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I recently had cause to read several on line forums concerning difficulties individuals were having with insurers, especially one particular insurer/broker based abroad.

It is true that many of the regular UK insurers that readers might be familiar with base their business model on insuring in the areas closer to home, that is Europe, the Mediterranean and the Baltic and they are therefore not so keen to insure owners taking their craft across the Atlantic, Pacific or to the middle East or South Africa for example, especially if some of those trips are planned in vessels getting a little elderly or without a recent survey.

At the end of the day all insurers underwrite to try to avoid making a loss and therefore when asked to underwrite some of the more “adventurous” risks that owners might wish to undertake, it is not surprising that they say “no”. It seems that some owners faced with this situation and still with a determination to go have turned to insurers who are not authorised and regulated by the Financial Conduct Authority (FCA), previously the Financial Services Authority and have purchased cover which appears to be suitable but has subsequently been found wanting when it comes to paying claims.

Although we who are regulated by the FCA find such regulation a time-consuming and expensive bind, there is no doubt that the protection that results to our customers is worthwhile to them and we would not recommend using an insurer which was not so regulated. Customers may not be aware that all companies registered in the UK to conduct insurance from the largest insurer to the smallest broker help to fund the FCA with their FCA Periodic Fee, Money Advice Service Fee, Financial Services Compensation Scheme Levy and Financial Ombudsman Service Levy, so don’t be surprised if these costs are passed on to you the customer, whether you see it or not, as it is you who are likely to benefit!

The message then is even if you want to undertake a more adventurous cruise, try a good specialist UK yacht insurance broker first, as they are likely to have the knowledge of which underwriter might help, what requirements you may need to meet and what pitfalls you may encounter.

David Long - 19/8/2013.

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