Global Courant
Just as property titles are subject to registration errors, existing liens and other encumbrances, ship and boat titles can have hidden issues that can create a liability for new ship owners. The best way for buyers of watercraft, yachts and boats to protect themselves against these liabilities is to purchase property insurance. Agencies that offer this type of insurance conduct thorough property history research to ensure the title of the vessel is in “good opinion.” Vessel title insurance also provides financial protection for shipowners in the event of a lawsuit or other financial loss due to title complications.
Why do vessels need property insurance?
Various types of problems can occur with boat titles. Vessel buyers are usually unaware that any of these issues exist – until they are hit with a lawsuit over ownership or costs associated with previous liens. Insurance agencies hire underwriters and title attorneys to investigate the title chain of ownership to uncover – and resolve – these issues before the sale takes place.
Common issues associated with yacht and ship titles include:
Fraud. Counterfeit or fraudulent documents can appear at any point in the ownership history. Ship brokers or previous owners sometimes try to sell ships under false titles, defrauding both the mortgage lender and the new owner. In some rare cases, the mortgages in the ship’s ownership history may be revealed as fraudulent. In addition, vessels can be registered with both the US Coast Guard and the state, allowing vessels to carry more than one “valid” title. Multiple titles can lead to multiple mortgages for which the ship owner can be held responsible.
Property Disputes. Even though a vessel owner has a valid document certificate and a federal boat registration, he or she can still be subject to property disputes. These documents do not have the ultimate authority to determine ownership; only the underlying contract of the yacht or vessel can determine ownership. If the underlying contract of the vessel’s title is made on fraudulent documents, the buyer’s ownership may be voided.
Pre-existing mortgages or pledges. The new owner of a vessel will be held responsible for all unpaid taxes, unresolved mortgages and unpaid contract work associated with the title of a vessel, even if he or she was unaware of them at the time of purchase.
Vessel buyers may request title advice prior to finalizing the sale. While good advice provides some assurance against disputes, opinions and ship title summaries are not always reliable. Incorrect data, incorrect documentation, fraud and human error can lead insurers to prepare incorrect title recommendations. The only way the buyer of a yacht or boat can protect himself against these complications is by purchasing vessel title insurance.
How does boat title insurance protect me?
In addition to conducting a thorough investigation of the ship’s ownership history before the sale is completed, title insurance companies provide financial compensation in the event of a lawsuit. Ship title insurance generally covers the costs of legal defense against attacks on the ship’s title; in addition, insurance will provide compensation for any financial or asset losses caused by a defective title.
Property Insurance for Boats and Vessels – Protect
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