Liability only or full coverage

[Mike OReilly]

Originally Posted by valhalla360

Particularly for older inexpensive boats...there just isn't enough profit for them to bother fine tuning the rates. ...

Sounds about right. But does it happen more in certain jurisdictions? Like I say, I’ve never even heard of someone being turned down for insurance based simply on the age of their vessel here in Canada. Certainly no one I personally know. But it seems to happen a lot in the USA, and I think someone here just said it happened in the UK.

Different markets and different risk profiles I suppose, but I can’t see Canada and the USA being very different in this regard.

[gamayun]

Originally Posted by Mike OReilly

It’s interesting how some people report not being able to get insurance for older boats, while others of us have never had a problem. My boat was built in 1977. My previous boat dated back to 1974. I’ve never had any problems getting insurance here in Canada. It has never been an issue.

What gives? What’s the reason for the difference? Is it location-based? If so, which locations?

I've heard from a broker friend here in CA that insurers won't touch boats that are older than 30. I bought mine at 25 years old and had a lot of difficulties finding an underwriter, but that might have been due more to my experience level than the age of the boat, although I bet both come into play. I recently picked up liability coverage for the work I do and only one company was willing to insure me based on the sort of "risky" stuff they think I do. I heard they formed their impression based on my website. So companies likely vary depending on which country they are located in (we're very litigious in the US) and their level of comfort with perceived risk.

[Paul L]

Originally Posted by Mike OReilly

Paul, you can drill into boat types and sizes to get to “cruisers” only. Cruisers are not the majority almost anywhere.

I’d encourage you to provide additional datasets. I’ve never found a better one, but I’d welcome others. Anecdotal evidence is useful, but far too biased and skewed to base much on.

Data by itself is not very useful. The data needs to apply to the question. The dataset you point at does not include a significant number of cruisers, meaning personal boats that do significant passages to other than home cruising areas. Like those that go to the Carribean or cross the Pacific.

What percentage of the claims to boat insurance companies are in this dataset? It has to be a pretty small percentage of all claims.

Lightning is a major reason we carry coverage. In your dataset there are 3,359 vessels in 2,758 accidents caused by weather with 1,228 injurys and 628 deaths. I seriously doubt this tells you much about the costs and risks of lightning hits to cruisers in Central America. The dataset just doesn't apply.

The insurance companies know this and is why they price their product entirely differently solely based on where you are cruising.

[Mike OReilly]

Paul, until you provide more than criticism or anecdotal evidence, I think I’ll stick with actual information. I strongly urge everyone to look at actual data, not just listen to opinion.

[Paul L]

Originally Posted by Mike OReilly

Paul, until you provide more than criticism or anecdotal evidence, I think I’ll stick with actual information. I strongly urge everyone to look at actual data, not just listen to opinion.

Mike
The topic is boat insurance. It would be great if we had access to the data the insurance companies have and use to determine policy rates. We don't have the data, but we do have the results of them using the data. As far as I can tell the insurers primarily use the value of the vessel and the cruising grounds to determine risk and policy price. A distant third consideration is the experience of the crew. The US data you are focused on is certainly interesting, but I still don't believe it is very releveant to offshore cruisers insurance cost and availibility.

It may adequately describe cruising risks for you. For me it understates the primary risks that I personally insure against: lightning and total loss among distant cruisers. I mentioned above that my recently obtained Indian Ocean coverage is 3-5x the cost of US coastal. If I am considering what my risk is to determine if the policy is reasonable value, the US database of accidents offers no hint concerning the 5x additional cost. I have to use additional data, even if they are groupings of anecdotes to be practical.

[CassidyNZ]

We carry comprehensive insurance. Our boat represents a significant part of our future wealth and we will depend on its sale to top up our funds when the sailing is all done so an uninsured total loss would be distressing.

Having said that, our insurance is in our opinion affordable. For local waters we pay less than 1% of insured value and that goes up to about 1.3% when we’re sailing to the islands for our bi-annual 6-month cruise. Our boat is 33 years old. The only limitation in terms of age is that our standing rigging must be less than 10 years old for passage-making (restriction does not apply for local sailing).

I have a routine of changing one wire on the rig each year to keep the oldest wire at 10 years old and avoid the cash-flow problem of re-rigging the whole boat at once. This year I’m replacing the front and aft stays simply because I don’t know the condition of the wire inside the jib furler.

I had a total loss of our previous cruising boat and it took us 10 years to recover and replace our boat. Not doing that again.

[Mike OReilly]

Originally Posted by Paul L

Mike
The topic is boat insurance. It would be great if we had access to the data the insurance companies have and use to determine policy rates. We don't have the data, but we do have the results of them using the data. As far as I can tell the insurers primarily use the value of the vessel and the cruising grounds to determine risk and policy price. A distant third consideration is the experience of the crew. The US data you are focused on is certainly interesting, but I still don't believe it is very releveant to offshore cruisers insurance cost and availibility.

Well, it is the best data we actually have. Yours is just a belief.

This tangent began when I stated that, based on actual evidence, the risks involved in the cruising lifestyle is quite low. You seemed to be saying otherwise. I’d love to see your evidence.

How insurance is priced is a mugs game. If you looked at the actual survey I posted you’ll see people were paying everything from a small fraction of a percent, to sometimes up to 6 to 8 percent. IOW, the rates were over a pretty wide range. I suspect it has more to do with “what the market will bear.” Or perhaps the bother factor; it’s such a small revenue stream that few underwriters even bother, so they can charge whatever they want.

Originally Posted by Paul L

It may adequately describe cruising risks for you. For me it understates the primary risks that I personally insure against: lightning and total loss among distant cruisers.

OR, it could be that this is what the market will bear. Point is, you don’t know, and neither do I. I do know that lighting happens along the American coast, and is quite serious in some areas, so yes, the database is relevant to assessing real risk. Basing your determination on insurance prices is a pretty disconnected way of assessing your risk.

[waterman46]

Originally Posted by CassidyNZ

For local waters we pay less than 1% of insured value and that goes up to about 1.3% when we’re sailing to the islands for our bi-annual 6-month cruise. Our boat is 33 years old. The only limitation in terms of age is that our standing rigging must be less than 10 years old for passage-making (restriction does not apply for local sailing).

I had a total loss of our previous cruising boat and it took us 10 years to recover and replace our boat. Not doing that again.

That is an amazing low premium percent of insured value. Wonder if NZ has much lower claims history than Western hemisphere, or if the percentage of insured value is greatly dependent on the amount of insured value.

We were quoted nearly 4% of value, for Central America and Caribbean. Boat is 37 years old. I have no claims with this boat, and only a minor one before that in another boat, and they did not ask back that far. I suspect nobody wants to insure lower value boats just due to cost of processing the binder is same as for a megayacht.

[Greg K]

[QUOTE=Mike OReilly;2975772]
How insurance is priced is a mugs game.
------------------------------------

BINGO! We have a winner!

[zboss]

There is a "third option" other than liability vs. full. You can always choose partial coverage - a lower hull value that equates to your original purchase price or some other value that is meaningful enough to get you back into another boat and start again. Seed money as it were.

For example, our hull value went up from 92K to 110k this year on our 5 year insurance survey... we could have chosen to stick with the 92K or set it at any value less than 92K, all the way down to perhaps what we originally paid for the boat.

That tends to drop the cost of insurance significantly while still maintaining some coverage.

[a64pilot]

Be careful with partial coverage.
I saw an old man lose his airplane that way, he had it forever and never increased insured value, when he turned in a claim for Insurence to get his airplane repaired from a landing incident, the Insurence company gladly paid the entire insured value, took possession of the airplane and re-sold it.
That cost them less money than paying for the repair and as they paid the entire insured amount the old man didn’t have a leg to stand on.

So if you insure your $150,000 boat for $75,000, and turn in a claim the Insurence company can write you a $75,000 check and take possession of the boat. They don’t have to pay for having it fixed.

[CassidyNZ]

Originally Posted by waterman46

That is an amazing low premium percent of insured value. Wonder if NZ has much lower claims history than Western hemisphere, or if the percentage of insured value is greatly dependent on the amount of insured value.

If insurers use local claims experience to establish cost of cover then I suspect the low cost we’re experiencing is down to very safe sailing in NZ and an equally low crime experience (theft from/of boats). As an example, I have quite a wide circle of boating friends /acquaintances and can’t recall anyone ever having to claim on insurance.

I often wonder if insurance is worth it then I think of my earlier loss and also the need to occasionally go into marinas/boat yards where access is denied unless one is insured.

[capnorv]

I've always figured if I'm negligent enough to lose my boat, it should be on me. That said, this summer my son put 40 gallons of water in the fuel tank while we were in Canada and I was sweating it for a couple days. The boatyard by the marina where it happened was going to do the work for us until they asked if we had full coverage insurance. I said no I'd be paying cash and they refused to do the work. There is definitely a bias there. We found a fuel conditioner 20 miles away and for 1/4 the price were on our way. Though without my mechanical ability we might still be there.

[Giro]

I know that obtaining boat insurance can be a daunting task but I’ll throw this in the mix and beg for everyone’s forgiveness for doing so: The real problem is with liability and, unless your vessel is a new ultra expensive sailboat with all the electronics and equipment needed, not worth replacement. As we all know, our sailboats are probably worth ten cents on the dollar regardless of how much we love them and take care of them. It’s just a fact of life. The real need for insurance rests with the protection we must have in order be able to sleep at night. For those of us who live aboard our vessels and call them our primary home, the risk is clear (lose our boat and we are homeless). For those of us who may be fortunate enough to have more, which may include multiple assets such as real estate, etc., the exposure becomes greater. Which brings up the reason for my comment. If anyone carries an umbrella insurance policy, it is extremely important to be aware that, unless your boat is insured by the same insurance company that carries your umbrella policy, most (if not all) insurance companies will not honor coverage of liability for said umbrella policy. Example: ABC insurance company insures your boat. XYZ insurance company insures your cars, home, investment properties as well as your three or four million dollar umbrella policy. Someone decides to hang around your boat that is berthed at a marina or is moored in a bay. That person falls into the water and drowns and that person’s estranged wife, long lost cousin or son or daughter decides to sue you. You know the rest, that three or four million dollar umbrella policy does not cover your liability and your out of pocket exposure is there. I know it’s a depressing thought, but it is a very real potential problem.

[Happ]

It all depends on your risk tolerance. A few weeks ago Dorian came right past Beaufort, NC. I know of 2 liveaboards that lost their boats. Not damaged by a dock. All the docks had to be evacuated. One was a 30 something sailboat and the other was 50’ Trojan. Both sunk. Neither had insurance. Another has a 48’ that dragged anchor and ended on a shoal. His current estimate is $30,000. He has insurance.

These are real life incidents. Would you be financially ok if your boat sunk? One insurance option I found was State Farm. About 1/2 of GEICO. It is good as long as you are within 75mi of the US.