Does My Yacht Insurance Cover a Major Refit?

A certificate showing the yacht’s insured value and policy expiry date does not answer the refit question. Read the policy wording, schedule and endorsements together, particularly anything headed “Refit, repair and hot works”, “Alterations” or “Rights of recovery”. Those conditions can determine whether the insurer accepts the yard exposure at all.

There is no universal notification threshold. One published UK wording requires at least 14 days’ advance notice for refit, repair or hot works costing more than £25,000. It also requires confirmation of contractor liability insurance and prohibits contractual restrictions affecting the insurer’s recovery rights. That is an example of a contractual condition, not a rule applying to every yacht.

A January 2025 yacht wording takes a different approach: its hot-work extension requires prior notice, full work details, competent authorised personnel and no agreed waiver of recourse against the yard or subcontractors. A small welding job can therefore deserve as much insurance attention as a substantial interior refurbishment.

Send the actual specification. “Winter maintenance in Palma” is not a useful description if the job includes cutting exhaust supports, removing generators and temporarily disabling the fixed fire-extinguishing system.

The dangerous document is often the booking form signed to secure a slot. Its attached conditions may limit the yard’s liability, require the owner to indemnify the yard, or waive rights against contractors. Signing such provisions without insurer approval can jeopardise a subsequent claim.

A waiver of subrogation restricts the insurer’s ability to recover its payment from a responsible third party. The owner may see it as routine administration; the insurer sees a potentially valuable recovery right being surrendered. Contractually assuming another party’s liabilities can create a separate coverage problem.

Mark these provisions for review before accepting the quotation:

• The yard’s maximum liability and whether it applies per incident or in aggregate.
• Any waiver of recovery against the yard, its employees or subcontractors.
• Indemnities covering injury, pollution or damage to neighbouring vessels.
• Separate conditions for lifting, storage, towage and sea trials.

Standard contracts are not a substitute for that review. The ICOMIA refit-contract guide expressly contemplates owner-maintained hull and liability insurance, contractor insurance and agreed waivers, including arrangements involving owner-appointed contractors. Confirm the legal effect and insurance consequences with qualified advisers for the yacht’s own case.

Under the arrangements described in the ICOMIA guide, owners maintain insurance for the yacht and third-party liabilities throughout the refit, while contractors carry insurance responding to fault-based claims. These are different protections. A yard’s insurance certificate should not be treated as a promise to pay for every casualty affecting the yacht.

Request the certificate early enough for its limits and conditions to influence yard selection. Ask the insurance adviser to verify:

• The insured legal entity matches the contracting yard.
• The named premises include the actual worksite and storage location.
• The covered activities include the proposed operations.
• The policy remains valid throughout the anticipated yard period.
• The limit applies per occurrence, in aggregate, or through a combination of limits.
• Owner-appointed specialists are addressed separately where necessary.

The distinction between a yacht’s value and the yard’s contractual liability ceiling deserves particular attention. The ICOMIA guide includes provisions addressing aggregate claims and agreed ship-repairers’ liability limits; the number printed on a certificate cannot be read in isolation from the contract.

Do not accept “all subcontractors are covered” as the complete answer. Put the electrician, engine specialist and owner-supplied audiovisual contractor on the responsibility schedule, then have the relevant arrangements checked before they board.

Welding is not the only operation that creates a hot-work exposure. US shipyard safety guidance also identifies grinding, burning, drilling and similar spark-producing operations. That matters during apparently modest jobs around cable runs, insulation and concealed spaces. (osha.gov)

For US shipyard employment, OSHA requires a fire watch under specified hazardous conditions, including situations involving sparks passing through openings or combustible material on the opposite side of a bulkhead. During hot work, the fire watch must not be assigned other duties. The welder cannot simultaneously perform that role. (osha.gov)

The US standard requires the watch to remain for at least 30 minutes after completion, unless the employer or its representative surveys the exposed area and determines that no further fire hazard exists. This is not a worldwide insurance condition, nor permission to ignore stricter yard procedures or policy requirements. (osha.gov)

Before authorising the job, ask the project manager to record:

• The permit issuer and precise work location.
• The fire-watch personnel and areas each will observe.
• Protection or removal of nearby combustible materials.
• Access to extinguishers and emergency communications.
• The post-work inspection and watch arrangements.
• Any temporary impairment of detection or suppression systems.

Treat a newly discovered welding requirement as a pause point. Send it for insurance review before the contractor starts, rather than describing it afterwards as incidental maintenance.

Consider an illustrative 30-metre motor yacht insured for €6 million, entering a Barcelona yard in November 2026 for a five-month, €600,000 refit. These are planning assumptions, not market quotations. The work includes paint repairs, machinery removal and some steel fabrication.

Assume the proposed contract caps the yard’s liability at the price of the works. A hypothetical €2 million fire loss would exceed that ceiling by €1.4 million, before considering the enforceability of the cap, deductibles or other policy terms.

That arithmetic does not establish what the owner’s insurer would pay. It identifies the exposure that must be resolved before signature. The practical options to discuss are:

• Increasing the yard’s agreed contractual liability limit.
• Obtaining the owner’s insurer’s written acceptance of the arrangement.
• Purchasing an expressly agreed extension or project-specific protection.
• Changing the contractual allocation or choosing another yard.

The project budget should contain a separate allowance for any quoted additional premium, required surveys and contractual review. Do not invent that allowance by applying a generic percentage to the refit price. Obtain terms for this yacht, this yard and this specification.

Keep the €600,000 works budget separate from the €6 million insured asset value. They answer different questions, and neither should silently become the other’s insurance limit.

The best administrative sequence puts insurance review before an unconditional yard commitment. Use the following process as an owner’s checklist, allowing extra time where the insurer needs amended terms or further information.

1. 1Submit the project description. Include the yacht’s identity, yard location, dates, work specification and expected contract value.
2. 2Identify unusual exposures. Highlight hot work, structural alterations, machinery removal, lifting arrangements and temporary safety-system impairments.
3. 3Provide the complete contract. Include general conditions, appendices, subcontractor terms and every proposed waiver.
4. 4Supply contractor insurance evidence. Ask the adviser to reconcile certificates with the contractual obligations.
5. 5Obtain the insurer’s written decision. Keep any endorsement, accepted waiver, revised deductible and additional premium together.
6. 6Maintain a change log. Refer material departures from the approved specification or programme back for review.

This checklist reflects the advance-notification, work-detail, contractor-insurance and recovery-right conditions found in published yacht wordings. It is not an assertion that every policy requires precisely the same documents.

Avoid an approval request that merely asks whether the yacht is “covered in the yard”. Seek an answer tied to the submitted contract revision, specification and dates. An acknowledgement that documents were received is not the same thing as acceptance of the risk.

Build a handover checklist covering launch, machinery commissioning and sea trials. Ask for confirmation of the applicable cover, authorised operators and any outstanding insurer requirements before the yacht leaves the yard. Do not let an extension date expire while practical completion slips into another month.

Review the insured value separately from the final invoice. Agreed-value yacht policies can pay the agreed amount following a covered total loss, making the figure accepted by the insurer consequential. A €600,000 refit invoice is not, by itself, an agreed €600,000 increase in insured value.

Keep dated photographs, commissioning reports, invoices and the final specification available for that review. Also reconcile removed equipment and valuables with their storage arrangements. Insurer guidance recommends identifying high-value objects for removal during a refit and considering secure off-site storage.