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Old 23-01-2023, 06:48   #1
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Thoughts about going uninsured?

So my wife and I have recently started a schedule of living on our boat (Moody 425) about 8 or 9 months a year and then flying home to work for the other months. Our plan is to cruise internationally and eventually circumnavigate doing this.

This past year we had the boat fully insured and I've been thinking about the costs and restrictions and wondering if it's worth it. We paid about $4,300 for insurance last year and that had a $22,500 deductible and a $45k deductible for a named storm. Our hull value is only about $150k. On top of that you have the usual geographic restrictions that you need to always be dealing with.

So I got to thinking that with a deductible that high we would need to suffer a total loss every 30 years just to break even. No I understand that you aren't really meant to break even with insurance but I compared it to my homeowners insurance and if my premium was $20,000 for a $500k house people would consider that insane and probably opt to go uninsured.


So my question to the rest of you is are we crazy to just say "screw it" and go uninsured? We have the assets to fix anything that needs to be done on the boat and I figure short of sinking there isn't much that we could do that would cost more than $25k (not even factoring in the increased premiums after having a claim)
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Old 23-01-2023, 06:58   #2
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Re: Thoughts about going uninsured?

If the risk / benefit works out, going without hull insurance very well may be reasonable. You'd want to keep liability coverage, however, as that should be inexpensive. And the potential liability cost (for both property damage and environmental) in an incident can be very large.
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Old 23-01-2023, 07:21   #3
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Re: Thoughts about going uninsured?

The only reason to ever buy insurance for anything at any time is because you're forced to, whether by the mortgage company or the government. Insurance companies are businesses who's model is the same as the Disney pirates: "Take what you can, give nothing back."
If you aren't legally bound to carry insurance, then you're just paying a "stupid tax".
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Old 23-01-2023, 07:26   #4
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Re: Thoughts about going uninsured?

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Originally Posted by Benz View Post
The only reason to ever buy insurance for anything at any time is because you're forced to, whether by the mortgage company or the government. Insurance companies are businesses who's model is the same as the Disney pirates: "Take what you can, give nothing back."
If you aren't legally bound to carry insurance, then you're just paying a "stupid tax".
That's not entirely true. It's a risk / benefit thing. If you can afford the risk of losing the boat, you don't need hull coverage. But for some people, affording a couple grand a year for insurance is do-able, but losing the boat would mean either being out of boating entirely or being forced to replace the boat with a much cheaper one. That second scenario is quite likely for those who are boating, but still working and haven't piled up a ton of money in the bank to fund their boating future.
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Old 23-01-2023, 07:40   #5
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Re: Thoughts about going uninsured?

As someone pointed out in a recent thread on insurance, just because you have it does not necessarily mean that you will get full compensation, especially in the case of a partial loss.
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Old 23-01-2023, 07:41   #6
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Re: Thoughts about going uninsured?

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Originally Posted by nuru05 View Post
So my wife and I have recently started a schedule of living on our boat (Moody 425) about 8 or 9 months a year and then flying home to work for the other months. Our plan is to cruise internationally and eventually circumnavigate doing this.

This past year we had the boat fully insured and I've been thinking about the costs and restrictions and wondering if it's worth it. We paid about $4,300 for insurance last year and that had a $22,500 deductible and a $45k deductible for a named storm. Our hull value is only about $150k. On top of that you have the usual geographic restrictions that you need to always be dealing with.

So I got to thinking that with a deductible that high we would need to suffer a total loss every 30 years just to break even. No I understand that you aren't really meant to break even with insurance but I compared it to my homeowners insurance and if my premium was $20,000 for a $500k house people would consider that insane and probably opt to go uninsured.


So my question to the rest of you is are we crazy to just say "screw it" and go uninsured? We have the assets to fix anything that needs to be done on the boat and I figure short of sinking there isn't much that we could do that would cost more than $25k (not even factoring in the increased premiums after having a claim)
If you are crazy, so am I. My boat's value is a bit higher than the value you state, at least when we bought it 20+ years ago, and I paid for full insurance coverage for the first two years of full time cruising internationally and the cost was over $8000/year, and that was 01-02. Possibly it was especially high because (at the time) we had a 3 year old child (and very little if any actual experience besides bare-boating) - I recall the agent said they rate couples with infants the same as if you are a single-hander (assumption being that when the SHTF the admiral is occupied caring for the infant, so, only 1 crew sailing the boat) so maybe my rates would be lower now that the child has fled the nest, but I figure over 20 years of not paying insurance, I have saved close to $140,000.

Sure, if we had a total loss, we would be screwed. But, our philosophy has always been that in that scenario, we are most likely dead anyway, and if not, so be it. Anything less than a sinking and we have a theoretical $140k "fund" which we didn't spend on insurance from which to repair the problem... ie. self-insured.

I also believe that having insurance causes seafarers to take risks they might otherwise not take. This may be a kind of pop-psychology belief because surely there is no hard data to back it up, but it feels right to me, and so we will continue to cruise self-insured and use extra caution to bolster our luck.

I figure we have another 10 years left before we are too old to continue cruising at which point savings from not having insurance would amount to a total of $180,000 (assuming reduction in premium as boat value declines over the years, so based on appx $6k/year instead of $8k). A very rough estimate, it's possible with inflation premiums would be even higher now so the savings might be much much higher (would be curious to know experience of someone who has continued to pay insurance annually on the same boat over 20 years and how their premiums have "evolved" over that period).

Note that I am not suggesting this approach for anyone else. Maybe if I had a different boat, or was not planning to live aboard for decades, instead of years, or if I was not a live aboard at all but a weekend sailor instead... but this feels right for us.
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Old 23-01-2023, 07:46   #7
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Re: Thoughts about going uninsured?

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Originally Posted by rslifkin View Post
That's not entirely true. It's a risk / benefit thing. If you can afford the risk of losing the boat, you don't need hull coverage. But for some people, affording a couple grand a year for insurance is do-able, but losing the boat would mean either being out of boating entirely or being forced to replace the boat with a much cheaper one. That second scenario is quite likely for those who are boating, but still working and haven't piled up a ton of money in the bank to fund their boating future.
There are some of us, perhaps many, for whom the annual insurance premiums are simply beyond our means.

We may have accumulated a cruising kitty large enough to provide a livable income, (including covering most foreseeable disasters) but that income level does not permit $2-$4000 insurance premiums.

So the strategy would be:
  • Carry liability insurance (because if risk of claims which could be far beyond any resources we have at our disposal)
  • Take the risk of an uninsured loss, in worst case it wipes you out and you lose the boat and have to start over, but meanwhile you are able to enjoy a cruising life which you can afford.

If you have the money to pay for insurance, you have a choice. If you don't, then it's either buy insurance and don't eat for a few months or take the risk.
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Old 23-01-2023, 07:51   #8
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Re: Thoughts about going uninsured?

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There are some of us, perhaps many, for whom the annual insurance premiums are simply beyond our means.

We may have accumulated a cruising kitty large enough to provide a livable income, (including covering most foreseeable disasters) but that income level does not permit $2-$4000 insurance premiums.

So the strategy would be:
  • Carry liability insurance (because if risk of claims which could be far beyond any resources we have at our disposal)
  • Take the risk of an uninsured loss, in worst case it wipes you out and you lose the boat and have to start over, but meanwhile you are able to enjoy a cruising life which you can afford.

If you have the money to pay for insurance, you have a choice. If you don't, then it's either buy insurance and don't eat for a few months or take the risk.

Depending on where you cruise, your budget, and other factors, there are definitely situations where insurance beyond liability is just disproportionately expensive relative to your other expenses and/or the value of the boat you're insuring. In those cases, insurance probably doesn't make sense even if you can't just readily absorb losing the boat.

And for some people, the idea that they're done boating if something bad enough happens to the boat is perfectly fine, which also changes the equation.
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Old 23-01-2023, 08:03   #9
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Re: Thoughts about going uninsured?

I've decided to pay off my boat this year and drop down to liability insurance. The thought of losing a major investment is scary but at 7k/yr premium, it just no longer makes sense. In addition to the premium there are other factors with insurance that I'd like bring up, making it even more expensive than the "face value" of the premium:

-You're required to haul out and survey regularly as well as "change" anything "they decide is not up to snuff.
-You're limited to places they say are okay to go, even if it is unsafe.
-The deductibles are getting hilariously bad. For named storm is is getting to be 20-30% normal. They raised my "mechanical" deductible to 5% this year, whatever that means.
-Further, if you do need to make a claim, there is the very real possibility that you'll incur legal costs if "they" decide not to do the right thing. They have lawyers on retainer.
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Old 23-01-2023, 08:09   #10
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Re: Thoughts about going uninsured?

For my situation the full coverage insurance is 1176€/yr on a 120000€ boat. Rather than looking at whether I want to shoulder the risk myself, first I look at what the 1176€ means to me. Is it a game changer or even important? Would I have a particular use for it (booze, women, boats) or would it be squandered by saving or even worse investing it?

I suggest doing the above evaluation first. After that depending on the answer, you can worry about whether you want to shoulder all the risk yourself or stop worrying about it all together.
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Old 23-01-2023, 08:33   #11
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Re: Thoughts about going uninsured?

Really depends on your situation. My strategy has been to only purchase boats I could afford to lose & go liability only. But if I wanted a really nice boat I would have to re-evaluate.

One thing to keep in mind in your financial/risk calculations is there is a tax deduction on the loss of your boat. You do need income to take advantage of this of course. But if you are in this situation it makes carrying hull insurance all the more unattractive.
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Old 23-01-2023, 09:30   #12
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Re: Thoughts about going uninsured?

Quote:
Originally Posted by nuru05 View Post
S
This past year we had the boat fully insured and I've been thinking about the costs and restrictions and wondering if it's worth it. We paid about $4,300 for insurance last year and that had a $22,500 deductible and a $45k deductible for a named storm. Our hull value is only about $150k. On top of that you have the usual geographic restrictions that you need to always be dealing with.

That's a lot to pay for what you're getting. We pay about a quarter of that and have lower deductibles for a boat of roughly similar value. You're in the Great Lakes, right? Is there something about yhour situation that makes it particularly difficult to get insurance?


Quote:

So my question to the rest of you is are we crazy to just say "screw it" and go uninsured? We have the assets to fix anything that needs to be done on the boat and I figure short of sinking there isn't much that we could do that would cost more than $25k (not even factoring in the increased premiums after having a claim)

1) Liability, including liability for environmental damage, is something you should also consider.


2) You may have trouble with slip rentals, or storage at a yard, or in some cases haulout for repairs, without insurance.


3) The sad reality is that most couples do not return to cruising after a total or near-total loss of their boat, regardless of whether it is insured. Most of the exceptions involve couples who already had a long history of cruising together prior to the loss. The main question then is to what extent a total loss of the boat plus some cleanup/salvage liability would affect your life ashore. Only you can make those tradeoffs.
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Old 23-01-2023, 09:55   #13
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Re: Thoughts about going uninsured?

Quote:
Originally Posted by Benz View Post
The only reason to ever buy insurance for anything at any time is because you're forced to, whether by the mortgage company or the government. Insurance companies are businesses who's model is the same as the Disney pirates: "Take what you can, give nothing back."
If you aren't legally bound to carry insurance, then you're just paying a "stupid tax".

Some years ago a close family member of mine cut down a tree for a friend of many years, who had been his college roommate. There was an accident and a bystander was dead at the scene and another person was hospitalized. Lawsuits in the seven figures followed.



I can assure you that the person involved was well pleased that they had a one million dollar liability policy. State Farm paid the hospital bills and paid the attorney's fees for the defense of the lawsuits. It's not a "stupid tax" to pay to have someone else take a risk that you can't afford.


The PTSD was bad enough from that and took him years to get over. If he'd had to deal with a financial catastrophe at the same time he may have never recovered.
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Old 23-01-2023, 10:04   #14
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Re: Thoughts about going uninsured?

I am currently in the Bahamas and have full insurance, but am undervalued. But if I move 10 miles I wouldn't be insured. Figure that out.

Currently to get better more expensive insurance it would cost me $1000+ to get a new survey for the honor to pay for insurance.

I haven' decided what to do later, but I don't count the value of the boat in my net worth in case it gets destoryed.

I think once insurance becomes something tat prevents enjoying your boat it is time to rethink.
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Old 23-01-2023, 10:10   #15
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Re: Thoughts about going uninsured?

With condolences to your acquaintance, the only reason insurance had to kick in is because he was cutting down trees with people around. I do a good deal of tree work on my property, and make sure no one is anywhere near a danger zone when I'm cutting stuff down. I'll simply wait until it's safe to do so.
But I'll allow that in our litigious times, certain businesses perhaps do well to carry insurance, though it's made necessary more by the rapacity of lawyers than because insurance companies want to have your back.
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