Institute Yacht Clauses (IYC) vs local wordings: how to compare boat insurance

Last reviewed: 11 August 2026

The Institute Yacht Clauses (IYC) are a recognised London-market reference, but they are not a complete policy on their own and are not automatically better than Spanish or European wordings. To determine which insurance protects a vessel more effectively, compare the incorporated version, schedule, endorsements, insured perils, exclusions, valuation, navigation, deductible and applicable law.

Short answer: IYC does not mean “everything is covered”

A policy incorporating IYC may suit particular yachts, voyages and risk structures. An insurer's Spanish or European wording can also provide broad, tailored protection. The name of the clauses does not decide a claim.

Before choosing, answer five questions:

1. Which edition and clauses are actually incorporated?

1. Which physical losses are covered and excluded?

1. How has the vessel been valued?

1. Where, when and for what purpose may it navigate?

1. Which liabilities, deductibles and duties remain with the assured?

What are the Institute Yacht Clauses?

The IYC are standardised clauses developed for yacht risks in the London market. The best-known historic reference is Institute Yacht Clauses 1/11/85, although other editions, additional clauses and proprietary yacht wordings may be used.

The Lloyd's Wordings Repository helps identify wordings used in the London market. For an individual policy, however, a repository reference cannot replace the contractual document supplied to the customer.

The 1/11/85 wording is based on listed perils and includes provisions concerning navigation, insured perils, exclusions, deductible, duties, salvage and collision liability. The schedule and endorsements may broaden, restrict or amend that starting point.

Why “IYC versus Spanish insurance” is the wrong comparison

There is no single Spanish, French or European boat policy. Some products list insured perils; others use accidental-damage or “all risks” language subject to exclusions. Proprietary high-value yacht wordings also exist.

A rigorous comparison therefore examines documents, not countries:

• schedule and policy particulars;

• general and special conditions;

• complete IYC version, if incorporated;

• additional clauses and endorsements;

• deductibles, sublimits and aggregates;

• certificate and terms of compulsory liability;

• governing law and jurisdiction.

Two policies advertising “IYC” may respond differently. The same is true of two products sold as “all risks”.

Comparison table: what to check

Item	IYC-based policy	Proprietary or local wording	Question the policy must answer
Coverage structure	The classic version lists perils and contains exclusions	May use listed perils or accidental damage with exclusions	Does the actual cause fall within cover?
Machinery and latent defect	May cover certain resulting damage subject to conditions, without turning wear or maintenance into a claim	Depends on wording and extensions	Is the defective part, resulting damage or neither covered?
Vessel value	Set in the schedule; IYC alone does not insert an amount	May use agreed, valued, actual or another defined basis	What amount applies to total and partial loss?
Navigation	Area and conditions are stated in the policy and endorsements	Territory, use and seasons are also restricted	Does it include every intended route, stay, race, charter or transport?
Liability	May include collision liability with its own formula and limits	May include voluntary and/or compulsory liability	Does it meet compulsory requirements and cover other third-party losses?
Deductible	Stated or amended in the schedule and may vary by peril	May have general and special deductibles	What does the assured bear in each scenario?
Salvage and wreck removal	Subject to specific clauses, limits and duties	Scope varies with contract and regulation	Which costs are insured and to what limit?
Survey and maintenance	The insurer may require a survey or recommendations	Also common depending on age, value and condition	Is it a condition precedent, warranty, recommendation or renewal requirement?
Law and jurisdiction	Not determined merely by incorporating IYC	Depend on contract and mandatory rules	Which law governs and where will disputes be heard?

The table cannot identify a universal winner. It reveals differences that a product label may conceal.

Listed perils and “all risks”: two misunderstood terms

Under a listed-perils structure, the assured must connect loss or damage to an insured cause, always subject to exclusions and conditions. “All risks” language is usually broader, but it never means every possible event. Wear, poor maintenance, deliberate acts, certain defects, unauthorised navigation and express exclusions may remain outside cover.

“Perils of the seas” does not mean every incident occurring at sea. There must be an insured maritime event and sufficient causation. Wear, corrosion, osmosis or maintenance failure does not become insured simply because it manifests during a voyage.

Machinery, latent defect and the cost of the failed part

This area often produces the most significant differences. A policy may cover damage caused by latent defect or negligence of specified persons while excluding the cost of replacing the defective part itself. Another may add machinery breakdown cover subject to age, deductible or sublimits.

Separate:

• the initial cause;

• the failed component;

• resulting damage to machinery, systems or hull;

• labour to locate and repair the damage;

• wear, corrosion and inadequate maintenance;

• removal, transport and reinstallation costs.

Searching for the word “machinery” is not enough. The answer may be spread across several clauses.

Agreed value, valued policy and market value

IYC does not automatically set a yacht's value. The amount and valuation basis must appear in the schedule and work with the applicable law.

In Spain, Article 414 of the Spanish Maritime Navigation Act 14/2014 provides that, for ships and vessels, the declared value is presumed to be a binding agreed valuation, except for fraud or a mistake making it notably higher than the interest. Articles 413 and 414 must be read with the policy.

Where English law applies, the Marine Insurance Act 1906 distinguishes valued and unvalued policies. Incorporating IYC does not remove the need to record the insured value and its basis correctly.

Even under a valued policy, deductible, limits, salvage, multiple insurance, fraud, breach and other terms may affect payment. No one should promise the scheduled figure “without argument”.

Navigation: Mediterranean, Atlantic and Caribbean

IYC does not itself grant worldwide navigation. The permitted area normally appears in the schedule or territorial clauses. An Atlantic crossing may require prior agreement, additional premium, a voyage plan, suitable crew, specific dates and safety measures.

Caribbean cover may include hurricane-season restrictions, location requirements, mooring standards or contingency plans. Flag-state rules and requirements in visited countries must also be checked.

Before changing route, disclose:

• itinerary and dates;

• departure and destination ports;

• skipper and crew;

• private, charter or racing use;

• yacht transport, if relevant;

• periods ashore;

• storm and cyclone precautions.

Notice alone may not extend cover. Obtain written confirmation whenever required.

Hull cover is not the same as compulsory third-party liability

Hull insurance primarily protects the interest in the vessel. It may include collision liability or third-party extensions, but their scope, proportion, limits and exclusions require review.

In Spain, Royal Decree 607/1999 governs compulsory civil liability insurance for recreational and sporting craft. Article 406(2) of the Maritime Navigation Act refers this compulsory insurance to the Insurance Contract Act.

Incorporating IYC into hull cover therefore does not by itself prove compliance with Spanish compulsory insurance or cover every voluntary liability, pollution, passenger, water-skiing, racing, charter or crew exposure.

Older yachts: there is no universal 20- or 25-year boundary

Age affects underwriting, but there is no universal rule removing partial-damage cover on a particular anniversary. Insurers assess construction, material, maintenance, navigation, value, claims and parts availability.

A recent survey may help, but it does not guarantee acceptance or full cover. It can also produce recommendations that must be completed before inception or within a stated period.

For an older yacht, prepare:

• current survey and date;

• maintenance and refit invoices;

• condition of rig, hull, systems and machinery;

• recent photographs;

• supported valuation;

• skipper experience;

• cruising plan;

• claims history.

Three examples of a proper comparison

11-metre sailing yacht cruising Spanish coastal waters

A local wording can be suitable if it covers the relevant physical damage, compulsory liability, assistance and an appropriate value. Adding IYC is not an automatic upgrade. Compare deductible, machinery, personal effects, wreck removal and navigation.

Yacht crossing the Atlantic

The priority is written acceptance of the voyage. Dates, crew, route, weather, stops, safety, Caribbean waters and hurricane season must be reviewed. An IYC policy restricted to the Mediterranean would not solve the exposure.

28-year-old yacht after a refit

The survey and scope of refit will be critical. Check partial damage, machinery, latent defect and resulting costs, and whether survey recommendations are binding. Neither age nor the IYC label predicts the claim response.

Checklist before placement or renewal

1. Obtain the complete wording and edition.

1. Review the schedule, particulars and every endorsement.

1. Confirm navigation, use, skipper and crew in writing.

1. Separate hull, machinery, collision and compulsory liability.

1. Check amount, valuation basis, deductibles and sublimits.

1. Analyse wear, corrosion, defect and maintenance exclusions.

1. Check personal effects, tender, outboard and equipment.

1. Review salvage, wreck removal and emergency costs.

1. Identify law, jurisdiction and claims procedure.

1. Disclose material changes and complete survey recommendations.

Frequently asked questions

Are IYC always better than a Spanish policy?

No. They are a recognised contractual base, but the answer depends on edition, endorsements, schedule, perils, exclusions, value, navigation and insurer.

Does IYC mean worldwide navigation?

No. Territory and navigation conditions are set by the policy. A passage may require written approval and additional premium.

Is agreed value automatic?

No. The amount and valuation basis must be recorded in the contract and coordinated with applicable law.

Does IYC cover every engine breakdown?

No. Cause, resulting damage, defective component, wear, maintenance, deductible and machinery extensions all matter.

Does an IYC policy replace Spanish compulsory liability cover?

Not necessarily. Hull and compulsory liability are distinct areas that must be coordinated expressly.

Can a yacht over 25 years old obtain partial-damage cover?

It may be possible, depending on underwriting, condition, survey, value, navigation and market. There is no universal rule.

The best policy is the one that responds to the declared risk

The decision should not turn on whether the wording is “English” or “local”, but on how it responds to the yacht's real scenarios. A professional comparison identifies gaps, conflicts and requirements before binding.

Nautilux Marine Insurance can review the schedule, wording and endorsements against the yacht's navigation, value and use. Request a policy review to understand what is covered and what should be negotiated before departure.

*General information only. It is not legal advice or confirmation of cover. Insurance response depends on the facts, clause edition, complete contract and applicable law.*