Davy Jones' Locker

Not all yacht insurance policies are alike. Some, for example, exclude losses under the Jones Act, more formally known as the Merchant Marine Act of 1920.

This U.S. federal statute regulates maritime commerce in U.S. waters and between U.S. ports. The law permits injured crew and staff members on board a ship to obtain financial damages from their employers for the ship owner's negligence. Another law, the Longshore and Harbor Workers Compensation Act, extends the same employment-injury and occupational-disease protection privileges to third parties, such as a bartender hired to serve an onboard occasion on a yacht.

Obviously, these risks are significant and real. The important concern for wealth managers is to assure owners of yachts that their insurance policies do indeed contain coverage absorbing the risks posed by both laws.