Just one year ago, Pier Luigi Loro Piana—heir to the luxury Italian clothing company Loro Piana—was making celebratory toasts and basking in the light that gleamed off trophy after trophy. His 130-foot Baltic sailing yacht, My Song, racked up three first-place wins in as many races at the Loro Piana Superyacht Regatta, which not only bears his family name, but which he also hosts each summer off the Mediterranean’s playground of the rich and famous, Porto Cervo. Soon after those wins, My Song set a speed record for the RORC Transatlantic Race, which saw her crew sail her across the Atlantic from the Canary Islands to Grenada. “Racing at 20 knots was amazing,” Loro Piana told Sail-World at the time. “I am very happy.”
A few months ago, according to multiple news reports, he had his beloved sailing yacht placed aboard a transport ship so she could return to her home waters. The yacht—just 3 years old with plenty of prime racing years left under her keel—was scheduled to defend her title in the Loro Piana Superyacht Regatta again this past June. But My Song never made it to that regatta, or back to Italy at all. After the transport ship reportedly made a stop in Palma de Mallorca, Spain, the yacht’s name became destined for a different kind of record book.
Her billionaire owner, despite all his money and connections, had to watch helplessly as news reports showed his multimillion-dollar yacht sinking into the sea, having fallen off the Peters & May transport ship during a storm on May 26. The photographs taken from helicopters circling the hull were heartbreaking, at various times showing the bow, and then the stern, and then the bow again sinking beneath the water as waves battered the hull. “It is as if my home has burned down,” Loro Piana told newspaper La Repubblica.
As of early June, My Song had been recovered and hauled out, with the hull showing signs of serious damage—and the chief executive officer of Peters & May had released a statement that left boat owners everywhere bewildered. “A full investigation into the cause of the incident has been launched,” CEO David Holley wrote, “however the primary assessment is that the yacht’s cradle (owned and provided by the yacht, warrantied by the yacht for sea transport and assembled by the yacht’s crew) collapsed during the voyage from Palma to Genoa and subsequently resulted in the loss of My Song overboard.” In other words, the head of the company hired to transport My Song safely was publicly placing blame and liability on the boat’s owner and crew.
Michael T. Moore, a 40-year veteran of maritime law and founding partner of Moore & Company in Coral Gables, Florida, practically felt each word of the statement like a kidney punch. He knew that Peters & May, in a court of law, would likely be proved right.
The entire situation, he says, brought back memories of a friend who had put his life savings into a yacht more than 100 feet long and worth about $7 million. A few years ago, the friend put the yacht on a transport ship bound for Florida, where he intended to sell the vessel at the Fort Lauderdale International Boat Show and live on the proceeds throughout his retirement. That boat didn’t make it, either. And the friend sued the transport company. “He only got $500,” Moore says. “Your life gets ruined in one moment.”
What boat owners need to understand about the recent news reports, Moore says, is that the CEO’s statement about My Song and her owner facing all the potential liability is far from an anomaly. It is, in fact, the default norm. Once a transport company handles a boat, Moore says, the boat stops being a boat in the eyes of the law. It instead becomes cargo, which means regular boat insurance no longer applies. And at that point, the company moving the cargo gains the upper hand in terms of liability. The law that takes over is the International Convention Regarding Bills of Lading, or “the Hague Rules,” which numerous nations have signed onto with their own versions. In the United States, the law takes the form of the Carriage of Goods by Sea Act.
The law requires transport-ship owners to pay $500 for cargo that is not shipped in packages, should anything go wrong. Since a boat becomes cargo once the transport company handles it, and since the boat is not shipped inside a package, its value in terms of the transport company’s liability is just $500, regardless of the actual value. “If you don’t get yourself properly insured—if you think for a moment that you’re insured by the vessel—you might want to think again,” Moore says. “Most of the time, these cargo vessels do not have anything to insure your vessel, and they are protected by the Carriage of Goods by Sea Act.”
Ingrid Anglin, executive director at Only Yacht Superyacht Insurance in Fort Lauderdale, says she urges clients only to transport their boats on ships that offer liability insurance for the boats too. The fact that a transport company is offering such insurance to the boat owner, she says, is a hallmark of the company being trustworthy in the first place. “If the company doesn’t also have a policy that covers your boat, then look for another,” she says. “Their liability coverage should automatically cover your vessel the minute they touch it.”
Having the right insurance is even more important than trying to figure out which transport company is the best, Moore says. That’s because there basically are two types of transport companies handling transatlantic passages for boats. Both turn a boat into on-deck cargo, which means the boat is exposed to weather as opposed to being in the belly of a ship. The way the two types of transport companies position the boats on deck as cargo is different. The first type of transport company uses transport ships that are specifically designed to load boats on and off. “They sink down in the water, and the vessels are brought into a wet dock,” says Moore. “The back of the ship is then closed and water is pumped out. The ship rises, and of course the water supporting these vessels is leaving, so the yacht being carried by sea is now settling into its cradle.”
With the second type of transport company, he says, the boats are handled more like packaged cargo, being lifted through the air and positioned by humans and the force of gravity, instead of by water and gravity. “You put slings underneath the yachts, and they’re lifted by the cranes, positioned over the cradles and lowered down to the cradle that was created to carry that boat on the cargo vessel.”
It’s that second type of transport company that, Moore says, has led many clients over the years to call him and ask about filing a lawsuit. “It’s unfortunately a reoccurring theme,” he says. However, he adds, even knowing how the loading of the boats works, it can be hard for boat owners to determine which transport company to trust, because the ships themselves have so many differences.
“Ships come in a lot of different flavors,” Moore says. “You have new ships. You have old ships. You have super-seaworthy ships and not-so-seaworthy ships. You have vessels flagged in good states and vessels flagged someplace like Cambodia. It’s a problem. You don’t really know what you’re getting. Some people are at the top of their game, and others are not so good.”
For all of these reasons, he says, he urges clients—no matter which type of transport company they choose—to work with a specialty marine insurance broker to make sure that, no matter what goes wrong, the boat will be insured. He advises clients to email the insurance broker when seeking out a transport policy, and to ask specifically for a policy that will kick in should the boat suffer damage or go overboard. “Make sure your emails are crystal clear: I want to be fully covered for the full value of my boat. Here’s how I’m sending it. Tell them exactly what you’re going to do, in writing, and then you will be covered,” Moore says. “That’s called shifting the risk. It’s risk management. You’re shifting the risk to the marine insurance broker, and then to the marine insurance carrier. If your yacht goes overboard, at least you’re going to get paid.”
He and Anglin both say that working with an insurance broker who specializes in the marine industry is also key to making sure the coverage is correct. “A guy will say, ‘I can insure your house, your boat, your car, whatever,’” Anglin says. “Sometimes they can, but ask if there’s a marine specialist in the office. They may have done a good job handling your house and your car or maybe your business, but you want a marine specialist who really understands what happens on the water.”
Asking a few basic questions, Anglin says, can help boat owners suss out whether an insurance broker really knows what he’s talking about. A true marine specialist will be able to answer certain questions off the top of her head, regarding basic boat insurance as well as insurance that covers cross-ocean transports. For instance, boat owners can ask if an insurance policy requires the owner to have a hurricane plan. Owners only need a hurricane plan in places where there are hurricanes. “If the boat is in Michigan and they say you need a hurricane plan, I would hang up the phone,” Anglin says.
A question that boat owners can ask specific to cross-ocean transports, Anglin says, is whether the insurance policy’s liability limit should be equal to the boat’s value, or more than the boat’s value. “You always want your liability coverage to be above your hull value,” she says. The reason is the same as with liability insurance for a car: What if your boat goes overboard and damages another boat? You’ll need more liability coverage than the value of just your boat.
The good news, says Moore, is that when things do go wrong on a transport ship, they’re often far less dramatic than what happened to My Song. At the same time, though, the fact that cases as severe as this one are so few and far between can lull boat owners into a false sense of security. He says he hopes that, in talking about the My Song situation, boat owners will realize they have to plan for the worst-case scenario when putting a boat on a transport ship.
“Most cargo claims are settled,” he says. “You get a little ding and the insurance companies settle. But when you get into a situation where the yacht owner doesn’t have insurance or his normal yacht policy does not cover the yacht when it’s cargo, that’s going to be a sad day. That owner is thinking he has yacht insurance, and he needs to be worried.”
This article originally appeared in the August 2019 issue.