Cruisers Forum Insurance ?

[osprey877]

Originally Posted by Captain Anthony

Liability insurance is a fact of boating if you float your boat in a marina here in the North East. As an attorney, I see the largest issue/problem in being able to get insurance for consequential damages. My agent said that my policy will pay for a consequential damage claim, I beg to differ. I read my policy, word for word and I didn't see any consequential damage coverage at all. Do any of you have consequential damage coverage? I define consequential damages as a loss to my boat because of an event or consequence caused by another person or something like a through hull letting go and the boat sinks.

Read your policy again. Most boat property insurance policies are open peril policies whereby the insured is covered for all loss or damage to the boat, however incurred, unless expressly excluded or limited. The third party liability insures the owner against all claims made against them arising from their ownership or use of the vessel, however incurred, unless expressly limited or excluded. So if it’s not expressly excluded, you're covered.
And consequential damage is any damage or loss that naturally flows from the original loss. So if you negligently install a thru hull, the consequential damage may include the sinking of the boat, and the consequential loss would include the cost of salvaging it, replacing electronics etc. You will be covered for all the loss to the extent of the policy limits.
If “another person” causes the loss, then if you have insurance, you can claim under your policy for the loss and your insurer then pays you and then sues the wrongdoer. If you don’t have insurance, you sue the wrongdoer directly and hope they have insurance, or that you have un insured vessel coverage.

[foufou]

My harbor requires a policy with liability of $100K/$300k liability. In addition I have a $20k policy on my boatand had a claim for the full amount ten years ago when I had a boat fire while I was not aboard. After a bit of a battle I got a check for the full amount of the policy. My bill for a year is $396!
i have shopped it around and not come close to this deal. Am I the only one who has found the right insurance? Foufou

[Dsanduril]

That’s a 2% premium on boat value, so not out of line with what is being discussed here. Probably about half is for the liability/3rd party cover, the other half for the hull cover.

[chrisr]

this is actually how the shipping industry worldwide insures - via what is termed PandI Clubs. some of the biggest are gard, skuld, UK, etc etc. together they would ensure 99% of the world fleet

there is a paid club management secretariat, and apart from overheads the clubs are non-profit.

the key to making them work (and it's the same for any mutual insurance like is being discussed here) is that members control who is allowed in to insure, and ensure that they are of suitable quality (to avoid claims) and financial ability to meet calls (when claims need to be paid for others)

i definitely think there is room for such a mutual yacht insurance club, but getting it off the ground would be a massive task

i'm in if somebody else wants to do the work...

cheers,

[Paul L]

Originally Posted by chrisr

this is actually how the shipping industry worldwide insures - via what is termed PandI Clubs. some of the biggest are gard, skuld, UK, etc etc. together they would ensure 99% of the world fleet

there is a paid club management secretariat, and apart from overheads the clubs are non-profit.

the key to making them work (and it's the same for any mutual insurance like is being discussed here) is that members control who is allowed in to insure, and ensure that they are of suitable quality (to avoid claims) and financial ability to meet calls (when claims need to be paid for others)

i definitely think there is room for such a mutual yacht insurance club, but getting it off the ground would be a massive task

i'm in if somebody else wants to do the work...

cheers,

I think you missed an important part of this type of insurance. If the claim rate is too large in a year, then the members have to kick in additional to cover tbe liability. I doubt any cruiser would sign up for that.

Whereas the assured pays a premium to an underwriter for cover which lasts for a particular time (say, a year, or a voyage), a P&I club member instead pays a "call". This is a sum of money that is put into the club's pool, a kind of "kitty". If, at the end of the year, there are still funds in the pool, each member will pay a reduced call the following year; but if the club has made a major payout (say, after an oil spillage) club members will immediately have to pay a further call to replenish the pool.

[Mike OReilly]

Originally Posted by Paul L

I think you missed an important part of this type of insurance. If the claim rate is too large in a year, then the members have to kick in additional to cover tbe liability. I doubt any cruiser would sign up for that.

That why you pool risk, and why you employ smarty-pants actuarials who can calculate risk out over a large time and space (at least, they think they can). The same would apply to a cooperative insurance program vs a commercial enterprise, although in theory a cooperative could be cheaper in that it does not need to produce this extra profit that private equity demands.

But as I said, and chrisr just echoed, it would take a huge amount of work to set one up. And I certainly don't have the time, desire or talent to do such a task.

But as I also point out, if accessing liability-only policies is the main goal, then the issue is more about the brokerages than the underwriters. We have to find a way to bypass the brokers who choose not to sell these policies because they can't make them pay.

Setting up a brokerage would be far easier than setting up a whole new cooperative underwriter. But I'd rather just learn who the good brokers are -- the ones that will write these policies for their customers. They have to be out there since a good number of CF members report having liability-only policies. If we can drive business to them, maybe they'll be even more inclined to embrace it.

[TonyNA]

It seems the charter fleet industry and their worthless tropical storm plans may be to blame for increasing our rates. Look at the huge losses they had in BVI and elsewhere. In my opinion they should be placed in a separate high risk insurance pool away from responsible full time cruisers who actually move their boats out of risk areas and know how to operate them. Is having them in the same bucket of coverage with us sustainable? Is it a case where they need us more than we need them?

[Mike OReilly]

Originally Posted by TonyNA

It seems the charter fleet industry and their worthless tropical storm plans may be to blame for increasing our rates. Look at the huge losses they had in BVI and elsewhere. In my opinion they should be placed in a separate high risk insurance pool away from responsible full time cruisers who actually move their boats out of risk areas and know how to operate them. Is having them in the same bucket of coverage with us sustainable? Is it a case where they need us more than we need them?

Agreed, but do we know if they are in the same bucket?


I really wish insurance wasn't such a black box. We on the outside are all left guessing as to why so many of our rates are going up, or the restrictions are increasing, or we can't get insurance at all.

[slug]

Originally Posted by letsgetsailing3

I'm just saying three things:

1) the math probably doesn't add up, and
2) you need to start with the actuarial information. Otherwise, how are you going to figure out what a policy should cost?, and
3) the reason the costs are going up is because we've had some traumatic weather events that affected places where people have boats.

But it's certainly worth asking the question. So, good luck.

The insurance industry doesn’t like “ cruisers “
The risk is too high

No permanent berth , Insufficient watch keeping .... long list of negatives

[chrisr]

Originally Posted by Paul L

I think you missed an important part of this type of insurance. If the claim rate is too large in a year, then the members have to kick in additional to cover tbe liability. I doubt any cruiser would sign up for that.

true, i didn't go into that much detail, but i did mention ;
"that members control who is allowed in to insure, and ensure that they are of suitable quality (to avoid claims) and financial ability to meet calls "
cheers,

[Paul L]

Originally Posted by Mike OReilly

That why you pool risk, and why you employ smarty-pants actuarials who can calculate risk out over a large time and space (at least, they think they can). The same would apply to a cooperative insurance program vs a commercial enterprise, although in theory a cooperative could be cheaper in that it does not need to produce this extra profit that private equity demands.

But as I said, and chrisr just echoed, it would take a huge amount of work to set one up. And I certainly don't have the time, desire or talent to do such a task.

But as I also point out, if accessing liability-only policies is the main goal, then the issue is more about the brokerages than the underwriters. We have to find a way to bypass the brokers who choose not to sell these policies because they can't make them pay.

Setting up a brokerage would be far easier than setting up a whole new cooperative underwriter. But I'd rather just learn who the good brokers are -- the ones that will write these policies for their customers. They have to be out there since a good number of CF members report having liability-only policies. If we can drive business to them, maybe they'll be even more inclined to embrace it.

So are you saying you are interested in a co-op where if at the end of the year there were too many claims you'd dig into your savings to cover the deficit? This is how the original Lloyds membership worked where the gentlemen Names pledged their wealth to cover shortfalls.
I buy insurance to pay someone else to take on my risk, not to take on someone else's risk.

[Chris31415]

Insurance is a regulated industry in the US. That alone should discourage anyone from starting an insurance company. There are many laws to comply with.

That aside, you need a significant amount of capital to start an insurance company. Regulators will require it. Rating agencies will require it in order to get good rating.

Then there are the business aspects. Sales, administration, etc.

[Mike OReilly]

Originally Posted by Paul L

So are you saying you are interested in a co-op where if at the end of the year there were too many claims you'd dig into your savings to cover the deficit? This is how the original Lloyds membership worked where the gentlemen Names pledged their wealth to cover shortfalls.
I buy insurance to pay someone else to take on my risk, not to take on someone else's risk.

Uhm, no... that's not what I'm saying at all. No insurance company wants this silly "IF" that you postulate.

There is absolutely no reason that an insurance company cannot be run as a not-for-profit corporation, affording all the normal protections a corporation has to it's owners. It can be a cooperative, or any number of organizational structures.

In the end it is about risk. The coop, or the for-profit company, takes on the risk of others. A successful insurance company (no matter what the governing structure) understands how to structure this risk so that the company, or its owners, are not unduly threatened. But if they didn't accept some risk, well, they wouldn't be an insurance company.

But the actual point of my post that you quoted is to suggest a completely different tack.

[Paul L]

Originally Posted by Mike OReilly

Uhm, no... that's not what I'm saying at all. No insurance company wants this silly "IF" that you postulate.

There is absolutely no reason that an insurance company cannot be run as a not-for-profit corporation, affording all the normal protections a corporation has to it's owners. It can be a cooperative, or any number of organizational structures.

In the end it is about risk. The coop, or the for-profit company, takes on the risk of others. A successful insurance company (no matter what the governing structure) understands how to structure this risk so that the company, or its owners, are not unduly threatened. But if they didn't accept some risk, well, they wouldn't be an insurance company.

But the actual point of my post that you quoted is to suggest a completely different tack.

Ok. It seemed you were responding to my post that responded to chrisr post that proposed exactly the shared risk co-op, a P&I Club.. You are now talking about a new corporation, for profit or non-profit, that is a new insurance company. It would be interesting business to get into at a time that experienced companies are getting out.

[TonyNA]

As a good model for ideas I suggest taking a look at the larger healthcare cost sharing networks. I belong to one that has been around since 1981 and has worked very well for me and friends that have made large claims that were all paid. The plan costs a fraction of traditional insurance, has an option with no lifetime limits and control costs by not having to comply with mountains of government red tape or paying for services and medications that the group believes goes against its beliefs. It even meets the Affordable Healthcare Act. It works worldwide and has worked well for us while cruising internationally as long as the medical provider writes their bills in English and in USD. As long as it is around I will never buy traditional medical insurance again.

As I posted earlier I think a considerable increase to our insurance costs come form storm losses in the charter fleet industry. I also think "insured owner apathy" results leaving their boats in harms way and not maintaining them has massively contributed to losses. These are high risk subjects. The charter feet problem has grown over time and will continue to grow as sailing becomes less affordable for individual owners. Making the comparison to auto insurance It would be like adding more 18 to 25 year old males every year to the population and have them all drive high end sports cars while under some chemical influence. Eventually these guys will make insurance and individual vehicle ownership unfeasible. That's my two cents worth but I think its where we are headed with individual yacht insurance.