Property and Casualty Insurance Practice Exam

What type of insurance is included in a Personal Yacht Policy?

1. Only liability coverage for injuries

2. A package of property and liability coverages for large pleasure boats

3. Only theft coverage for the yacht

4. Coverage limited to the equipment on the yacht

The correct answer is: A package of property and liability coverages for large pleasure boats

A Personal Yacht Policy is designed to provide comprehensive coverage for large pleasure boats, combining both property and liability coverages. This type of insurance typically encompasses various elements such as physical damage to the yacht itself, coverage for bodily injury to others and property damage, as well as protection against theft and other potential risks. When considering this policy, it is essential to recognize that a yacht represents a significant investment and is often used for recreational purposes, necessitating broader coverage than just liability or theft. The inclusion of property coverage protects the yacht from physical damage due to accidents, weather conditions, or other losses, while liability coverage addresses claims arising from injuries or damages to third parties. This makes the option that states a package of property and liability coverages for large pleasure boats the most accurate representation of what a Personal Yacht Policy typically includes. Other choices are too narrow in scope and do not encompass the comprehensive protection needed for such vessels.