Does insurance really not pay up?

[goeasy123]

Originally Posted by sailingharry

This is the huge challenge. 95% of us never file a claim (the one up thread I had is the first in my life). And since most of us responsible folks tend to flock with responsible folks, we mostly know people who haven't claimed. The market is small, the population is small, and there are no repositories of information. And, unlike cars (and even houses to some extent), almost every single claim is highly unique, making every story almost a one-off.


Kind of like divorce attorneys and real estate brokers. Most of us see very few in our lives, and almost never have a chance to work a second time with one. So picking the right one is terribly challenging. Even surveyors -- my horrible first experience was with one of the highest regarded surveyors in Annapolis.


Sussing out the scams from the winners is not easy, no matter how hard you try. Just read this thread to see the unanimity of opinion!

There's nothing like a dose of confirmation bias to prove a point.

[sailingharry]

Originally Posted by KTP

What can you do if the insurance companies decide not to insure your boat but the public marinas around here require insurance?

I ask because our marina does require insurance yet there are quite a few boats that have not left the slip in years and are quite suspect looking. I can't see how they have insurance.

I don't personally have any experience with inability to get insurance, but my perception is that it is massively easier to KEEP insurance than to GET it. To get it, the boat must be young, and surveyed, and in good shape. Once you have it, they just keep on keeping on.

[Reeve21]

Originally Posted by thinwater

. A mast that falls over in plain sailing conditions because the stays are 40 years old may no be covered, or the damamge it does to the boat.

One of the guys in our yard lost his mast in a 10 knot breeze. An unstayed Nonsuch rig, 2 piece mast, it failed at the rivets where the pieces joined together at 30 years or so of age.

His insurer paid him full replacement cost. I was kind of surprised how easy the process was for him.

Not everyone is so fortunate....https://groups.google.com/g/ina-nons...qFOA7uy4?pli=1

The last time I was shopping insurance I was offered a policy with a price that seemed too good to be true. Then I read the exclusions--no coverage whatsoever for spars, sails or electronics.

[dannc]

If one is having problems with the insurance company, one option can be the state insurance commission. I wish I had known about this when I had my problems with Nationwide but I was younger and more ignorant back then.

After my area of NC had a few hurricanes, a major nationwide insurance company started cancelling home policies. This happened to one of my coworkers who had no claims. The house was not in a flood zone either. The company just wanted to reduce their risk I guess and started to cancel policies. I suggested to my coworker to contact the insurance commission, which was done, and low and behold the policy was not canceled.

The insurance companies certainly have to deal with fraud, look at the roof scams in Florida as an example, but there are people running some insurance companies that are scammers as well.

We got a post card a year or so back from a roofer trying the Florida scam which is to get a new rood, blame it on storm damage, and get the insurance company to pay.

Now storms do cause roof damage. A hail storm went through central Florida decades ago and caused hundreds of millions of dollars of roof damage. I had two family members living in different cities that had to replace their roofs. One family member's car was outside and it was totaled from the hail. It looked like someone hit the car with a ball peen hammer on every inch of hood, roof, and panel. The car body had more dimples than a golf ball. I have always wondered if this storm is what caused the roof scams to start up.

[UFO]

I've had 2 claims against others peoples insurance and both got paid out, although it was a slow and painful process.


I do know someone that buckled their mast at the gooseneck and had to have a large section to replace it - The insurance company applied depreciation to the mast and only paid out 20%

[S/V Illusion]

Originally Posted by UFO

I've had 2 claims against others peoples insurance and both got paid out, although it was a slow and painful process.


I do know someone that buckled their mast at the gooseneck and had to have a large section to replace it - The insurance company applied depreciation to the mast and only paid out 20%

A few decades ago, we had a fire and the boat was ‘totaled’. At that time,it was 2 weeks old!

The underwriter (“your in good hands”) wanted to depreciate everything including the cost of wooden bungs, charts, the anchor, etc…, none of which had ever been used.

Can’t accuse them of not paying but it took 2 years and 2 lawyers to do so. Hardly a “they pay” success story.

[sailingharry]

Originally Posted by UFO

I do know someone that buckled their mast at the gooseneck and had to have a large section to replace it - The insurance company applied depreciation to the mast and only paid out 20%

I'm generally mostly OK with depreciation. If my 5 year old sail was part of a fire, it was mostly gone anyway. If my 2000 hour engine was killed in a flooding, it's somewhat gone (but maybe not as gone as the insurance claims). But a mast is one that really pisses me off. A 40 year old mast will be good for the life of the boat. And a payout of 20% leaves me with a bill to replace it that is approaching the value of the boat. If I lose a 15K mast on a 20K boat (and they pay 3K), the boat is constructively totaled and they have paid nothing.


Fortunately, this is just hypothetical. I've never lost a mast, my current boat isn't 40, and it's worth more than 20K.


But, my boat IS 24, and at 20% per year (I think they depreciate 20% per year after 20, right?), many claims for real losses (like a mast) are likely to be effectively denied.


One thing that is hard to figure out. Consider a 20K damage to the side of my boat. That fiberglass is depreciated (but not the labor). So in theory, they will mostly pay to fix it. So in that sense, it much better to have a repairable damage to a depreciated part.



Remember upthread the $750 repair to a tired old bimini? They paid the $700 labor bill, and applied 80% depreciation to the $50 in materials.

[Bill_Giles]

I pay about the same for my car insurance as for my boat. The latter is worth several times that of the car. However I use the car nearly every day. I think that the cost of boat insurance is very reasonable but the boat insurers are sometimes hesitant to pay if there is anything slightly amiss. So reasonably we should ensure that we do not give them an excuse not to pay.

[ausnp84]

A lot of replies in here from folks griping about insurance… and I wonder how many of those folks have actually made a claim.

I’ve had five - ironically none have been my fault - ranging from a flipped over dinghy, full loss of steering, a break in, and a total loss, and every time insurance has paid out in full.

Sure, I can no longer get a policy unless I pay out a huge premium (fair enough, given five claims), but from my experience, as long as you READ your policy small print, go through a reputable company and don’t just get the cheapest coverage, there should be no issue making a claim and having it paid.

N

[CaptainMarkS]

I received insights on some of the tricks insurance companies use first hand from a marine insurance broker! For example: lightning strike damage denied when the vessel didn’t get a direct strike; claims rejected because of policies lacking “consequential damage” clauses (examples already mentioned include rigging components and aged fire extinguishers). He actually advised me to go liability only. There are decent policies out there. Caveat emptor applies: it’s up to the insured to do research and read the fine print.

[SuW]

Originally Posted by CaptainMarkS

I received insights on some of the tricks insurance companies use first hand from a marine insurance broker! For example: lightning strike damage denied when the vessel didn’t get a direct strike; claims rejected because of policies lacking “consequential damage” clauses (examples already mentioned include rigging components and aged fire extinguishers). He actually advised me to go liability only. There are decent policies out there. Caveat emptor applies: it’s up to the insured to do research and read the fine print.

If your broker advised a "liability only" policy, and could provide one, I think that would be worthwhile.

With a 40-year old boat in good condition, with good gear, all we really need is liability coverage. If the mast broke, for example, we'd replace it with a used one and re-rig it. If the dinghy sank, we'd buy a new one (actually just bail it out, no outboard).

If our boat tore free in a gale and damaged a lawyer's gin-palace; or if it burned and sank, the price of another boat would be fairly small compared to the potential liability (and we could probably at least salvage the anchor )

Does he have any examples of companies providing liability-only boat insurance policies, though?

[OneBoatman]

The first rule is that most all insurance companies represent themselves, not their customers. Geico may have the best advertising of any of them, but you will not find them so friendly when it comes time to pay a claim. I think many of us have heard stories about marine claims going smoothly and others that become a nightmare. As a mechanic and an engineer, I can honestly admit I've never heard of fuel valves not being properly "aligned" as being the cause of losing propulsion. That is what the adjuster stated as the reason for denial? Electric, maybe. Was this an electrical failure of your ignition switch where your fuel shut off valves suddenly closed?

[CaptainMarkS]

Originally Posted by SuW

If your broker advised a "liability only" policy, and could provide one, I think that would be worthwhile.

With a 40-year old boat in good condition, with good gear, all we really need is liability coverage. If the mast broke, for example, we'd replace it with a used one and re-rig it. If the dinghy sank, we'd buy a new one (actually just bail it out, no outboard).

If our boat tore free in a gale and damaged a lawyer's gin-palace; or if it burned and sank, the price of another boat would be fairly small compared to the potential liability (and we could probably at least salvage the anchor )

Does he have any examples of companies providing liability-only boat insurance policies, though?

Yes. Concept Special Risks offers liability-only. Most brokers work with them. I’ve used Novamar.

[Laxlife]

I opt for high deductibles in all my property insurance policies. $5-10,000. This lowers my premiums but also aligns the incentives of the insured with the insurer.

[Mickeyrouse]

One of the reasons marine insurance is so quirky is the size of the risk pool.
There are 280 million vehicles on American roads (according to google) and a large number of them have some kind of coverage. The number of yachts insured is a mere fraction of the number of cars. Most states still require an annual safety inspection, whereas boats….well, you see the beginnings of the problem. Hardly any yachts have a production run more than a few hundred, compared to auto model production in the 100’s of thousands. So, the marine insurers don’t have a good idea of just what risks they’re accepting when writing coverage. And you will no doubt be shocked to hear that a few boat owners have been known to sabotage their boats in hopes of getting the agreed value of insurance coverage, particularly when the market for used boats is heading south.
I for one have had no problems with insurance, having had boat coverage for 35 years. That includes a constructive total loss courtesy of Hurricane Rita. The insurance paid the full claim no hassle, and sent the check FedEx within 24 hours. It allowed a complete total refit of everything on the boat except deck hardware and cabinet work. Your experience may vary.