Which statement is correct regarding coverage under a Yacht policy?

A yacht policy may use a warranty regarding geographical cruising limits, which means the policy can specify certain areas where coverage is valid. This is important because yachts often travel to various locations, and insurance providers want to limit their exposure by dictating specific cruising ranges. By including a warranty on geographical limits, the insurer ensures that the policyholder is aware of the defined cruising areas and agrees to operate the yacht within those parameters. If the yacht ventures outside these limits, coverage may be voided, which emphasizes the significance of these warranties in yacht insurance.

This approach helps both the insurer and the policyholder maintain clarity regarding risk management while ensuring that the specific needs of yachting activities are addressed.