

These insurers have franchised and unfranchised offers. The franchised is called deduction. For example, if you rent a boat with a deposit of 3,000 euros, insurance will cover 2,900 euros, and your liability will cover 100. Franchised insurance products are traditionally cheaper than franchise-free ones. In any case, the cost of these insurances is much lower than that of similar offers from charter companies. The only drawback is that you will have to make the deposit itself.

What to do if something happens

Regardless of whether you buy insurance or not, in the event of any damage that is your fault or not, the first thing you should do is call the charter company. After the call, it's best to take a picture of the breakdown and email the photos and a description of the problem —— for safety. Otherwise, you will be in breach of the terms of your charter contract. Even if you're innocent and you were just run into in a marina, the charter company may withhold part of the deposit if the breakdown is only discovered during checkout.

If you have insured your deposit with a third-party company, call them immediately after talking to the charter company and, if possible, duplicate the information by email. The further procedure for returning the withheld deposit is simple. The charter company must issue you a stamped and signed invoice for the amount that will be deducted from your deposit with a list of all work and materials. You will also need to send a charter contract, a passport, a skipper's license, and, as a rule, photographs of the breakdowns, a diagram of the incident, and an explanatory note. This package of documents will be issued by your charter company anyway. You can wait 3-6 months for the money, but it will eventually be paid, and that's the main thing.

P. S. If you do leave a full or reduced deposit, be careful when checking in. Shoot a video of scratches on the body to get a charter company representative into the frame and inspect the mast and rigging of old boats, blocks, staples, and rope fasteners. If you are unable to check the sails, write on the checklist that the sails have not been inspected. Agree with the charter company that you will go to sea at a certain time, and if you see problems with the sails, you will return to the marina. Don't hesitate to seem boring —— This is the first and last time you'll see the charter staff, and you'll part with your money forever.