Often, shipyard’s insurance is not capable of dealing with the high value of some of the superyachts available on today’s market. The shipyard may therefore choose to protect itself by requesting a Waiver of Subrogation from the owner’s yacht insurer.
What is a ‘Waiver of Subrogation’?
When a yacht is held in a shipyard, the yard has an option to transfer its liability for any damages to the boat, to the vessel’s owner. This is where a Waiver of subrogation comes into play; ‘subrogation’ meaning ‘to substitute’.
The waiver also means that the shipyard doesn’t take any responsibility for the yacht whilst it is based in the yard - except in the cases of gross negligence and/ or a wilful act performed by the shipyard.
This means that the client’s insurance company will not be able to hold the shipyard responsible for any losses incurred while the vessel in their care, and therefore cannot demand payment from the yard for the loss.
Choosing a leading specialist
Yacht insurance experts calculate endorsement’s for Waivers of Subrogation on a case by case basis, dependant on factors which include:
Beware hidden costs
Financial costs can vary, from no premium being charged to a small percentage charge based on the value of the yacht.
Owners are strongly advised to confirm costs with the shipyard and their yacht insurance provider prior to committing to a refit, therefore avoiding any hidden costs arising after the refit deal has been signed.
It is therefore imperative that the yacht owner discusses the refit plan with their insurer before signing a Waiver of Subrogation. If not, they could find that their insurance cover is void.