Boat Insurers: Cartel or not? Time to leave BoatUS?

[Tonali99]

Originally Posted by Cool Hand Luke

What's the average cost of an insurance policy? 1% of the value of the boat? 1.5%? 2%? 2.5%? 3%?

Never thought of it that way. So for me ...2.66%

[P3sailor]

I've worked for two insurance companies, one CEO put it this way: "The insurance industry is comparable to the big gambling industry, the house never looses." So, with all the huge payouts these past few years the "house" wants to recoup its losses so an increase in all rates is the way it's done, simple.
Basically, insurance is a legal scam that scares people into purchasing a policy by playing the accident or disaster game, which in reality only a small percentage of us will actually experience.

[valhalla360]

Originally Posted by P3sailor

I've worked for two insurance companies, one CEO put it this way: "The insurance industry is comparable to the big gambling industry, the house never looses." So, with all the huge payouts these past few years the "house" wants to recoup its losses so an increase in all rates is the way it's done, simple.
Basically, insurance is a legal scam that scares people into purchasing a policy by playing the accident or disaster game, which in reality only a small percentage of us will actually experience.

Not really a scam. If the house loses long term, they go bankrupt. To expect anything else is illogical.

Too many people don't grasp the purpose of insurance. Carrying insurance because you had a $200 ding from a hard docking is foolish. If you can't afford a $200 repair without shrugging it off, you really can't afford to be cruising. Insurance should be for catastrophic issues that you wouldn't otherwise be able to absorb without significant impact to your life.

[GrowleyMonster]

I insured my 1979 built Bruce Roberts 44 with BoatUS/Geico and I pay $188/year. I insured my 1976 built Cal 2-27 with Ski-Safe and paid $450/yr. There seems to be little rhyme nor reason. Both policies were for only what is required by my marina, $300k liability and salvage/removal. If the rates don't go up or don't go up much when I pay again in October I am seriously considering hull insurance as well. I would be most interested to see what they quote me. One thing about Geico I find from using them several times for cars and trucks over the years is they are quick to pay legit claims.



I actually had a hard time finding an insurer for the Roberts when I bought her. Nobody wanted to insure a boat over a certain size and over a certain age.

[Island Time O25]

I don't know why everyone is hung up on storms and named events but here is the real skinny told to us in a high school business accounting class in the late 1970s by a 75 year old retired Prudential Ins. VP who taught high school after his retirement. The guy obviously was tired of all the BS he had to spew before his retirement and wanted to unload.

Here is what he said.

All of the insurance companies, not many not most but all, on the average over the long term pay out 30c for every policy dollar taken in. Of the 70c only a small fraction goes on the books as actual profits/dividends or in case of mutual cos return to members. Most of it gets reinvested in the downtown real estate across US or some such (land, resource leases, etc). And most of the invested premiums generate a tidy sum before a penny is spent on claims.

He said for proof of what he was talking about - go ahead and list what % of the downtown skyscrapers and other large buildings across US were owned or their construction underwritten by the insurance companies. And his punchline was - the insurance industry is one of the very few industries (at that time, late 70s) which literally do not know what to do with all the money sitting in their coffers. Today we can add Apple, Amazon etc. to the list of such companies but back then it was only insurance industry and perhaps energy.

And that was during the time when most insurance premiums were actually affordable and non-compulsory (see the corelation? I do). These days of compulsory this and that type of insurance it is probably even more apparent than 40 years ago. So I refuse to cry for the industry losses during the few hurricane years and will not allow its unabated greed fueled by their overwhelming lobbying access to lawmakers on all levels of the government to continue feeding the beast. Self-insurance with absolute minimum liability (to satisfy marinas, ect) is the way for me.

Speaking of marinas. How did it happen (rethorical question as we all know the answer) that we as a society have allowed others to force us into payng for what essentially those forcing us to pay should've been paying themsleves? The case in point is the automobile compulsory insurance (and thanks to marinas now its there for boats as well).

If you are afraid to be hit and damaged by a uninsured driver why do you have the right to demand that they pay for your insurance? B/c that's what compulsory legislation is really is - the well connected (who had the most to lose and did not want to pay market rates for uninsured driver coverage) got the legislators to move the insurance costs from their backs onto millions of others, who otherwise were happy enough to drive around uninsured.

If the marina is so afraid of being damaged or stuck with costs of salvage by an uninsured boater it shold have its own policy covering such events. And it wold be a good business practice to raise their dockage and storage rates by commesurable amount to cover their insurance premiums. But not to saddle others with the costs which the business should be paying as part of "cost of doing business" no diferent than office rent, office electricity or office supplies.

As a side note NH does not have a compulsory atuo insurance, just either a bond or eveidence of $25,000 worth of banks depostis or some such. As a result thier auto insurance premiums are 1/2 of the similar premiums of the compulsory insurance in MA. And that is the reason Geico et als are raising their premiums because - with all the marinas demanding evidence of insurance - they can. The storms etc are just a smoke screen.

During the pirate craze a few years back the add'l insurance premiums for marine shippers increased by a factor of 5 or 6 over the actual payouts to the pirates, around $600mil and just over $100mil respectively. Still crying for insurance industry "losses"?

[rslifkin]

With the insurance vs marina thing, we'd end up paying for it either way. If they were carrying insurance to cover all of our potential screw-ups, they'd have higher operating costs. Which means they'd charge more for slips, etc.

[Island Time O25]

Originally Posted by rslifkin

With the insurance vs marina thing, we'd end up paying for it either way. If they were carrying insurance to cover all of our potential screw-ups, they'd have higher operating costs. Which means they'd charge more for slips, etc.

Yes I understand that. And that's how it should be. Without any compulsion, including whether or not marina itself has to have insurance, insurance rates would be much lower (see my prev. post about auto insurance in MA vs. NH).

There would be more cruisers as the cost of operating a vessel would be less. And for marinas that add'l number of cruisers would offset any rare losses suffered. It's called a free market. We should try it sometimes as a country as it really works to everyone's benefit. Provided of course that we stop allowing the few well connected industry lobbyists keep their crony statist capitalism scams going.

[Tonali99]

Originally Posted by rslifkin

With the insurance vs marina thing, we'd end up paying for it either way. If they were carrying insurance to cover all of our potential screw-ups, they'd have higher operating costs. Which means they'd charge more for slips, etc.

Gee, sounds like a nice friendly marina owner you have.
Here in Florida it's more like every contract time. Don't like it? Move.
But where you ask? Doesn't matter. All the same. One even said they "have to be competitive" And here I thought that meant competitive pricing. Nope! It's systematic get rid of the little guy.

[HighTemp]

I am going through the insurance renewal dance at this very moment. I moved from Lloyds to American Modern and saved about 24% on our Lipari a couple of years back. When we purchased the Saona last September, we stayed with American Modern and we got what I felt was a decent premium. $6500 per year. This year they jacked up the rate to just under $10K. No claims, no nothing. I shopped around and have had 2 carriers come back with quotes in the neighborhood of $7300....until I said ok and submitted our application. GEICO jacked the premium up to over $10K. When I asked why, they said that the original quote request said that we kept the boat at our primary residence address and when they found out it was in a marina, that this changed everything. I am not sure how they concluded that a 47 foot long catamaran was being kept in our garage, but oh well. It is frustrating , but what can you do? I have little choice but to pay the fee and move on....at least for now.

[sail sfbay]

High Temp...............I appreciate a catamaran is like having 2 mono hulls but have you considered going through an insurance broker to allow them to shop for the best price. I did that this year and they found Markel to offer a competitive rate.

[Montanan]

Originally Posted by HighTemp

I am going through the insurance renewal dance at this very moment. I moved from Lloyds to American Modern and saved about 24% on our Lipari a couple of years back. When we purchased the Saona last September, we stayed with American Modern and we got what I felt was a decent premium. $6500 per year. This year they jacked up the rate to just under $10K. No claims, no nothing. I shopped around and have had 2 carriers come back with quotes in the neighborhood of $7300....until I said ok and submitted our application. GEICO jacked the premium up to over $10K. When I asked why, they said that the original quote request said that we kept the boat at our primary residence address and when they found out it was in a marina, that this changed everything. I am not sure how they concluded that a 47 foot long catamaran was being kept in our garage, but oh well. It is frustrating , but what can you do? I have little choice but to pay the fee and move on....at least for now.

HighTemp, not sure if I am interpreting your post correctly, but if they determined that your catamaran IS your primary residence and not just a vessel that you go to from time to time where it is kept in a marina, then the fact that you are a liveaboard, instead of an occasional boater that is likely the reason for the higher policy pricing. More time using the boat, more risk associated to the boat.

[Montanan]

Originally Posted by sail sfbay

High Temp...............I appreciate a catamaran is like having 2 mono hulls but have you considered going through an insurance broker to allow them to shop for the best price. I did that this year and they found Markel to offer a competitive rate.

Or perhaps one could get two policy coverages, one for the starboard hull and one for the port side.

[DHLyman]

Good info. Thanks. I’m writing an article for Caribbean Compass magazine about yacht insurance, specifically for boats in the Caribbean. Anyone have stories to share, links, agents, sources? Are any of you self insured? Has the lack of affordable insurance kept you out of the Caribbean, or out of cruising at all?
Go to CaribbeanCompass.com to see my articles January thru August editions.

[Montanan]

Originally Posted by DHLyman

Good info. Thanks. I’m writing an article for Caribbean Compass magazine about yacht insurance, specifically for boats in the Caribbean. Anyone have stories to share, links, agents, sources? Are any of you self insured? Has the lack of affordable insurance kept you out of the Caribbean, or out of cruising at all?
Go to CaribbeanCompass.com to see my articles January thru August editions.

Since annual vessel insurance costs generally range from 1 to 3 percent of the hull value, I just can't see such being a major factor as to affordability of ownership.

It is a rather trivial expense. Kind of like the ante required to place before receiving a hand of cards.

[Shaneesprit]

Originally Posted by valhalla360

Not really a scam. If the house loses long term, they go bankrupt. To expect anything else is illogical.

Too many people don't grasp the purpose of insurance. Carrying insurance because you had a $200 ding from a hard docking is foolish. If you can't afford a $200 repair without shrugging it off, you really can't afford to be cruising. Insurance should be for catastrophic issues that you wouldn't otherwise be able to absorb without significant impact to your life.

I like this, I wouldn’t ever claim unless I had to, I could. Live with a much larger excess than companies offer, or maybe a policy that only would payout if the claim was above a certain value.