Vessel insurance update- Fall 2019

[BandB]

After hearing some of the quotes for coverage, waiving storm coverage may mean the difference being financially able to cruise or not. The thinking here is that we plan to be out of the zone during hurricane season, so not much need for said coverage.

Don't react to hearing some of the quotes. Wait until you've gotten your own quotes and exhausted all channels.

 

[BruceK]

Berkshire Hathaway did a JV deal with big Aussie insurer IAG for part of their business. I didn`t know they were in Australia otherwise.
Club Marine,part of Allianz, is long established here and performed exceptionally well on a friend`s sailboat full loss, and recently did full payout on a Riv they insured,just a month earlier, that sank on my marina. I`ve not had a claim(touch wood), but claims performance is as important as premium,as is "skin in the game", notwithstanding Allianz is based offshore.

 

[emilanderson]

How do home built boats fit into the insurance scheme? I'm building to USCG standards as outlined in their home builders guide and AYBC. The boat will be USCG documented and registered in my state, SC. The boat will be USCG inspected and also surveyed. I'd like more than just liability but I will go with that to get on the water.

It depends on state law and depends on the insurance company. Here in WA state floating homes vs houseboats some insurance companies insure them as a home and some as a boat. Also, depends on if you live in it as primary or airbnb/rent it. Ask around and get quotes. Guarantee you the insurance brokers generally have no idea a floating home could be insured as a regular home. Some insure it as a boat but then have increased personal property coverage and then price it at home rates. I have seen it all in the NW.

 

[Leo Reise]

Interesting, in all the comments there does not appear to be one with a Canadian perspective.
Currently we happen to have 2 boats (not recommended). My insurance for our new to us trawler was insured by the same carrier as our sailboat. The broker, when sending me the policy for the trawler, notified me that on renewal of my sailboat policy in the spring, agreed value will no longer be an option on boats over 30 years old - market value only.
I inquired how and by whom the market value was established, the reply was they will rely heavily on survey results. (I am sure they have alternate sources as well.) Surveys are being required for renewals very 5 years.
My trawlers insurance was through the same broker as the previous owner. The value was within $2 K of the purchase price. The trawler just turned 30.
None of this affected the amount of liability we could carry. Since there are a number of canals & harbours that we share with commercial vessels, wreck removal & environmental clean-up become very important clauses.
Just our experience.

 

[Roamer Blue]

The whole insurance market is hardening. Auto and home is going up, trying to insure new ventures is difficult, a guy with a truck can't get insurance, RV's are being dropped... it's all related. As noted, the rampant under cutting to gain market share is coming home to roost, add in the "no victim" idea that insurance fraud is acceptable to too many people... circle the wagons, insurers are going to get more intrusive in the normal stuf, and just say NO to anything out of the ordinary... seek insurance FIRST, before commiting your capital.

 

[Alaskan Sea-Duction]

Hey Pete, be ready for me in March. I will get an in water survey done before.

 

[Pau Hana]

Hey Pete, be ready for me in March. I will get an in water survey done before.

Roger that. Tom- and if you haul out, get that on the survey report.

 

[BandB]

The whole insurance market is hardening. Auto and home is going up, trying to insure new ventures is difficult, a guy with a truck can't get insurance, RV's are being dropped... it's all related. As noted, the rampant under cutting to gain market share is coming home to roost, add in the "no victim" idea that insurance fraud is acceptable to too many people... circle the wagons, insurers are going to get more intrusive in the normal stuf, and just say NO to anything out of the ordinary... seek insurance FIRST, before commiting your capital.

Last time we had bailouts such as AIG for $180 billion. Note that they did repay $205 billion four years later.

 

[ranger58sb]

After hearing some of the quotes for coverage, waiving storm coverage may mean the difference being financially able to cruise or not. The thinking here is that we plan to be out of the zone during hurricane season, so not much need for said coverage.

The real "zone" can be surprisingly large, though. Many think of Florida -- or maybe Florida, Georgia, and the Carolinas -- as being the hurricane zone, but here on the Chesapeake we've had to react to three hurricanes since returning from our Florida assignment. And obviously the whole Gulf Coast and TX have been hit hard too...

So it might not be easy for some to be "out of the zone"...

-Chris

 

[Pau Hana]

The real "zone" can be surprisingly large, though. Many think of Florida -- or maybe Florida, Georgia, and the Carolinas -- as being the hurricane zone, but here on the Chesapeake we've had to react to three hurricanes since returning from our Florida assignment. And obviously the whole Gulf Coast and TX have been hit hard too...

So it might not be easy for some to be "out of the zone"...

-Chris

Absolutely correct.

While the CAT zone is understood to be an area from the Carolinas to Brownsville, TX the key is "named windstorm".

Your primary mooring location is the general reference to whether or not you have a Named Storm Deductible. If you're moored in the Chesapeake (not known as a CAT zone) and a named storm comes roaring thru, it's a good bet that you won't have a NSD on your policy- so the standard deductible would apply to any partial damage. Same goes if you're a California risk and a freak hurricane slams San Diego- no NSD would apply.

 

[Pau Hana]

It depends on state law and depends on the insurance company. Here in WA state floating homes vs houseboats some insurance companies insure them as a home and some as a boat. Also, depends on if you live in it as primary or airbnb/rent it. Ask around and get quotes. Guarantee you the insurance brokers generally have no idea a floating home could be insured as a regular home. Some insure it as a boat but then have increased personal property coverage and then price it at home rates. I have seen it all in the NW.

I respectfully disagree- I am very well versed in the floating home vs houseboat and boat B&B markets. They are VERY different.

Most marine insurers consider B&B exposures as bareboat rentals, and therefore exclude that exposure. The tragedy happens when a claim occurs during a B&B rental, and that claim is declined because of the exposure. As much as the vessel owner wants to assume there is coverage, the policy language is the reality they must live with.

What determines whether a risk is a floating home or houseboat- as a start:

• Is it self powered?
• Is is registered as a boat?
• Construction - hull or stick built on a non-propelled barge?

The same tenets that apply for vessels apply for houseboats with regards to B&B. Floating homes, as they cannot get underway, can be endorsed for the rental exposure.

 

[tiltrider1]

Peter is the insurance expert. However, in WA there is very specific legislation on 3 categories of living on water. Floating homes, Barge homes and boats. Floating homes are protected by law on the state level. They must meet state laws on fixed plumbing and must be in a floating home designated moorage. Barge homes are illegal with the exception of some 30 grandfathered barges. Everything else must be registered as a vessel and must be self propelled.

Now there is a lot of grey area between boat and barge. Many registered vessels have been determined to be in fact illegal barges. To date no true recreation boat has been determined to be a barge.

So from an insurance issue in Seattle it’s pretty simple, floating homes are in a designated area, barges have a permit and everything else is a vessel.

 

[Alaskan Sea-Duction]

I respectfully disagree- I am very well versed in the floating home vs houseboat and boat B&B markets. They are VERY different.

Most marine insurers consider B&B exposures as bareboat rentals, and therefore exclude that exposure. The tragedy happens when a claim occurs during a B&B rental, and that claim is declined because of the exposure. As much as the vessel owner wants to assume there is coverage, the policy language is the reality they must live with.

What determines whether a risk is a floating home or houseboat- as a start:

• Is it self powered?
• Is is registered as a boat?
• Construction - hull or stick built on a non-propelled barge?

The same tenets that apply for vessels apply for houseboats with regards to B&B. Floating homes, as they cannot get underway, can be endorsed for the rental exposure.

Do you cover boat docks?

 

[Bud]

Peter,
Where or who should I go to for liability only insurance.
Bud

 

[menzies]

So, does it help if the boat owner offers up front to waive coverage for damage from named storms?

How would you/they handle damage that your boat could cause in a named storm? - to property or people. Fuel spill. Disposal, etc.

 

[Pau Hana]

Do you cover boat docks?

Hi, Tom,

We have markets that will cover docks, but they are more commercial that residential. Per the underwriters I’ve spoken to, residential dock coverage should be an endorsement to your homeowners policy.

I am expecting answers from several other underwriters, and will advise on their answers.

 

[Pau Hana]

Peter,
Where or who should I go to for liability only insurance.
Bud

Markel and GEICO Marine offer liability only coverages.

GEICO does require a survey for liability only as well as hull and machinery coverage.

 

[Alaskan Sea-Duction]

Hi, Tom,

We have markets that will cover docks, but they are more commercial that residential. Per the underwriters I’ve spoken to, residential dock coverage should be an endorsement to your homeowners policy.

I am expecting answers from several other underwriters, and will advise on their answers.

Thanks. I don't have a homeowners policy as we are full time cruisers. The dock is 84x10 feet long with a head dock 25x10 feet. Dock as electric and city water. Also a 10X7 shed on the dock. All this in Longview WA.

Now back to TF stuff. It gets me how the insurance companies are in sync with each other. So my rates go up on the west coast because of a hurricane on the east coast? To me that is gouging policyholders. When we bought ASD our yearly rate was $900. Now it is over $2200! WTF!

It will get to a point where I will not be able to afford insurance. This scares the hell outta me.

 

[BandB]

Thanks. I don't have a homeowners policy as we are full time cruisers. The dock is 84x10 feet long with a head dock 25x10 feet. Dock as electric and city water. Also a 10X7 shed on the dock. All this in Longview WA.

Now back to TF stuff. It gets me how the insurance companies are in sync with each other. So my rates go up on the west coast because of a hurricane on the east coast? To me that is gouging policyholders. When we bought ASD our yearly rate was $900. Now it is over $2200! WTF!

It will get to a point where I will not be able to afford insurance. This scares the hell outta me.

Yes, scares me my homeowners will go up due to fires on the west coast. Not an exact science as the pools are created large.

When did you buy ASD?

You can insure your vacant land and get the dock covered. People do it regularly when their land is wooded and the trees have value. Others do it for fences. Plus liability is advisable on vacant land. You're really just looking for property insurance without a home.

Now you think your boat insurance is expensive, wait until you insure your dock.

 

[Alaskan Sea-Duction]

When did you buy ASD?

You can insure your vacant land and get the dock covered. People do it regularly when their land is wooded and the trees have value. Others do it for fences. Plus liability is advisable on vacant land. You're really just looking for property insurance without a home.

Now you think your boat insurance is expensive, wait until you insure your dock.

Bought it in 2013. The only land we own is 100'X20'. It is all covered by a dike. The land allows me to have access to the dock. We lease the land under the dock (100' X 84') from the State of Washington. confused. Yep we were too.

 

[Bryant]

Insurance

2019 has seen lots of changes in the stateside marine insurance arena- some good, some challenging. Programs are tightening up their underwriting criteria or simply electing to no longer offer marine coverage. Most of these changes can put the insured in tough situations, as companies are non-renewing customers on short notice or requiring navigation changes that limit the insurer’s risk- and it’s tough to insure an older vessel with a 5+ year old survey, or larger vessels with owner/operators.
It’s always a good practice to have your vessel surveyed regularly, especially if the boat is over 10 years of age. I’ve always recommended that a boat be surveyed every other regular haulout (here in Seattle, we haul out every 2-2.5 years) so the survey remains relatively fresh.

• Companies exiting the market completely- Brit RE, American Reliable, Ironshore, Tradewinds. If you’re insured with one of these companies, expect to receive a non-renewal notice.
• Premier Marine has severely curtailed their appetite to vessels no older than 25 years of age as of 11/01 (I believe). If you’re with Premier, I strongly recommend you get your vessel surveyed soon so you can have the policy shopped.
• various London syndicates have pulled back on their Caribbean/offshore navigation offerings.

Just food for thought- I know insurance isn’t sexy or high tech, but it is an important component or our pastime to consider.

Pete

Thanks for some very good info.

For all:

I have a 1984 GB 36 Classic with a current survey. My agent is Herritage in Maine. I'm insured through GEICO and my boat is in Florida. My yearly rate is $2500 for an agreed upon value of $96k, $500k liability, $980 something for salvage and all the other stuff. Don't know what the renewal will be but so far it's pretty reasonable. Check them out.

 

[Bud]

Thanks for some very good info.

For all:

I have a 1984 GB 36 Classic with a current survey. My agent is Herritage in Maine. I'm insured through GEICO and my boat is in Florida. My yearly rate is $2500 for an agreed upon value of $96k, $500k liability, $980 something for salvage and all the other stuff. Don't know what the renewal will be but so far it's pretty reasonable. Check them out.

For partial losses does depreciation apply?

 

[Bryant]

Insurance

For partial losses does depreciation apply?

No. You have to ask for the partial losses rider but the cost is negligible. Maybe $100/year or less. The cost of my policy includes that coverage.

 

[Pau Hana]

For partial losses does depreciation apply?

Yes.

GEICO Marine’s schedule of depreciation- it starts at the 20th year from new, at 10% per year n to a maximum of 80% depreciation.

The Partial Waiver of Depreciation Endorsement limits depreciation on certain items, but not all.

“PARTIAL WAIVER OF DEPRECIATION
FOR PROPERTY REPAIRED OR REPLACED
Under SECTION IV – COVERAGES, A. HULL AND EQUIPMENT, 4. Limit of Insurance, c. Amount Paid to “You” In Event of Loss, (2), Repairs for Partial Loss is removed in its entirety and replaced with:
(2) Repairs for Partial Loss
“We” will pay the reasonable cost of repairs or replacements, in accordance with quality marine repair practice, less depreciation. Depreciation shall be calculated at 10% for each year beginning with the 20th year from manufacture. In all cases, there shall remain no less than 20% residual value regardless of age. In the event of damage to plywood, plastic, fiberglass, metal, cement, or other molded material, “we” are obligated to pay only the reasonable cost of repairing the damaged area, in accordance with quality marine repair practice. If there is a covered loss requiring repainting of an “insured boat,” “we” will pay the cost of repainting or resurfacing the damaged area in accordance with customary marine repair practices so that the area repaired will match, as closely as practical, the original color. “We” have the option to make or reimburse “you” for repairs or replacements, or to pay “you” directly based on an agreed estimate of loss. Repairs and replacements will be made with like kind and quality.
“We” will not deduct depreciation for repair or replacement of the following:
a. fiberglass, plastic or wood hull materials;
b. masts and spars;
c. metal supports and framing for attached towers, T-tops and hard tops;
d. bow, stern or deck railing; and
e. glass
In the event of damage to a “dinghy” with cost of repair exceeding the “actual cash value” of the “dinghy,” the most “we” will pay is the “actual cash value” as determined by industry reference materials including, but not limited to, the N.A.D.A. book, the BUC Used Price Guide, and ABOS Marine Blue Book.
GM053 02 17
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All other terms, conditions, and agreements of the policy remain unchanged.”