Urgent insurance problem

[valhalla360]

Originally Posted by Jolly Roger

How does self-insuring work? I’d like to know more about this, please.
JR.

If the boat is damaged, you go to your bank, pull out the money and pay for the repairs and/or replacement boat

If you have a $5k boat, insurance is $1k/yr and are worth $10million, self insuring can make a lot sense (Liability is a different ball game). You can easily eat the $5k loss and if you are reasonably careful, odds are you go 5yrs without a loss, so the premiums would be more than the loss.

If you have a $250k boat, insurance is $2k and you have $250k in other assets, self insurance is pretty questionable as it would cost you half your net worth and would result in a major reduction in lifestyle.

[ItDepends]

Originally Posted by Jolly Roger

Reading these boat insurance policies is tedious. Mine is 20 pages and says: Comprehensive. The lesser of actual cash value at time of loss or $100,000.
What the heck does that mean!!
I thought about seeing a lawyer to see if the policy they gave me could somehow be upheld, but then they wouldn’t be too cooperative if I had to make a claim would they?

Yeah, insurance policy speak is tough.

"Actual Cash Value" is what is left over after depriciation is subtracted from replacement cost.

EXAMPLE: Your boat's engine is 15 years old, out of an expected life of 20 years when it was destroyed by a fire in the engine room. If it costs 25,000 to replace, the insurance payout would be 25,000*(20-15)/20 or $6250. But wait... you have a $7,000 deductible, so your actual check from the insurance policy is $0.

This is why replacement value policies are so much more valuable than "actual cash value" policies. And why they are so much more expensive.

If you do not understand the words in your policy, I guarantee you will be angry and disappointed if you have a claim.

[Jolly Roger]

"It is entertaining to read all the rants about the evil, greedy insurance companies who are canceling our policies! If they cancel your policy, how exactly are they making ANY more money from you???? I know, let's cancel ALL our policies and get really rich!!!!"

This reminds me of a company run by accountants, who were not doing very well with sales, so someone suggested, "I know let's sack all the salesmen and save money."

[valhalla360]

Originally Posted by Jolly Roger

Reading these boat insurance policies is tedious. Mine is 20 pages and says: Comprehensive. The lesser of actual cash value at time of loss or $100,000.
What the heck does that mean!!

There are two types of comprehensive insurance:
- Actual Cash Value: In this case, they will pay out what they determine to be the market value of the boat (you can argue with the adjuster and there is typically a mediation process if you strongly disagree). It typically comes with an upper limit (in your case $100k). That upper limit is usually the basis for the premium amount...the language suggests this is the type of insurance you have.
- Agreed Value: The insurance company "agrees" to pay you the dollar amount agreed to without regard to the market value. Usually, it requires the customer to provide documentation (survey & appraisal) to support the value. If the insurance company agrees with the documentation, they will pay out the dollar amount agreed to in the event of a total loss. This is common for something like high end art or classic cars.

In simple terms, if there is a coverable incident:
- They decide what the boat was worth immediately before the incident (if the engine was inoperable before a tsunami took out your marina, they will discount for the inoperable engine when setting the value).
- If they decide it's worth more than $100k, you get $100k (probably minus a deductible).
- If they decide it's worth less than $100k, you get what they decide it was worth (again, minus deductible)
- You can argue with the adjuster over what it's worth but you won't ever get more than the $100k.

It's generally a good idea to keep the dollar value close to what they think the market value is. This will result in this statement having minimal impact. If you have a $50k boat and set it at $200k, you gain nothing in the event of a claim. The premiums will be based on a $200k boat but they will only pay out based the $50k value (of course, they don't like having wildly divergent numbers as that could be susceptible to fraud and/or legal fights over the value).

As it's an older unusual boat, you may want to inquire about "agreed value" but there is a very good chance, they have no interest in issuing such a policy. Unlike a painting where they can stipulate security and climate control to reduce their risk, a boat tends to go out in difficult conditions and it would be easy for an owner commit insurance fraud by breaking off a thru hull and sending her to the bottom. (not implying you would do this but when the numbers get too far from normal, they tend to assume the worst)

[Rumrace]

I have a 7 year old Jeanneau avarage price 225-250. I pay $39.00 a month. Same guy does house cars and two antique bikes.

There is no legal requirement in Canada to have boat insurance. However we toss ppl out of our club without insurance.

I’ve had two complete losses both Marina fires. Just oiled the teak on one burnt real good. My insurance company went after the dork who started the fire. No one sued him for wrecking the season.

Half your insurance payment is commission. Their offices m, pay cheque’s speak volumes towards overhead.

So roughly my insurance risk is about 10% of my cost so $50.00

[Montanan]

Originally Posted by ItDepends

Without some numbers it is really hard to tell... but when a boat is 45 years old, unless it is a true classic, its value to the boat buying market is pretty low. Does it still makes sense to even carry hull insurance on this?

It is entertaining to read all the rants about the evil, greedy insurance companies who are cancelling our policies! If they cancel your policy, how exactly are they making ANY more money from you???? I know, let's cancel ALL our policies and get really rich!!!!

If I was an insurance company, I wouldn't insure any boat for more than market value. To do so puts that policy are very high risk for a fraudulent total loss claim.

Increased value marine hull and machinery insurance is a coverage feature that allows you to insure the mortgage value of your vessel instead of the market value. This may be required by the lender / lien holder.

Traditionally, under the “Marine Insurance Act”, Hull insurance covered the market value of the ship and, at the same time, the shipowner’s “insurable interest”. Any cover in excess of market value was prohibited. Shipowners successfully demonstrated, however, that there were additional costs associated with replacement, beyond market value. It is now recognised that if the assured has an additional insurable interest, in excess of the vessel’s market value and in excess of the Hull insurance. Hull Interest cover was instituted as an excess cover, commonly known as “Increased Value” or “Hull Interest”. This was originally confined to Total Loss Only cover, only paying the agreed amount when the vessel was a total loss according to the Hull insurance.

A very important provision of hull and machinery insurance is the running down clause, also known as “the collision liability” provision.

As its name suggests, this clause protects the owner of the craft against legal liability. This is the liability that may arise out of the owner’s vessel colliding with another ship and damaging its property or cargo.

It is very important to note that the collision liability clause does not apply to legal liability arising out of bodily injury or death, or property damage to fixed installations such as piers, e.g., allisions.

If you wish to get insurance against this kind of liability, you will need to purchase protection and indemnity coverage.

[ItDepends]

Originally Posted by Rumrace

I have a 7 year old Jeanneau avarage price 225-250. I pay $39.00 a month. Same guy does house cars and two antique bikes.

There is no legal requirement in Canada to have boat insurance. However we toss ppl out of our club without insurance.

I’ve had two complete losses both Marina fires. Just oiled the teak on one burnt real good. My insurance company went after the dork who started the fire. No one sued him for wrecking the season.

Half your insurance payment is commission. Their offices m, pay cheque’s speak volumes towards overhead.

So roughly my insurance risk is about 10% of my cost so $50.00

Help me understand this...

You say you have had two "complete losses" Assuming those were both boats of equivalent value to your current Jeanneau. That means you have collected something on the order of $500,000 in claims.

That means, in the absence of ANY administrative costs at all, 10,000 people had to pay $50 premiums for a year and NONE of them had even ONE claim just to put enough money in the pot just to cover your claims.

Or another way of looking at it is the AVERAGE boat like yours has to go 5,000 years without a single claim to make this even CLOSE to a break even case. That is just not reality.

How can that be sustained? The numbers just don't compute, what am I missing???

[Rumrace]

One boat settled for $28,000.00 the other $310,000.00. My insurance company took no loss.
If you add up the claims by area and the policy bills is as close to 10% as a lawn dart.
A co-op non profit would have surplus one year and a disaster the next.
Certainly if you collected all the 11 sailing yacht clubs in my area. Qualified the members and boats based on market values not personal purchase choices.
I’m betting of the 4,500 boats involved there would not be a legitimate claim in 5 years. Add the rest of the Lakes sailors you’ve got more clients than any of the players bailing out. Us paying for Florida hurricanes is fubar

[ItDepends]

Originally Posted by Rumrace

If you add up the claims by area and the policy bills is as close to 10% as a lawn dart.

Could you be more specific? You are claiming that $50 is your insurance bill for the year to cover $250,000 worth of boat.

Are you saying that $5 (10%) of your premium goes to paying claims in aa average year? This is full hull and liability coverage?

Assuming only full losses, that means the average boat goes 250000/5, or 50,000 years between full loss claims? That can't be right... or even close.

[silverp40]

Would like to revert back to the original thread.



We also cruise a US flagged, 1979 sailboat and been having great trouble finding an insurer. After a few rejections , we're thinking of self insuring again, like we used to in the past.


Does anyone know of anyone that would offer liability only??

[Jolly Roger]

I’ve just looked into liability only with two different marine insurance companies and they weren’t interested. They said that in most cases, where there is a dispute between injured parties, they finish up paying for both.
It makes you wonder who they are actually working for, you, their client, or themselves. It doesn’t take a genius to answer that.

[clamshack]

Is the current company covering your personal property? If the hull was insured for 25k and they want to drop it down to 15k; that’s not the end of the world. In your case the fact that they cover your stuff, dinghy and other transferable equipment may be the more valuable part of the policy. Have you taken this into account? It may be worth asking how this part of the policy would work in the event of a total loss.

Another thought, have you improved the boat recently. You may want to try to provide a comprehensive list to justify the 25k valuation.

I read on another thread that you could try Hagerty. They specialize in classic vehicles including yachts insurance.

[Rumrace]

Top contributing factors in boat accidents
Contributing factor Number of accidents Number of deaths Number of injuries
Operator inattention 664 55 383
Operator inexperience 612 56 343
Improper lookout 578 28 409
Excessive speed 418 32 345
Machinery failure 373 19 151
Navigation rules violation 316 26 220
Alcohol use 296 115 260
Weather 244 42 81
Hazardous waters 232 62 95
Force of wave/wake 215 14 182
Source: 2020 Recreational Boating Statistics, U.S. Department of Homeland Security and U.S. Coast Guard Office of Auxiliary and Boating Safety

So Forbes claim on this 2020 report the average claim is $11,000.00.

Your odds of making a claim drunk are low due to high fatality.

[silverp40]

Thank you for the info, we'll keep looking. Its certainly a challenge to get insurance now for a classic plastic boat, especially in the US. Seems like European companies are easier in this regard, however most would want a EU registered boat.


BTW, rumrace, a top contributing boat accident/claim is electrical, onboard fires.

[Jolly Roger]

All’s well that ends well: They have re-instated the policy at the original value, but they want a survey before they will renew it in May 2023.
I am thinking of selling Britannia before then anyway, so a buyer can pay for a survey, and if it's satisfactory the insurance might roll over.
Someone said the boat was “unusual.” This was not an issue, only the age at 45 years. She is a staysail schooner, which is not unusual at all. Only the square sail set on a yard on the foremast might be classed as unusual, but I prefer to think of it as unique and interesting. It’s certainly the only way to travel downwind.
Thanks to everyone who chipped in.