Rhode Island Insurance Adjuster Exam

When is a yacht policy generally necessary?

1. For boats used commercially

2. For personal watercraft only

3. For boats that are 26 feet or longer

4. For any pleasure boat

The correct answer is: For boats that are 26 feet or longer

A yacht policy is generally considered necessary for boats that are 26 feet or longer because these vessels often possess characteristics that distinguish them from smaller boats and personal watercraft. The size and complexity of larger yachts usually entail different risks and coverage needs, which a standard boat policy may not adequately address. Therefore, yacht policies are designed to cover the unique liabilities and potential damages associated with larger vessels, such as higher repair costs, increased liability limits, and specialized coverage options like hull insurance and equipment coverage. While boats used commercially do require specialized commercial marine insurance, personal watercraft may use different types of coverage that don’t necessitate a specific yacht policy. Pleasure boats, regardless of their size, can often be insured under broader boat insurance policies unless they meet the criteria for a yacht policy. Thus, vessels that are 26 feet or longer typically indicate the need for a dedicated yacht policy.