New Insurance changes recieved today...yikes

[Montanan]

Originally Posted by Navicula

just recieved an email about some changes to insurance.....

for southern coverage policys any damage directly or indirectly is excluded form coverage on our policy by any named storm going forward..

Lightning strike deductable has increased to 10 percent of your hull or machinery limit or 10 thousand dollars...

please note: we have never had a claim

Glad to see you read your declarations and noted the policy coverage limits and exclusions. It is amazing how many policy holders don't read or understand the details the contract for risk transference.

Scope and terms of coverage are almost always negotiable with an underwriter. If you find the risk exclusion as to damages by named storms disconcerting, I would recommend requesting a change in that specific attribute, to be instead of an exclusion of coverage to become a defined deductible. Homes often have wind related damage coverage and deductibles which damage may be dependent on hurricanes, or on "named storms", or the broadest just based on wind damage of all type [a squall, thunderstorm, n'oreaster, whatever] The deductibles are a stated percentage, e.g., 1%, 2% or 5% of the "home value". The difference with a boat is that there is established a "hull value"

Ditto as to if you feel the deductible for damage due to lightning strike, which appears to be capped at the greater of $10,000 [Canadian or US$] or 10% of the hull value. Has the hull value been quantified in the declaration? Are you in agreement with the hull value? Again a negotiable and determinable value. Be sure that the policy covers the ancillary systems which are most likely to be damaged onboard by a lightning strike e.g, the wiring and circuit breakers, the electronics, the batteries, your computers, cameras, the engine control, motors [thrusters], electric toilets, air conditioning, lights, electronics, the autopilot, solar system, power converters / inverters, water maker, appliances and not just the boat structure.

Insurance is just a negotiated risk transfer contract. One has to first identify each and every specific risk that one has exposure to and which risks that an underwriter is willing to have transferred and then establish the terms of each specific transfer and the cost of each base policy and rider policies. Details, details, details.

[Navicula]

Insurance is just a negotiated risk transfer contract. One has to first identify each and every specific risk that one has exposure to and which risks that an underwriter is willing to have transferred and then establish the terms of each specific transfer and the cost of each base policy and rider policies. Details, details, details.[/QUOTE]



very well written and I understand what your saying as well as agree,....reading and understanding these contracts are like trying to read the bible and understanding it....negotiating seams like the reasonable solution

[Montanan]

Originally Posted by Navicula

Insurance is just a negotiated risk transfer contract. One has to first identify each and every specific risk that one has exposure to and which risks that an underwriter is willing to have transferred and then establish the terms of each specific transfer and the cost of each base policy and rider policies. Details, details, details.

very well written and I understand what your saying as well as agree,....reading and understanding these contracts are like trying to read the bible and understanding it....negotiating seams like the reasonable solution[/QUOTE]

It best to agree with your broker the primary terms that you desire to have as to scope of coverage and deductibles and then to have the broker pursue that proscribed coverage with the underwriters instead of having the underwriters provide proposals on a catch as catch can basis. There is a lot of wasted time between policy holder, underwriter and broker when the terms of coverage that is desired are not explicitly defined from the start.

Boat insurance is of modest values so not a lot of time is accorded to such establishment of policies because there isn't enough monetary incentive for the broker or the underwriter.

Just be sure you can afford to take the losses of each and every risk type so as to not be caught unaware or unaffordable to you. It is rather incredible how little the general populace knows about insurance basics. Often people don't even attempt to know until an adversity arises and they go to pursue a claim, or have to contend with lack of coverage. It is what you don't know that can hurt you. Insurance is a complex subject that should be taught in secondary schools so that your average person has a clue; sadly it is never taught.

[Argyle38]

Originally Posted by Mike OReilly

Yes, but unfortunately it is often harder to get. It seems that few broker, and perhaps underwriters, are interested in selling such a product. I suspect it's because it nets them very little profit since it costs so little.

I've heard this repeated around for a while and it never made much sense to me. A couple of years ago I was at an SSCA seminar and there was an insurance guy there basically saying the same thing. It just didn't make sense but I couldn't put together why. I kept it rolling around in my head for a while whenever I would think about insurance.

From a strictly dollars and cents (sense?) perspective, it just doesn't add up. The entire insurance industry is about spreading risk over their customer base and adding a profit margin that the market will bear. If great losses of charter fleets in tropical areas is driving up premiums (good point BTW) to 4-6% of hull value for everyone, in order for them to continue to make a profit, then that's what they'll charge. Similarly, if the distributed risk makes liability premiums only around $200/year, then that is what they charge for that product. From a percentage standpoint, they should be making the same. If they are not, why not just increase liability premiums? With a lower cost product, their volumes should be much higher to bring total cash flow up to a reasonable amount. The reason that liability premiums are generally much lower is that the risk of a huge payout is much lower. Even though we might share an anchorage with a $1M megayacht, it's very unlikely we could do enough damage to that boat to cause a total loss. It's a lot more likely that you (or nature) will do something to your own boat to cause a total loss. This is all reflected in the premiums.

But, it certainly does seem to be the case that insurance companies seem to be discouraging liability only policies. If it's not about profitability, then why?

I think might have something to do with who gets paid in the case of a claim. If you lose your yacht, you, an individual, are the payee. In the case of a liability claim, the payee is generally the other guys' insurance company. I think it's very possible that is the main difference.

In the case of a dispute, you have to decide to either settle for less of a payout, hire an attorney at great cost, or possibly not get paid anything if you didn't read or understand all of the fine print. Your fault, sure, but they still have all those years of expensive premiums with zero payout. In the case of a liability claim, they other guys insurance company already has their lawyers on staff, who's full time job is to understand the fine print. A little tougher to weasel out of a payment.

So, to me at least, it seems logical that the move away from liability coverage is less about real profit margin, which is based on risk, and more about 'effective' profit margin, which is based on denial of claims, something we hear about quite a bit.

[Mike OReilly]

Originally Posted by Argyle38

...So, to me at least, it seems logical that the move away from liability coverage is less about real profit margin, which is based on risk, and more about 'effective' profit margin, which is based on denial of claims, something we hear about quite a bit.

Thanks for this Argyle. Good analysis. I wonder if we attended the same SSCA seminar. I had the same experience, and this was with the well thought of broker that fellow boaters often suggest.

I've wondered the same ... why the difference in availability between liability vs comprehensive? From the underwriter's perspective, the profit margins should be the same. I hadn't considered your explanation. My speculation was that while the profit margin can be the same, the cost to administer a bunch of smaller-value policies vs fewer larger ones would itself eat into profits. But again, you'd think they'd just price that into the product and be done with it.

I do wonder if the bottleneck is not at the underwriters, but at the broker level. I assume brokerages get paid a percentage of the policy they write. Small amounts from these small liability-only policies, but it still takes as much time to acquire and write the policy, and they can't really increase their profit margins.

So here's a question: is it the underwriters, or is it the brokers, who make getting liability-only policies more difficult?

[Dooglas]

Originally Posted by Navicula

.....I hope to see a huge reduction since the coverage is reduced

I wouldn't bet on it!

[Argyle38]

Originally Posted by Mike OReilly

So here's a question: is it the underwriters, or is it the brokers, who make getting liability-only policies more difficult?

Certainly could be the brokers. If they work on dollar value commissions then it would certainly be a lot less valuable for them. I wonder if anyone has any experience contacting underwriters directly. Fourlyons says they pay $150 with Progressive. I would certainly consider contacting them. Progressive is a big company who may do their own underwriting.

Still, it seems like the dollar difference is so great that there is a lot of room for brokers to put their own surcharges in and still make it much less expensive for the customer.

In my situation, I have an old boat covered at $45k agreed value, plus $2500 tender coverage at a little over $1k/year for the waters of US and Canada with no date restrictions (Hagerty classic boat insurance, they do not underwrite their own policies). This isn't too bad at 2.2% but the "coastal waters" part means it could be interpreted to mean I'm only covered to 3 nm off shore. Still, I'm OK with it, most problems happen near the hard bits near shore anyway. But eventually I might head south, and I've seen people on here mention premiums of $2k or more for similar coverage. Folks with 6-figure boats getting with $5-6k premiums for increasingly less coverage and restrictions.

So if I saw a tropical zone quote for $2k and this other guy telling me I can get liability for $150, a broker could come along and sell me that same policy for $300, pocket the $150 himself and I'd probably still jump at it.

[Captain Anthony]

READ your policy, word for word. Please determine whether or not the term
" Consequential Damages" is defined. These type of damages seem to be a sailors worst nightmare. I have requested a " consequential damage loss rider" to my policy. Turns out, consequential damages were not covered in my "yacht policy"

[Mike OReilly]

Originally Posted by Argyle38

...So if I saw a tropical zone quote for $2k and this other guy telling me I can get liability for $150, a broker could come along and sell me that same policy for $300, pocket the $150 himself and I'd probably still jump at it.

Seems like a good business niche. I don't know how brokers get paid. I've assumed it is a percentage of the policy fee, but it could be a set amount. I'd love to hear from brokers on this.

My boat is covered under a standard agreed-value comprehensive policy for $45K. Also have coverage for dinghy and outboard. Pus a bunch of incidentals, including $2M liability (pretty standard in Canada). Costs us $400 CND. But I am limited to something like 52ºN and 40ºN, so for us this means most of Canada, but south of Labrador and north of the Chesapeake (or there abouts). We also have 100 mile offshore limit.

This seems pretty inexpensive to me, which is why I get nervous when I read about all the huge increases, and added restrictions, happening down south.

[Woodland Hills]

Call Jack Martin & Assoc about the special Markel policy offered through the MTOA (marine trawler owners association). You don’t have to have a powerboat to qualify, just be a member for $60 a year. It was well worth it for us.

[Navicula]

in Canada I was paying 800 per year good full coverage till the Hudson.....then I wanted the Bahamas so the coverage extension went to Turks and Caois at an increased cost to a total for 1300.....then Irma hit and Mathew hit and a few others and it went to 2200, which wasnt bad compared to others.

now the companys are clawing back coverage, which will affect all of the boating community, I follow Zatara and they were saying there cat premiun is 10 grand a year....but I have not read there policy

[Captain Anthony]

WOODLAND HILLS, is that $60.00 a year policy liability insurance only?

[Woodland Hills]

Originally Posted by Captain Anthony

WOODLAND HILLS, is that $60.00 a year policy liability insurance only?

$60 a year membership in MTOA to be eligible for their expanded coverage policy.

[Captain Anthony]

Got it, if it sounds to good to be true, it usually is to good to be true. Thank you. Upon reading my " yacht policy" in detail, I was very surprised to find out how much it DID NOT cover, like " Consequential Damages". I'm no insurance attorney but I know a thing or two about insurance because I have been involved in a thing or two regarding insurance claims. It's always too late, after the event to learn that for a few dollars more your loss could have been covered.

[Chotu]

What about going the litigation route instead of the insurance route?

If someone crushes my boat, I file suit for damages?

Insurance has seemed less than worthwhile to me overall. In any and every case. Every type of insurance. I'm a pretty careful guy. I'm over half way through life at this point. I think I've saved more money paying for everything out of pocket than I would have if I had insurance.

And my boat got trashed by a hurricane. Broke loose and slammed against a seawall with several others, a few of which sank. I'm fixing the damage for less than I think insurance premiums with deductibles would have cost.

Then there is the fact 99% of all losses are just under the deductible (dinghy theft, etc) as well as their want to not cover a laundry list of the most probable losses.

I prefer to pay everything out of pocket and live a prudent life. Goes for literally every type of insurance there is.

I've only been to one marina that absolutely required liability insurance, which I had to pay. Otherwise, none.