Has boat insurance become so hard to find?

[S/V Illusion]

Originally Posted by Foswick

You make money when/if you accrue covered expenses that exceed what you have collectively paid in premiums. If I pay $1000/yr for 10 years and make $20,000 in claims in that same period, that is a good ROI.

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I tried to distill your post to the portion responsive to my question.

Reimbursement for the $20,000 loss nets you zero. No profit, no ROI, no investment. For clarity, insurance premiums are what you gamble every year on a bet you might win a $20,000 wager by protecting against losing. That’s not an investment.

[Foswick]

This is microeconomics 101. Strictly speaking, insurance is what's called a "protective expenditure" which, if realized, is by definition an investment because it yields more value to the policy holder than they contributed. Granted, if you never make a claim, you could argue that it never was an "investment" per se. It's kind of like buying a home as an investment but never selling it. But this isn't an economics forum. If you really want to understand, message me. If you just want to argue about the definition of "investment" ... let's not. I don't think it contributes to the discussion.

[CyKlop]

Originally Posted by S/V Illusion

I tried to distill your post to the portion responsive to my question.

Reimbursement for the $20,000 loss nets you zero. No profit, no ROI, no investment. For clarity, insurance premiums are what you gamble every year on a bet you might win a $20,000 wager by protecting against losing. That’s not an investment.

Simplified, Profit = Income - Expenses. You increase "profit" by either increasing income or decreasing expenses. Looking at insurance, the purchase price of the vessel is the same either way, so we can ignore that. Assume an incident that results in $20,000 of expense, but you've not paid any insurance over the last 10 years. Profit is negative $20,000. (Income of negative 0, expenses of 20,000)

Now assume paying insurance of $1,000 per year over the last 10 years. Income is 20,000 (insurance payout). Expenses are $10,000 of insurance payments and $20,000 payout. $20,000 - $30,000 (expenses) is profit of negative $10,000.00

The difference in profit is $positive $10,000.00. Noone is suggesting that you actually make a positive profit of 10K. It is about limiting your potential loss (negative profit).

The other way to think about this is from a "risk management" perspective. You are paying a certain premium to reduce your risk of huge financial losses.

[Foswick]

My previous policy I got 12 years ago with Boat US (now Geico) was super easy and inexpensive to get. So, when I went to insure my new boat (purchasing right now), I was surprised at how difficult it had become. Geico wouldn't touch it because it is a 1975 (despite the fact my current boat which they insure is a 1972). In general, I found the landscape pretty inhospitable, despite my considerable experience, continuous insurance, and no claims ever.

I finally went to Progressive's website and had a really great policy within about 15 minutes, and for less than half of what I had been quoted elsewhere. And, the coverage doesn't restrict my cruising area, provided I don't go more than 150 miles offshore in US or Canada. Not a problem for me, this year.

[Kettlewell]

I finally went to Progressive's website and had a really great policy within about 15 minutes, and for less than half of what I had been quoted elsewhere.

I've had a Progressive liability only policy for many years, and the problem is they keep jacking the price up every year despite no claims and a lot of experience. I wonder if they are quietly trying to kick me off by pricing me out simply because my boat was built in 1978.

[jcapo]

Originally Posted by Foswick

I finally went to Progressive's website and had a really great policy within about 15 minutes, and for less than half of what I had been quoted elsewhere. And, the coverage doesn't restrict my cruising area, provided I don't go more than 150 miles offshore in US or Canada. Not a problem for me, this year.

Two months ago my '87 Tayana 42 was too old and too big for Progressive. Last year Progressive would insure it but only for 60K.

[Foswick]

Seems almost arbitrary. I can't believe decisions are based on actual actuarial data - except maybe loosely. Or, maybe more likely, the actuarial data are not well-understood by the actuaries.

I get the sense that it is analogous to someone sitting in a tiny office watching stock prices go up and down, and making buying/selling decisions based on these fluctuations but without understanding why they are fluctuating or looking at the fundamentals of these companies.

In other words, I don't think the insurance industry knows how to insure boaters.

The person that goes out water skiing on the lake - that is an ENTIRELY different animal than the couple who lives aboard and cruises. Yet, I don't think the industry really gets that - along with a lot of other important distinctions.

[Mike OReilly]

It's the complete black-box nature of the boat insurance business that pisses me off. It's made purposely hard to see inside the box. Only the priests of the business are able to know what is going on, and even most of them don't seem to understand.

I ran a fairly exhaustive survey using CF and SN members a number of years ago. What I found was that rates were all over the map. Some were paying as little as 0.3% of the insured value, while others were over 6.0%. I didn't control for all possible coverage variables, but this was for standard comprehensive (hull/liability) insurance.

On a personal level, the few times I've shopped around, I've encountered quotes that can be 100% or more above others. It's hard to understand the rhyme or reason for the discrepancies.

I also think that insurance for the types of boats most of us have is, at best, a minor part of any company's business, and at worst a simple PITA. I don't think most know, or even care that much, about the insurance products being offered. It's just too small.

[Kettlewell]

It's the complete black-box nature of the boat insurance business that pisses me off. It's made purposely hard to see inside the box.

In some states it is outlawed, but the insurance companies also use stuff like your credit rating or where you live to adjust your rate. I suspect rates are determined by all sorts of factors we can't even imagine, based on the huge numbers of policies they provide. When my rate skyrocketed a few years ago I spent a lot of time calling around the company's various customer service numbers to see if I could get an explanation, and I found one person who seemed like he really dug into it yet he couldn't find a reason why.