Insurance or not?

[markpierce]

Funny, I never had to purchase uninsured motorist protection until after California voters approved mandatory minimum auto liability insurance. It was always just covered before as part of my previous full coverage policy's.

Should the government... NO!!!

It has always bothered me. Liability insurance is required for all motorists, so why do we need to have uninsured-motorist coverage? Well, because many motorists violate the law. There is not sufficient incentive for persons to obtain needed insurance. Probably because many are here illegally. Unfortunately, California and many other jurisdictions won't forcibly export criminal non-citizens.

 

[psneeld]

On the Columbia River if a 50 gallon spill occurs, someone WILL report it the the USCG and Washington DNR and Washington EPA come at you from the forest and are relentless.

We had a 1929 tug sink right in front of pur dock and put about 300 gallons of fuel in the water. USCG spokesman on the scene state that it wasn't bad and that it would desipate. You could hear DNR and the EPA folks screaming at the USCG folks. They wpuld be seeking the maximum fines against the owner.

Maybe because the DNR and EPA guys had little experience.

What they say onvTV and what happens is rarely the same.

Look, I am not an advocate of pollution. I just know from quite a bit of experience that cleanups from sunken recreational boats rarely happen due to the little fuel and oil that make it into the water and even if it does, it us no where near the $800,000 that is often a coverage number used (if it was common, I bet that number would be lower or your premium for that coverage would be pretty high).

The debate is about the typical insurance policy and what is truly needed.

If there was one part of insurance that in my experience gets rarely used, it would be this one.

I will try and find out if that is a regional issue or widespread.

 

[FootballFan]

My understanding the reason a policy covers up to 800K is that is the limit to which a boater could be fined.


Could be wrong about that.

 

[rwidman]

Again, anyone ever been fined for oil/fuel spill?
.

Yes - Exxon Valdez. It's hard to figure out what the final costs were but it was in the billions of dollars.
--------------------------------------------------------------------------------------

This happened to a friend of mine:

His fuel oil company came to his house to fill his oil tank when he was at work. Somehow, they screwed up and pumped a couple hundred gallons of fuel oil onto the ground.

By the time the EPA got done with him (yes, they went after him as the owner of the property), the cost was over a million dollars and they tore his house down.

Fortunately, in the end, the oil company's insurance paid the cost and all he had to do was find a new place for him and his family to live.

The EPA can be relentless.

 

[kev_rm]

what do you mean by this ? Life insurance is sometimes sold as an investment...but not property/liability insurance....so I'm not following you here...

All insurance is an investment - it behaves like a reverse annuity with some probability of losing all your money (i.e. no claims paid)

The average person would be financially better off, over long periods of time, if they could live out replacing the covered item, by simply putting their premium dollars into low risk bonds.

Why? Because the administration cost of a Bond is WAY WAY less than an army of accountants, claims adjusters, underwriters, IT people, marketing, and so forth.

 

[psneeld]

My boat isnt the Exxon Valdez and neither is anyone elses here.....typical not understanding basic concepts of what this forum really is.

If someone let their house get torn down for a couple hundred gallons of heating oil, someone got screwed. I have worked for a company that cleaned up residential oil tanks and spills. Huge difference in a couple hundred gallons and thousands, between light and heavy oils and on land or the water.

I guess its just experience why it is so unckear to some.

 

[Seevee]

My understanding the reason a policy covers up to 800K is that is the limit to which a boater could be fined.


Could be wrong about that.

That's what my agent told me, but it was some obscure number like $852,649.36

 

[Seevee]

All insurance is an investment - it behaves like a reverse annuity with some probability of losing all your money (i.e. no claims paid)

The average person would be financially better off, over long periods of time, if they could live out replacing the covered item, by simply putting their premium dollars into low risk bonds.

Why? Because the administration cost of a Bond is WAY WAY less than an army of accountants, claims adjusters, underwriters, IT people, marketing, and so forth.

Kev_rm,

Insurance is NOT and investment, it's an expense, just like fuel. Some get a good feeling about it, but you don't get a return on your dollar. And, it you averaged in all of the premiums and claims, the policy holder would loose. It's just a fact of life, you get no benefit that pays for the insurance companies overhead and profit.

Now, I believe there are some forms of life insurance that is an investment, but last time I looked at it I could do better with money under a mattress.

 

[Seevee]

Yes - Exxon Valdez. It's hard to figure out what the final costs were but it was in the billions of dollars.
--------------------------------------------------------------------------------------

This happened to a friend of mine:

His fuel oil company came to his house to fill his oil tank when he was at work. Somehow, they screwed up and pumped a couple hundred gallons of fuel oil onto the ground.

By the time the EPA got done with him (yes, they went after him as the owner of the property), the cost was over a million dollars and they tore his house down.

Fortunately, in the end, the oil company's insurance paid the cost and all he had to do was find a new place for him and his family to live.

The EPA can be relentless.

At times, govt can be out of control, and the EPA is one good example.

 

[Seevee]

If everyone had insurance the cost would go down because no one would have damage from boaters without insurance. Also, as the number of policy holders goes up, the data pool that insurers use gets deeper, allowing them to get more specific with rates. Think about your auto insurance. That factors in your education, credit rating, marital status......with more data, pricing can get more sophisticated and higher risk boaters identified and charged accordingly, and lower risk boaters given lower pricing.

Benthic2,

It doesn't work that way... look at Obama care.

 

[AusCan]

Kev_rm,

Insurance is NOT and investment, it's an expense, just like fuel. Some get a good feeling about it, but you don't get a return on your dollar. And, it you averaged in all of the premiums and claims, the policy holder would loose. It's just a fact of life, you get no benefit that pays for the insurance companies overhead and profit.

Now, I believe there are some forms of life insurance that is an investment, but last time I looked at it I could do better with money under a mattress.

Just because the average policy holder loses, does not preclude it from being an investment. You get a return on your dollar if your dollar if you make a successful claim. You may make a profit if your claim is more than your total insurance premiums.
When buying hull insurance, it is like selling short. You win something if your boat value goes down.

 

[dhays]

Benthic2,



It doesn't work that way... look at Obama care.

In general it really does work that way. There are other factors that will affect insurance premiums however. All else being equal, the larger the pool the lower the risk and therefore the lower the premiums.

 

[Benthic2]

The "return" you get on your "investment" isn't only what you receive in claims. It is the security of knowing that your max payout in any given year will be your deductable. If you need to equate it to a financial instrument it would be like a put option. It is protection against a loss greater than a fixed amount. You get that benefit every year, whether you file a claim or not.

Another important fact to remember is that Insurance companies do have overhead as mentioned above...but they also have investment income to offset it, so the overhead is not as large as you might think.

 

[smitty477]

Benthic2,

It doesn't work that way... look at Obama care.

Obama care is a tax not insurance - so apples and oranges.

 

[Alaskan Sea-Duction]

So bottom line is insurance a scam. From my pocket to the CEO of the insurance company. If thay can convince legislatures (like auto) that the citizens should be required to carry insurance then that fills their pockets with cash. It will be interesting how many insurance companies bail out of Texss and Florida. Its all about money and profit.

 

[smitty477]

My boat isnt the Exxon Valdez and neither is anyone elses here.....typical not understanding basic concepts of what this forum really is.

If someone let their house get torn down for a couple hundred gallons of heating oil, someone got screwed. I have worked for a company that cleaned up residential oil tanks and spills. Huge difference in a couple hundred gallons and thousands, between light and heavy oils and on land or the water.

I guess its just experience why it is so unckear to some.

I worked for an oil and chemical clean up company as well and during the short time I was there I saw many fines levied both on land and in the water. Some spills were quite large but we also had our share of smaller land based spills where we were brought in by the EPA to limit the affects.
Even that long ago there were reasonably high fines for smaller spills - this is in the New York and NJ areas.

 

[BandB]

So bottom line is insurance a scam. From my pocket to the CEO of the insurance company. If thay can convince legislatures (like auto) that the citizens should be required to carry insurance then that fills their pockets with cash. It will be interesting how many insurance companies bail out of Texss and Florida. Its all about money and profit.

Well, after Andrew, they tried to bail out of Florida. Right now they're under a brief no cancel, no increase rule. After Andrew, a couple of insurers said they were withdrawing from providing homeowners. The insurance commissioner said that he couldn't stop them from doing that but he could control who was allowed to sell in the state and everyone who sold auto insurance would also be selling homeowners. We shall see this time. The very size of the two states makes it less likely for them all to run. Now, you really worry about an area like Puerto Rico where most companies could easily afford to forego that business.

 

[BruceK]

Just because the average policy holder loses, does not preclude it from being an investment. You get a return on your dollar if your dollar if you make a successful claim. You may make a profit if your claim is more than your total insurance premiums.
When buying hull insurance, it is like selling short. You win something if your boat value goes down.

Steve, I`m not with you on the "profit" concept. Insurance cover buys restitution for loss due to an insured peril. There is no profit, just reinstatement or equivalent money, less any "adjustments"(deductions) the policy stipulates. The premium is a fee, once paid it has bought a years cover.
The premium is what you pay for the entitlement to restitution. You pay it each year you insure, at the end of each year the cover is exhausted,but usually renewed upon payment of another premium.

 

[FootballFan]

Insurance is not an investment, it is a risk management expense.


Do I buy insurance on a cell phone? No. If I lose or break the phone I can replace it without any impact to my overall financial situation. For some people replacing an iPhone would be very difficult on their budget.


It is a free market - purchasers make their own decisions.


Is life insurance a good thing? For a household that has a single earner term insurance may be a valuable tool in making sure that spouse and kids are able to maintain some form of standard of living they are accustom to. For someone older, has accumulated some amount of wealth - may not be worth the investment.


My point is - insurance is an option to mitigate your risk. An individuals tolerance for risk is specific to their decision. It is not globally right or wrong.


Those examples are all mitigating the risk of an asset or income stream disappearing.


The next level down is liability. Not sure, but it seems that most states require a car owner to at least have liability. A person can afford a car, but they may not be able to afford the damage they do to other people or their property.


I am in general anti-regulatory - but in this case - I agree with the requirement of liability insurance on cars.


Are boats different? Someone may be able to afford a boat, but does that mean they can afford to pay for damages they might cause.


I struggle with why not buy insurance for a boat. Currently heavy into boat shopping. Hope to be under contract in the next couple of weeks. Along the way I have visited with a marine insurance broker about different boats and costs.


What I have seen on quotes - .5 % or less - for full agreed to value coverage (yacht policy which includes environmental). The dollars saved versus mitigating risk, I just can envision not buying insurance.


Just my thoughts

 

[psneeld]

I worked for an oil and chemical clean up company as well and during the short time I was there I saw many fines levied both on land and in the water. Some spills were quite large but we also had our share of smaller land based spills where we were brought in by the EPA to limit the affects.
Even that long ago there were reasonably high fines for smaller spills - this is in the New York and NJ areas.

Goes to show you that there are extremes in many things experienced here.

Thete was always talk of fines by local bueracrats, tv people, etc...but seldom did I see it come to pass, especially on the water as it was almost always so spread out by the time we got there, cleanup was almost impossible.

 

[smitty477]

Goes to show you that there are extremes in many things experienced here.

Thete was always talk of fines by local bueracrats, tv people, etc...but seldom did I see it come to pass, especially on the water as it was almost always so spread out by the time we got there, cleanup was almost impossible.

We had two converted LCM's that could skim fluids & oils off of the water and a dozen or so vacuum trucks that had a capacity of 6,000 gals each - but that was quite some time ago.
I believe the reported spill count was over 25,000 cases for 2016 alone last time I visited Stonybrook U. DEPA office early his year. You can actually go there nd look up the individual spill that you might be interested in and/or look up an area to see if it is spill free on the reports. Last I was there you do not even need to file a freedom of information act form , wait the 3 days or pay the fee - its all there for free if you have the time.
Most people do not realize how many fines have been imposed over the years....

 

[rwidman]

............. Most people do not realize how many fines have been imposed over the years....

The EPA is brutal and there's little you can do to fight them.

 

[psneeld]

EPA and state environmental organizations are way diffetent.

Again, I will say the pollution from most smallet vessels is almost impossible to clean uo.

And there are plenty of sources to verify that.

 

[Seevee]

Obama care is a tax not insurance - so apples and oranges.

Smitty,

You're probably right, but I'd call it a penalty if you don't have it, but you still get your medical bills paid, regardless. But the premium is staggering compared to several years ago.

 

[Seevee]

Insurance is not an investment, it is a risk management expense.


Do I buy insurance on a cell phone? No. If I lose or break the phone I can replace it without any impact to my overall financial situation. For some people replacing an iPhone would be very difficult on their budget.


It is a free market - purchasers make their own decisions.


Is life insurance a good thing? For a household that has a single earner term insurance may be a valuable tool in making sure that spouse and kids are able to maintain some form of standard of living they are accustom to. For someone older, has accumulated some amount of wealth - may not be worth the investment.


My point is - insurance is an option to mitigate your risk. An individuals tolerance for risk is specific to their decision. It is not globally right or wrong.


Those examples are all mitigating the risk of an asset or income stream disappearing.


The next level down is liability. Not sure, but it seems that most states require a car owner to at least have liability. A person can afford a car, but they may not be able to afford the damage they do to other people or their property.


I am in general anti-regulatory - but in this case - I agree with the requirement of liability insurance on cars.


Are boats different? Someone may be able to afford a boat, but does that mean they can afford to pay for damages they might cause.


I struggle with why not buy insurance for a boat. Currently heavy into boat shopping. Hope to be under contract in the next couple of weeks. Along the way I have visited with a marine insurance broker about different boats and costs.


What I have seen on quotes - .5 % or less - for full agreed to value coverage (yacht policy which includes environmental). The dollars saved versus mitigating risk, I just can envision not buying insurance.


Just my thoughts

Football

Good post and a lot to think about. Insurance is really an individual decision depending on the needs/risk of the individual.

There's lot's of risky things that folks don't by insurance for besides boats. Hull or liability. And with liability there's still some risk that most don't insure for, like hitting a load of tourists and their kids and the damages hits 50 million.... or terrorism, or intentional acts, or slander, etc..... Now, most of us can avoid the bulk of these risky things, but they are still there.

With your .5%... suspect that's a typo and you can invasion buying insurance. That's pretty cheap if you have some risk to protect.

 

[Seevee]

Just because the average policy holder loses, does not preclude it from being an investment. You get a return on your dollar if your dollar if you make a successful claim. You may make a profit if your claim is more than your total insurance premiums.
When buying hull insurance, it is like selling short. You win something if your boat value goes down.

AusCan,
One will RARELY make a profit on a policy... it's clearly not and investment. It's an expense just like other expenses. You get benefit from all of them but they do NOT make you money.

 

[john61ct]

I don't know why y'all are acting as if fines have a relationship to the chances the spill can get cleaned up.

The ones where it's too late should be fined more not less.

It's a punishment in lieu of jail time, to deter it from happening.

 

[FootballFan]

Football

Good post and a lot to think about. Insurance is really an individual decision depending on the needs/risk of the individual.

There's lot's of risky things that folks don't by insurance for besides boats. Hull or liability. And with liability there's still some risk that most don't insure for, like hitting a load of tourists and their kids and the damages hits 50 million.... or terrorism, or intentional acts, or slander, etc..... Now, most of us can avoid the bulk of these risky things, but they are still there.

With your .5%... suspect that's a typo and you can invasion buying insurance. That's pretty cheap if you have some risk to protect.

Not a typo. Before I posted - pulled out the calculator and checked. Just rechecked.

Compared to the numbers that were on my previous boat - comparable to what I am seeing now.

Will stand on the .5% of agreed value.

Full disclosure on my situation and quotes:

Full coverage, yacht policy with environmental + tender.

Absentee owner - live in TX, boat on the Atlantic. File a hurricane plan with a local to the boat licensed captain which owns execution of hurricane plan.

5 % deductible normal. If the boat is north of Cape Hatteras during hurricane season. South of Cape Hatteras during season, 30% deductible.

Pricing is consistent calculated from agreed to value with what I paid on previous boat and quotes for next boat.

These are my numbers. With the numbers I am presented with - it is a no brainer to pay the expense.

Not making any generalizations, just stating my decision criteria.

 

[BandB]

Will stand on the .5% of agreed value.

.

Much varies on age and value of boat. I've seen $20+ million boats insured for 0.3%.

 

[Seevee]

Not a typo. Before I posted - pulled out the calculator and checked. Just rechecked.

Compared to the numbers that were on my previous boat - comparable to what I am seeing now.

Will stand on the .5% of agreed value.

Full disclosure on my situation and quotes:

Full coverage, yacht policy with environmental + tender.

Absentee owner - live in TX, boat on the Atlantic. File a hurricane plan with a local to the boat licensed captain which owns execution of hurricane plan.

5 % deductible normal. If the boat is north of Cape Hatteras during hurricane season. South of Cape Hatteras during season, 30% deductible.

Pricing is consistent calculated from agreed to value with what I paid on previous boat and quotes for next boat.

These are my numbers. With the numbers I am presented with - it is a no brainer to pay the expense.

Not making any generalizations, just stating my decision criteria.

You're original post said you would not consider buying insurance with .5% premium of hull value. I can understand, but that's pretty cheap, but I have no issue with going bear.