Fires remain among the most common and expensive causes of marine casualties, frequently resulting in total loss and complex, multi-party claims. Yacht fires, in particular, have long been recognised as low-frequency but high-severity events with losses often extending beyond the insured vessel to adjacent yachts, marina infrastructure, shipyard facilities and the environment.
Historically, fires onboard yachts have been linked to familiar causes such as electrical faults, fuel leaks and engine failures, often compounded by human error or inadequate maintenance. While these risks remain, the increasing use of lithium‑ion batteries in tenders, water toys and onboard systems has introduced a further and potentially more serious risk that needs to be managed. Whilst lithium-ion batteries do not necessarily present a greater likelihood of fire over other causes, they involve different hazards which require revised approaches to storage, charging and emergency response. The principal concern is thermal runaway – an uncontrolled, self‑sustaining reaction which can generate extreme heat and flammable gases. Once developed, such fires can escalate rapidly, prove difficult to extinguish and may result in extensive damage or total loss.
Yacht fire claims, especially those involving lithium-ion batteries, are often evidentially complex, with causation difficult to establish due to the destruction of key evidence. This can complicate the allocation of liability and recovery actions, particularly where losses involve multiple insured parties, neighbouring vessels or marina operators.
Regulatory developments are beginning to respond; the MCA recently published an updated Marine Guidance Note (MGN 681 – Amendment 1[1]) which introduces a more rigorous framework for managing lithium‑ion risks on yachts. Although framed as guidance rather than statutory, the amended MGN represents a benchmark in standards and best practice, imposing detailed performance-based requirements for battery storage and charging, including the use of certified, fire-resistant containers equipped with detection, suppression and ventilation systems or other dedicated compliant spaces, and updated crew training.
For insurers, MGN 681 is likely to play an increasingly important role in underwriting and claims assessment. Â Compliance with equipment and integrated procedures, crew training, and operational discipline will be considered as reasonably prudent risk management whilst non-compliance may give rise to coverage disputes, reduced recovery, or possible withdrawal of cover. This reflects a broader underwriting shift with insurers moving from passive indemnifiers to active participants in risk management, particularly in relation to emerging hazards. For both yacht owners and insurers, effective risk management, and ultimately insurability, will depend as much on compliance with evolving regulatory standards and best practice as on the scope of policy coverage.
For a fuller analysis on MGN 618, see HFW’s briefing here, included in HFW’s Comprehensively Yachts, May 2026 bulletin.
[Footnote 1: MGN 681 (M) Amendment 1 Fire safety and storage of small electric powered craft on yachts – GOV.UK]
[1] MGN 681 (M) Amendment 1 Fire safety and storage of small electric powered craft on yachts – GOV.UK
