Insurance, full coverage vs. Liability

I was blown away by the premiums quoted for full coverage. My location and the size of the boat put my premiums over 15k/year for 100k of coverage. Liability is a must and it's cheep verses the other. What do ya'll carry? Im glad I don't owe any money on the "Rose".

I have full coverage, but understand why your quote is so high. I'm sure part of it is age and construction material of the boat. Second, the boat is not easily pigeonholed as it's kind of unique for a pleasure vessel. That will always generate a higher insurance cost.

Ted

O C Diver said:

I have full coverage, but understand why your quote is so high. I'm sure part of it is age and construction material of the boat. Second, the boat is not easily pigeonholed as it's kind of unique for a pleasure vessel. That will always generate a higher insurance cost.

Ted

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Cannot agree wth you, Ted.

Marine insurance premiums are generated based on a number of factors, but the "uniqueness" of a vessel is not a factor. When I review risks, I look at:

• Vessel type (power or sail)
• Vessel age and size
• Vessel construction material
• Number of engines, fuel type, and speed of the vessel
• Vessel usage
• Loss history
• Homeport and navigation area desired
• Experience (or lack thereof) of the insured
• Credit score and driving record of the insured

A custom or one off vessel will not generate a higher premium than a production Sea Ray or Carver.

As far as liability only vs hull and liability coverage- liability only is much less expensive, as we are not insuring the boat itself. That said, we have been requiring surveys on all risks, due to the poor material condition of many vessels requesting liab only.

Swampu-$15k for $100k of coverage? Something is wrong, or there's more to the story. PM me and let's chat.

When I was shopping for coverage a couple of months ago, I was getting similar quotes for my sub $30k boat. I couldn't figure out why until I realized everyone was quoting me an "agreed upon value". When we used blue book, my premimum was literally cut in half. What was odd that the blue book value was the same number as the agreed upon value.

Hope this helps you.

" -$15k for $100k of coverage? Something is wrong,"


Yes, that does not seem right. Here is something to think about - Most policies have a deductible. The higher the deductible, the less the policy costs. Can you afford to pay the first $1K of damage. The policy will be less expensive than one with a $250 deductible. How about towing? If you already have SeaTow or TowBoatUS, you can eliminate towing coverage from your policy. Personal items? If these are already covered in your homeowner's policy, you can eliminate that.


In any case, there is probably more than one company willing to insure your boat so shop around.

Steve91T said:

When I was shopping for coverage a couple of months ago, I was getting similar quotes for my sub $30k boat. I couldn't figure out why until I realized everyone was quoting me an "agreed upon value". When we used blue book, my premimum was literally cut in half. What was odd that the blue book value was the same number as the agreed upon value.

Hope this helps you.

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The "Blue Book" value will decrease every year.

Towing, personal effects, and med pay are low cost and would have minimal impact on he overall premium. The deductible certainly will change the premium, but one has to factor in the cost benefit.

ACV (actual cash value) coverage is, in my opinion, not worth it. You do save some money- but paying for dimishing value based on conflicting valuation models (BUC, ABOS, Black Book, etc) is just not smart. ACV coverage does not take into account your purchase price, either.

Pau Hana said:

ACV (actual cash value) coverage is, in my opinion, not worth it. You do save some money- but paying for dimishing value based on conflicting valuation models (BUC, ABOS, Black Book, etc) is just not smart. ACV coverage does not take into account your purchase price, either.

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My company gave me no choice. Once the boat reached ten years of age, they would no longer insure it for agreed upon value.

I can see their side - If it was insured for $150K and is now only worth $100K, I could profit from sinking it.

WesK then change companies. Both my boats are insured for agreed value. The "new" one is 45 years old and the older one is 81.

Glad to know your evaluation is comprehensive, Peter. In my experience (solid boat, good surveys, new safety & nav/comm systems, experienced rec boat owner, proven "hurricane hole" dock, etc.), the discussion stops with the age of the boat - in my case, a 1976. That seems to trump all other factors.

So I send my $ to the Brits that have insured it for the last 10 or so years, without competition, and hope they show up if something happens.

May be what you're encountering, Rose.

TDunn said:

WesK then change companies. Both my boats are insured for agreed value. The "new" one is 45 years old and the older one is 81.

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Absolutely agree with the above

Our 1989 vessel carries an agreed value policy.

Does the expensive policy cover hurricane damage?

Well for me, I was getting quotes for $1300-$1400 for an agreed value of $30k. Going with the blue book dropped to $740. Huge difference, especially when the two values were the same.

fdw said:

Does the expensive policy cover hurricane damage?

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You'd have to read the policy language to answer that question factually.

Most companies that offer coverage in cat (catastrophic) areas do offer named storm coverage, with assistance for hauling out to avoid the storm.

Pau Hana said:

Absolutely agree with the above

Our 1989 vessel carries an agreed value policy.

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But can you insure a $100K boat for $150K?

Steve91T said:

Well for me, I was getting quotes for $1300-$1400 for an agreed value of $30k. Going with the blue book dropped to $740. Huge difference, especially when the two values were the same.

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The values are NOT the same, Steve.

The AV (agreed value) policy will not dimish in value over time, and there is usually no deductible for total loss. AV policies are generally "all risk" policies, which means that the policy should respond to any situation other than those not specifically excluded.

The ACV policy will diminish over time, usually have a deductible for partial and total losses, and generally has a very specific list of named perils that they will cover.

Read the policy- there is more to them than just the numbers on the dec page.

WesK said:

But can you insure a $100K boat for $150K?

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Doesn't the insurance company rely on a third party, as in a surveyor, to come up with a value that both the insurer and insured then agree upon?

WesK said:

But can you insure a $100K boat for $150K?

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If I understand your question correctly- yes, a vessel that was purchased for $100k could be insured for $150k. Let's say the insured did a total electrical refit or repower of the vessel- I would take his repair invoices and factor them into the valuation of the vessel, along with the value of the engines(s) being removed and would allow for increased value based on the work done.

Maintenance items, replacement of wear items like cushions, flares or fire extinguishers, and other items are not considered.

Pau Hana said:

If I understand your question correctly- yes, a vessel that was purchased for $100k could be insured for $150k. Let's say the insured did a total electrical refit or repower of the vessel- I would take his repair invoices and factor them into the valuation of the vessel, along with the value of the engines(s) being removed and would allow for increased value based on the work done.

Maintenance items, replacement of wear items like cushions, flares or fire extinguishers, and other items are not considered.

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Not what I was asking.

The boat was purchased for $150K several years ago. The estimated value now is $100K simply because of depreciation (it's several years older now).

Can it be insured for the original purchase price of $150K?

If the vessel were currently insured at that amount, I would offer coverage to match his current value. Also, I would review the survey (if applicable).

If there were nothin grossly out of line, I'd offer coverage. Remember, the published depreciation info is subjective, and we have to look at all aspects of the risk.

Pau Hana said:

If the vessel were currently insured at that amount, I would offer coverage to match his current value. Also, I would review the survey (if applicable).

If there were nothin grossly out of line, I'd offer coverage. Remember, the published depreciation info is subjective, and we have to look at all aspects of the risk.

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I don't understand your answer. So your answer is yes? You can insure a $100k boat for $150k?

All I was asked was how much. I said $30k. They said ok.

So if we fast forward a few years and it's now worth $20k, does that mean I can make $10k if the boat sinks?

Steve91T said:

I don't understand your answer. So your answer is yes? You can insure a $100k boat for $150k?

All I was asked was how much. I said $30k. They said ok.

So if we fast forward a few years and it's now worth $20k, does that mean I can make $10k if the boat sinks?

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I don't understand it either. I made a previous comment about profiting from sinking the boat (not that I would try that personally).

My comments have been about my personal boat. It's been pretty depressing watching it depreciate over the neatly ten years that I have owned it even though it was eight years old when I bought it. Depreciation (looking at what identical boats are being listed at) has been my biggest expense, even exceeding dockage.

BTW: I have heard stories of folks who owe more on their boat than it's worth docking it in FL in the hopes that a hurricane will sink it and they can make a profit. True? Who knows but some people try things like that.

Steve91T said:

I don't understand your answer. So your answer is yes? You can insure a $100k boat for $150k?

All I was asked was how much. I said $30k. They said ok.

So if we fast forward a few years and it's now worth $20k, does that mean I can make $10k if the boat sinks?

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My answer is yes, it is possible to insure a boat purchased for $100k for $150k.

Each insurer has their own underwriting criteria. We look at many aspects, including valuation guides, surveys, and more. Each risk is taken or rejected on its own merits.

Re your valuation question- if your policy is an agreed value policy, you would receive the agreed value of $30k for a total or constructive total loss, regardless of the book value. If you have an Actual Cash Value policy (which it sounds like you do) you would receive whatever settlement you and the insurer agreed upon after the loss, no matter what the dec page value states.

Agreed Value- Value is set at policy inception.
ACV- Value is set at time of loss.

Steve91T said:

So if we fast forward a few years and it's now worth $20k, does that mean I can make $10k if the boat sinks?

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This is not accurate. The valuation of the vessel and the amount you owe are mutually exclusive.

You're being compensated for the value of the asset, regardless of whether that asset is appreciating or depreciating. If you owed nothing, you would pocket $30K. The balance of $10K is the remainder of the value of the asset once the debt is paid to the creditor.

You cannot 'profit' from an asset you already own. Whether the insured value and actual value are in-line is also mutually exclusive to this topic.

I would add that we should be careful to differentiate between what an asset is valued at and what it would "SELL" for. These are also mutually exclusive.

Back to the OP's issue for a moment, sometimes you really need to shop and do so with true marine insurers. Then as one person mentioned, when all else fails there are surplus carriers like those within Lloyd's.

Various insurers have bad experiences or feel overexposed in certain areas and then become difficult in that area. For instance, one insurer stopped insuring along the Gulf of Mexico. It wasn't because they felt the area was too risky. It was because it was getting too risky for them as they had so much insurance placed there. They didn't want to put themselves so at risk if a storm hit that area.

As Pau pointed out, valuation on boats is very difficult because there is no singularly respected and reliable source. With an ACV policy, expect a battle over value if the boat has a total loss. How do you really establish and prove value of a boat that's now at the bottom of the ocean? Well, you argue about it.

BandB said:

.............. As Pau pointed out, valuation on boats is very difficult because there is no singularly respected and reliable source. With an ACV policy, expect a battle over value if the boat has a total loss. How do you really establish and prove value of a boat that's now at the bottom of the ocean? Well, you argue about it.

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Show current photos?

For most of us, there will be nearly identical boats for sale and a simple Internet search will find them. Of course, these are asking prices but brokers and others in t know will know what they have sold for recently.

Your photos might show the condition of the boat, improvements you have made, etc.

I think you're going to have a very difficult time insuring your boat for more than it is realistically worth. Specifically, if identical boats are on the Internet for $100K, I seriously doubt any reputable company will insure it for $150K. That's just too much of an invitation for fraud.

WesK said:

Show current photos?

For most of us, there will be nearly identical boats for sale and a simple Internet search will find them. Of course, these are asking prices but brokers and others in t know will know what they have sold for recently.

Your photos might show the condition of the boat, improvements you have made, etc.

I think you're going to have a very difficult time insuring your boat for more than it is realistically worth. Specifically, if identical boats are on the Internet for $100K, I seriously doubt any reputable company will insure it for $150K. That's just too much of an invitation for fraud.

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Insurers are not going to intentionally insure for more than value, but sometimes they do by accident.

Photos definitely help but still values can be argued ad infinitum. You may both find three comparable boats. You're going to say yours is closest to the highest price. The insurer is going to say, the higher priced one hasn't sold. We'll pay based on the cheapest one for sale. You could buy it as a replacement. And you either negotiate to an agreeable number or you resolve it in arbitration or court.

More than one expensive boat has gone to the bottom where the insured value was estimated to be way more than the realistic price of the boat.

I think that many here are misunderstanding some of the real differences between policies that cover only liability, or Actual Cash Value, and a All risk marine policy.

I think that Pete tried to get the point across, but I feel that his message was lost, so I will eleborate a bit.

We all understand a liability policy. It just covers liability to the owner. A problem with that concept is that we often assume for example that if another boat causes our boat to be damaged that we can "just go after his insurance" to pay for our boat. That is often not really the case. The challenge here is that in order to recover from someone, we have to prove he was negligent.

Allot of boat damaging other boat issues can never prove negligence. For example if your neighbors boat catches on fire and burns your boat, you might assume that his insurasnce will pay for your boat, but the reality is that unless you can prove that the owner was negligent than he has no liability. Just because his boat caught on fire does not mean the owner was negligent. Far from it. Thats not to say that his insurance might not pay, but I would not count on it.

An ACV policy is generally written similar to your auto policy. Often they are written by auto insurance companies. What they cover is the actual cash value of your boat as discussed. The big point here is that they often only cover a set of named risks, such as collision, fire, etc... Payout will be limited to losses that occur from a specific event, which has to be named in your policy.

An all risk marine policy agreed value is a whole different level of coverage. We all understand the agreed value part, which protects you from a post accident valuation that may not reflect your opinion of the value of your boat.

The big part of an all risk marine policy is the "all risk" part. What that means is that your boat is protected against enything not listed in the exclusions section of the policy. This is a huge difference from the ACV policy which only protects your boat from losses listed in the policy.

Lets take an example that I know about personally (although I was not the insured)

An owner is operating his boat when the engine temperature pegs, oil pressure drops and the engine starts blowing black smoke.

Cummins Northwest comes out, checks over the engine and sees high blowby. The engine is removed and disassembled, and the only thing they can find is that possibly the thermostat got stuck, but no real cause.

Under the owners all risk policy the engine was replaced with a factory remanufactured Cummins engine. The bill was well north of $20,000 and the owner only had to meet his deductable.

Under a ACV policy there would ave been no payout.

This actually happened. I was there. We were sea trialing the boat that day. I ended up buying that boat, with the new engine.