- Joined
- Aug 29, 2012
- Messages
- 2,690
- Location
- Good Ol' US of A!
- Vessel Name
- Pau Hana
- Vessel Make
- 1989 PT52 Overseas Yachtfisher
The insurance thing comes up often, and it's nothing more than a risk/benefit situation.
If everything were equal... you were an average boater had an average risk, average boat and operated in average conditions, insurance would be a waste of money in the long term.
I could argue, if one had a number of items to insure and spent a strong effort on avoiding an issue they would come out WAY ahead without insurance.
Another thought.... if you self insure:
you don't worry about deductibles
there is no hassle with the insurance companies
there are no policies with fine print
you don't have to go to court to get justice
there are no attorneys
there no need to create and maintain a value list of the components and their value and pictures
And, in some cases you can deduct the loss as a casualty loss. (See IRS Publication 547, form 4684.)
So, what's the chances you'll have an accident? Just raw stats, including EVERY boat is once in 285 years, and that loss would be $1,085.65. Now, our boats are most likely a LOT more expensive than the average, but crash a LOT less than average. If we factor in how many boats 40 to 65 feet have accidents and the percent that are out there it's about 20 times safer than the average.
The point being, is that you're VERY UNLIKELY to have and accident, and significantly less having a total loss.
BUT and here's the BIG BUT...... IF the boat is a substantial amount of your net worth, perhaps your home and that's most of what you have, a total loss will put you out of business permanently. You will likely die before getting the benefit of the "time between total losses" makes you whole. And that's a risk most folks aren't willing to take.
So, it's a very personal thing.
Interesting stats you cite- what is their origin and source of data?
The base definition of a claim is a "sudden, direct, accidental loss to the vessel"; we can prepare for almost an eventuality, but accidents do happen...and in the marine world, they compound very quickly. So, the argument that "nothing will ever happen to me because I know how to prepare against a loss" is moot.
Self insuring brings out its own set of unique challenges (as noted earlier) along with the standard challenges that a marine insurance company faces.
Claims, large and small, do happen with frightening frequency and severity. As I've mentioned several times- insuring companies are profitable at $.04 on the dollar. I just read an article regarding the London Syndicates that stated the below:
“Only about 18 syndicates were profitable on hull insurance over the past three years and around 50 were in the red,” another London broker said. “They have been insuring for as low as 0.1% of the vessel’s value, which is unsustainable.”
Brokers say hull premiums may need to double to make them sustainable."
There is market upheaval in play, due in no small part to various insuring companies offering coverage well below market rates (this does not mean more profitability for the insurance company- "market rate" is basically a break even point). Falvey Insurance company turned in $70M of losses on a Tuesday, and shuttered their rec marine and charter marine business the following day.
Falvey was known for offering extremely cheap rates (sometimes below 50% of market) and this contributed greatly to their downfall and subsequent scrutiny of the insuring markets.
In the past month, 2 other well known marine insurers have officially pulled the plug on their yacht business, and a 3rd has announced it is curtailing writing vessels over 27 years of age.
Bottom line- insuring your vessel is indeed a personal choice. Given that fact that one can still insure their vessel at an agreed value for a fraction of its purchase price, and have coverages for eventualities yet unseen (liability, salvage/wreck removal, pollution, and more)- it is a choice worth considering.