Why not increase price of insurance

[Arrandir]

Before I bought my boat I thougt sailors lived a free life and sailed to where they wanted. Later I realised that sailors are not free, it's the insurance companies that decide where they sail.

After sailing in my homecountry for a while I decided to sail abroad. I contacted all (three) insurance companies with office in my country which are specialised in boatinsurance. One said my boat was 25 cm too short for sailing offshore (The boat had been long enought if they had counted stern hung rudder OR bowsprit. To build a fiberglas structure in the bow was not acceptable). Another said they only were interested if my boat was worth 13 000 USD more (I told them that the boat was worth 50 000 USD). The third said it was three years too old for being suitable for sailing offshore (boats over 30 years old are falling apart).

I contacted many companies from other countries without much luck (this was in 2018). For a while I thought my dream about sailing away would be killed by insurancecompanies.

After a while I realised that I had to tell them about how much safety equipment I have onboard. Then some said yes to third party liability. I had prefered hull insurance, but I had to stay at home or sail only with third party liability. Since the boat was not that expensive the decision was easy.

Why do they say no instead of increasing the price?

If I had to choose between a third party liability insurance for 1 000 USD/year or sell the boat and buy a bigger, newer and more expensive, then I would take the expensive insurance. It would cost more and take a lot of time to buy a new boat. And maybe all this would be needless because they find a reason to not give insurance to that boat too.

[goboatingnow]

Firstly all you actually need is third party liability insurance. Secondly after that it’s really a personal decision

The boat insurance market has tightened many have stopped writing policies. It’s a insurance sellers market.

[redneckrob]

It's not probably the answer you're looking for, but the cruiser boat insurance market is a tiny niche within a niche. Insurance only works when underwriters have a big enough data set to be able to reliably set prices. And many classes of cruising boats just don't have a big enough data set or the data isn't consistent enough to use for underwriting. Without the data, they have no idea what price to set. So it's not a matter of increasing the price, it's a question of increasing it to what, exactly and based on what, exactly?

Add to that, the total addressable market for some of these niches is so small that it costs them almost nothing to ignore them. So the real question is what does the company have to gain by venturing into uncharted guessing territory, vs what they have to lose. If you think they're all missing a huge market opportunity, I'll consider funding your company that takes advantage of that by offering insurance to boats in your situation when you provide a well researched, quantifiable business case for it. I think though, after you go to the work to learn the insurance business and do the research you'll find that niche is empty for a reason.

[leboyd]

In addition to what @redneckrob wrote, in the US they have to present their data to each state in which they want to provide insurance. The states' department of insurance reviews the data and allows or disallows the pricing and/or coverage. This is time consuming and expensive, and, again, has to be done in every state where they want to provide coverage.

[PaulCrawhorn]

It's a bookie marketplace.

Businesslike bookies only take bets where they feel comfortable the odds are somewhat reflecting reality.

When they don't feel comfortable, they din't take the bet.

Think about it, what you are asking for is not a right

in fact you are asking for a helluvalot.

And it certainly is not necessary, just go without!

Or don't go...

Or buy the boat that makes them happy

[Larry T.]

It might not be a right but without at least liability of $500,000. you don'y get a slip at our marina.

[rbrazil]

OMG. Don’t get me started. Owning a cruising boat is hard enough. Searching for the perfect boat, (impossible) getting a survey, (yeah right) going through the purchase process, (no set rules) and then comes the big one…insurance — the absolute worst part of boat ownership! What a runaround. Even if you can find it the odds are good it will be canceled with a simple letter saying something to the effect of, “we no longer insure boats over 30 years old and over 40’ in length.” This is a true story. Geico (Boat U.S.) just sent us this letter even though we’ve never had a claim in the 5 years we’ve been under their policy. Luckily, our boat is in Mexico and we contacted Novamar Insurance (the Puerto Vallarta branch) who said, “No problem.” My jaw hung to the floor the entire phone call waiting for the other shoe to drop when they would say, “Sorry, we don’t insure boats with a mast, or, sorry, we don’t insure boats with a white hull, or, sorry, we don’t insure boats that are floating.” Nope, they said, “Yes!” Hip-hip, horray!” We are now insured! The moral of the story is— boating insurance is absolutely positively the worst part of boat ownership! Sorry for the rant, but, I feel a little bit better…

[MJH]

Originally Posted by Arrandir

Before I bought my boat I thougt sailors lived a free life and sailed to where they wanted. Later I realised that sailors are not free, it's the insurance companies that decide where they sail.

After sailing in my homecountry for a while I decided to sail abroad. I contacted all (three) insurance companies with office in my country which are specialised in boatinsurance. One said my boat was 25 cm too short for sailing offshore (The boat had been long enought if they had counted stern hung rudder OR bowsprit. To build a fiberglas structure in the bow was not acceptable). Another said they only were interested if my boat was worth 13 000 USD more (I told them that the boat was worth 50 000 USD). The third said it was three years too old for being suitable for sailing offshore (boats over 30 years old are falling apart).

I contacted many companies from other countries without much luck (this was in 2018). For a while I thought my dream about sailing away would be killed by insurancecompanies.

After a while I realised that I had to tell them about how much safety equipment I have onboard. Then some said yes to third party liability. I had prefered hull insurance, but I had to stay at home or sail only with third party liability. Since the boat was not that expensive the decision was easy.

Why do they say no instead of increasing the price?

If I had to choose between a third party liability insurance for 1 000 USD/year or sell the boat and buy a bigger, newer and more expensive, then I would take the expensive insurance. It would cost more and take a lot of time to buy a new boat. And maybe all this would be needless because they find a reason to not give insurance to that boat too.

My thought is that the marine insurance industry is negatively impacting the middle class offshore cruising niche. Only the wealthy or Joshua Slocums sailing uninsureable boats will continue making ocean passages in the future.

~ ~ _/) ~ ~ MJH

[captlloyd]

Originally Posted by rbrazil

OMG. Don’t get me started. Owning a cruising boat is hard enough. Searching for the perfect boat, (impossible) getting a survey, (yeah right) going through the purchase process, (no set rules) and then comes the big one…insurance — the absolute worst part of boat ownership! What a runaround. Even if you can find it the odds are good it will be canceled with a simple letter saying something to the effect of, “we no longer insure boats over 30 years old and over 40’ in length.” This is a true story. Geico (Boat U.S.) just sent us this letter even though we’ve never had a claim in the 5 years we’ve been under their policy. Luckily, our boat is in Mexico and we contacted Novamar Insurance (the Puerto Vallarta branch) who said, “No problem.” My jaw hung to the floor the entire phone call waiting for the other shoe to drop when they would say, “Sorry, we don’t insure boats with a mast, or, sorry, we don’t insure boats with a white hull, or, sorry, we don’t insure boats that are floating.” Nope, they said, “Yes!” Hip-hip, horray!” We are now insured! The moral of the story is— boating insurance is absolutely positively the worst part of boat ownership! Sorry for the rant, but, I feel a little bit better…

Would you mind divulging what type of coverage you bought and the cost ?

[rbrazil]

Full coverage. Similar to U.S. insurance but with lower dollar amounts of coverage coinciding with Mexico’s cost of living vs U.S. The yearly premium is $2300 USD

[captlloyd]

Originally Posted by rbrazil

Full coverage. Similar to U.S. insurance but with lower dollar amounts of coverage coinciding with Mexico’s cost of living vs U.S. The yearly premium is $2300 USD

Thanks.

[sailingchiro]

I was also dropped by Geico. Never had a claim. A letter stating they no longer are writing policies for my boat but didn't give a reason. Found out they are no longer writing commercial policies but I couldn't get a private policy because I wasn't grandfathered in. Had to go with Modern American with the usual list of repairs from survey. It really stinks. Insured for $130,000 for around $3200/year. We are stepping away from the charter business for a year then get the commercial policy again but from unknown.
Insurance is about as fun as scraping barnacles off the bottom.

[ixnax]

Originally Posted by rbrazil

Full coverage. Similar to U.S. insurance but with lower dollar amounts of coverage coinciding with Mexico’s cost of living vs U.S. The yearly premium is $2300 USD

Is that liability only? If so, how much? If it's also hull what is the insured value?
Who underwrites the policy. That's the thing, right? Otherwise $2300 is a meaningless number.

[Boatyarddog]

Originally Posted by Larry T.

It might not be a right but without at least liability of $500,000. you don'y get a slip at our marina.

Statement is true, but referred to a state law Inacted by DOEcology.
$1000 medical, $300.000 liability, it's slip insurance required for spill cleanup.
So.. In reality it's only $50.00USD per year. State Farm.

Covers just your slip, nothing for the boat.
Everyone should have that.
Boatyarddog

[waterman46]

Agree with the OP on insurance woes. I refuse to pay over 5% of the value of my boat each year for comprehensive coverage and now carry only liability. But even that has been hard to get, and after reading the umpteen exclusions on my latest policy I realized it actually insures me against nearly nothing.



Got to realize that like anything else, when you shop for insurance you are competing against other boat owners some of whom are very well-heeled and they don't mind paying the exorbitant rates. Insurance companies are just the same as any other business - they prefer to sell to the high end of the market where folks don't really care how much they have to pay.