Insurance, what can you afford to lose?

[belizesailor]

Originally Posted by Paul L

No umbrage at all. Just gently disagreeing with the blanket statement that cruising is very low risk statement, which then encourages the lack of need for comprehensive insurance. It's more nuanced and sometimes your current experience might not apply as well to the next unknown location.

And losses do vary dramatically by venue ("the next unknown location"). Example: Ive seen more small boat wrecks in Panama than anywhere else Ive sailed. Belize for example, is easily just as complex, and small boats do get lost there, but nothing like the carnage in Panama...especially the San Blas. A few seasons ago, when the weather off Colombia was especially bad and expanded all the way over to the San Blas, there were at least a dozen (not exaggerating!) wrecks added to the reefs there.

The wreckage count is increased considerably by the sleazy charter operators there, who lose boats quite frequently, but a fair number are cruisers too.

[belizesailor]

Originally Posted by daletournier

After spending time around Singapore with a carbon fibre mast (my last boat) I understand the lighting concerns.

Interesting thought, maybe the owners of all the yachts that don't go anywhere subsidise us guys that go far and wide, maybe we are quite a risky bunch.

There are of course dramatically more yachts that sit unused in marinas than are out cruising. In one large marina (1,000 slips!) I used to work out of, the vast majority of the boats never left their slip...and I mean never, not once...over a 5 year period. Very strange behavior to pay insurance (presumably) and slip fees for a boat you never use, but it is surprisingly common. So, assuming most of them are paying for insurance, it should help the risk pool considerably.

[Dooglas]

Originally Posted by daletournier

We go to sea knowing we could die and no way to hedge around that, we accept that we could lose the most important thing, life BUT we may not go to sea knowing we could lose the yacht, we insure against that.

It is more a matter of how we manage our risks. We manage the risk of death by choosing what we do and don't do, by gaining training and experience, and by installing many safety devices on our boats. We manage the risk of injury with health insurance. We manage the financial risk of large liability claims with liability insurance, and we may choose to manage the financial risk of the loss of our boat by comprehensive insurance as well as by decisions about how we use it. We attempt to reduce most risks by prudence and good judgement.

[daletournier]

Originally Posted by Dooglas

It is more a matter of how we manage our risks. We manage the risk of death by choosing what we do and don't do, by gaining training and experience, and by installing many safety devices on our boats. We manage the risk of injury with health insurance. We manage the financial risk of large liability claims with liability insurance, and we may choose to manage the financial risk of the loss of our boat by comprehensive insurance as well as by decisions about how we use it. We attempt to reduce most risks by prudence and good judgement.

100%.

[Mike OReilly]

Originally Posted by valhalla360

The cost of the insurance should correlate to the full risk (likelihood * impact), so the likelihood is already incorporated.

How can it when we’ve both agreed impact is dependent on each individual situation? What the insurance cost includes the potential impact to the insurance company, but not to you, the one buying the insurance. I assume this is how we get such mismatches sometimes.

Originally Posted by valhalla360

So would you say, health insurance is a silly thing to get because you eat healthy and exercise, so you aren't worried about getting a heart attack (I've seen you post how great it is to have insurance via the Canadian govt)? What's different about this?

“Silly” is your words. I have never said insurance is silly. I do say people should look at risk rationally, and not be driven by fear of loss alone (impact).

Obviously health insurance falls into this same category. Those people with low risk require it less than those with high. This is well borne out in utilization patterns in all healthcare systems.

I’ve written that it’s great to have single-payer, universal healthcare insurance b/c it is far cheaper and more efficient way to pay for healthcare for a society. It’s cheaper for society AND it’s cheaper for individuals.

Lets be clear, I’m not saying insurance is a bad thing. I’m saying that it should be approached rationally, and in the case of cruising boats, with an eye to actual risk.

Originally Posted by Paul L

The last 30,000 miles of cruising that I have done was far more risky than driving in the US when home but not as risky as a Central American cab, walking in most places except perhaps Colon, swimming except perhaps in Australia, flying on any major airline although I wondered about some of the discount ones, eating in the first world but I got some carrots in Panama that I thought were gonna kill me.

You can run with exceedly low risk and I'll run with risky but worth it.

You must be sailing some pretty dangerous waters Paul . Have you actually looked at accident rates in the USA (and Canada for that matter!). Carnage!!

[Paul L]

Originally Posted by Mike OReilly

.......
You must be sailing some pretty dangerous waters Paul . Have you actually looked at accident rates in the USA (and Canada for that matter!). Carnage!!

I've looked at the USCG recreational boating numbers and some of the BoatUS summaries for their recreational members. I preceive both of these as very low risk. Don't see what that has to do with the risks associated with cruising. Different beasts.

[Mike OReilly]

Originally Posted by Paul L

I've looked at the USCG recreational boating numbers and some of the BoatUS summaries for their recreational members. I preceive both of these as very low risk. Don't see what that has to do with the risks associated with cruising. Different beasts.

You can pull out the data for cruising level boats, and sort by types of events. This shows incident rates way below typical motor vehicle accident rates.

What dataset would you like to use? Insurance companies might have such data, but I’ve never seen it published. Maybe groups like the SSCA could, if they monitor that sort of thing. What do you suggest?

[Paul L]

Originally Posted by Mike OReilly

You can pull out the data for cruising level boats, and sort by types of events. This shows incident rates way below typical motor vehicle accident rates.

What dataset would you like to use? Insurance companies might have such data, but I’ve never seen it published. Maybe groups like the SSCA could, if they monitor that sort of thing. What do you suggest?

I laid the main cruising areas I have done and will do above. Those are what matter to my preception of what my risk is and how much of it I want to pay an insurance company to take on. There is no generic study that is gonna appy to my situation. The sample sizes are so small and the routes and uses so varied that averages and medians are not very useful to individuals. At least in my opinion.

It isn't just me who feels the generic numbers aren't applicable. Insurance for my boat while cruising offshore tends to be 3 or 5 times what it is when in the Puget Sound.

[Pelagic]

Originally Posted by Dooglas

It is more a matter of how we manage our risks. We manage the risk of death by choosing what we do and don't do, by gaining training and experience, and by installing many safety devices on our boats. We manage the risk of injury with health insurance. We manage the financial risk of large liability claims with liability insurance, and we may choose to manage the financial risk of the loss of our boat by comprehensive insurance as well as by decisions about how we use it. We attempt to reduce most risks by prudence and good judgement.

Very well written post, but I just wonder.....? are people that rational in real life and does marine insurance actually dull the mariners edge ?

As was noted, many yachties rarely use thier boat.

So little practice, compounded with no training standards and push button navigational awareness .......makes for what I consider...........'a high risk candidate for weekend disasters'

How many times have you heard a yachtie, or charter client say after an acciden
... "It's ok, I'm insured"

I love the Sea and I've had a wonderful career upon it....but my comercial mindset when I take command and let go the lines.... is that I am going into battle with an adversary that can kill my crew and I many different ways..
That is the very best way to insure!

[Dooglas]

Originally Posted by Pelagic

I love the Sea and I've had a wonderful career upon it....but my comercial mindset when I take command and let go the lines.... is that I am going into battle with an adversary that can kill my crew and I many different ways..
That is the very best way to insure!

I certainly agree that the best way to reduce risk is your own attitude and approach. That is true whether you are a commercial or recreational skipper. That does not, however, negate using insurance as a way to reduce risk where appropriate. When you take command of a commercial vessel "and let go the lines"; you do so with substantial insurance in place for the vessel, the cargo, the crew, and yourself.

[daveball]

15 years sailing offshore, no insurance what so ever (life, health or boat). Had dental work done in NZ, $1000, medical examinations in Australia and Malaysia for visa purposes which came to maybe $500. Insurance companies are the winners. Now ashore and forced to buy auto insurance which pays for all the idiots on our roads.

[CaptFigmo]

When I bought my Trawler in '03, diesel was $1.00,
Marina's were $1.00/ft and insurance was $1,000.
Now diesel $3.00, Marina's $2.50/ft and insurance (which I cancelled).is $3,000.
Life goes on.

[Rhumbline]

If you keep your boat in a marina you'll need pretty big liability limits with a 'wreck removal/cleanup' clause. You're not the only one who can suffer a loss in a mishap.

[TabbyCat]

Some good points have brought out in this discussion. FWIW, to answer the original question, as an insurance agent, when I say "insure if you can't afford to lose the boat", what I'm suggesting is that you to look dispassionately and unemotionally at the quote being offered. If you have a loan on the boat that you could not pay off if it was destroyed in hurricane, and you also sail in places affected by hurricanes, then you should have full coverage. If your boat is your home, and you would not be able to afford a replacement if it was lost, again, that's a strong case for full coverage. On the other hand, if your boat is a inexpensive weekend day-sailer then liability only coverage is often the best option. There is no hard and fast rule, each individual situation and boat is different, but the following seems to help: if you would classify the loss of your vessel as a "financial catastrophe", then you're looking at full coverage. If you look at the premium and think, "That's not worth it" then it sounds like you're in the market for liability only coverage.

[Mike OReilly]

Thanks Susan. I appreciate your comments here, and I don’t mean to belabour the point, but once again you’re only framing the question in terms of Impact. As we’ve amply discussed here, this is only 1/2 of the risk equation. A full risk assessment must include Likelihood of said event.

I’m not saying we shouldn’t consider things in light of “affording a loss.” But to use my extreme example, the exact same argument can be used for meteor impacts. None of us carry this kind of insurance, not because the impact would be low, but because the Likelihood of this event is small (although definitely not zero).

But I fully agree with you: "There is no hard and fast rule, each individual situation and boat is different.” Insurance can be an excellent tool for mitigating and managing risk. I’m definitely not opposed to the idea; would be pretty hypocritically otherwise since I’ve always been fully insured (for my boats at least, not other stuff).