How Insurers Look at Yachts

[camaraderie]

Ran across a reference to this Caribbean Compass article of a couple of years ago on another forum. The complete article is at:
Yacht Insurance Underwriting

...but the part that interested me was some of the guidelines and assumptions made by insurers. We have a lot of opinions here on Sailnet...but these opinions affect how much we pay for our insurance AND how much the insurers are at risk if they are wrong. Thought it might be interesting for discussion.
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"There are certain truisms apparent to the occupant of the Yacht Claims Desk, many of which can incite violent arguments if restated in polite company. These certainties, experience-based rather than theoretical, are listed below in no particular order:
· Wood yachts are today generally poor insurance risks
· Fiberglass is the most practical construction material today for yachts less than 60 feet in length.
· Steel and aluminum yachts, while often better constructed, are more difficult and costly to repair due to the lack of skilled technicians and facilities.
· Lighting damage is one of the most commonly occurring losses in the tropics.
· Lightning diffusers and diverters have no provable effect on lightning strike occurrences.
· Notwithstanding their growing popularity, catamarans are more exposed to loss than monohulls. Experience indicates that the catamaran is more likely to sustain a lightning strike; the catamaran is more exposed to dismasting than other vessels; the beam of the catamaran makes secure mooring more difficult to obtain; catamarans present a significant capsizing risk. (Any vessel with an escape hatch in the hull bottom should be viewed with concern.); the stability of the catamaran makes it popular with those with less than extensive seagoing skills; ad infinitum
· Older boats are more exposed to rigging failures hence the need for periodic rigging surveys;
· Rigging surveys should be conducted before ocean passages
· Carbon fiber mast and hulls are extremely expensive and difficult to repair.
· Theft is a risk which can be managed by restrictive policy conditions.
· Dinghies and tenders should not be covered by insurance when under tow.
· Gasoline-powered boats are more dangerous than diesel-powered boats.
· Every vessel in tropical waters (mainland and islands) should have a real world-workable hurricane protection plan.
· Sails or yacht canvas items left in place in a named wind storm increase the likelihood of damage to the vessel and should not be subject to insurance coverage.
· Trimarans and vessels built of ferro-cement are generally very poor insurance risks.
· Speed is a factor in powerboat loss occurrences - the higher the speed the more likely an operating loss.
· The insuring of charter boats in competitive regattas should be undertaken with extreme care.
· Typical charter boat damage deposits do not adequately respond to the increased risk in regattas.
· Fixed-fee yacht deliveries create an increased potential for loss.
· Single-handed operation of yachts on ocean voyages increases the potential for loss.
· Charterers are no more likely to imperil the safety of a charter vessel than are members of the general boating public to imperil a private vessel.
· There is difference in loss exposure and reparability among vessels by various manufacturers.
· The yacht survey is generally inclined to reflect the view of the party paying for the survey.
· The most important factor: there is no substitute for competent and experienced seamanship.
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[btrayfors]

So, what's to discuss?

Most of these seem to be reasonable conclusions, based on the settlement of hundreds of insurance claims.

Would be interesting to hear Al Golden's take on this -- IMIS: where are you?

Bill

OK, OK....before you guys start throwing things, I know of exceptions to almost all of these "rules" :-)

B.

[sailaway21]

What's to argue about? From an insurance company standpoint it's hard to quibble with the maxims expressed. Since everyone knows that only lunatics buy trimarans or ferro-cement boats I'd imagine they're at risk for purchasing health insurance as well. (g)

[camaraderie]

Bill....Catamarans are more dangerous than monohulls?
Charterers are as good as general boaters? OK...but don't anchor near me!!

[sailaway21]

Cam,
You can read better than that. They didn't say that catamarans were more dangerous than monohulls-just that they were more exposed to loss.

Likewise you erroneously conclude that boat charterers are just as good as general boaters when, if there is any applicable implication to be drawn it is that they are better than general boaters. But then the insurance man wasn't saying that either; he was saying that the risk of loss is roughly equivalent, which is a different thing entirely.

[camaraderie]

Picky Picky...
Cat's are more exposed to loss? I'd say that "catamarans are more prone to capsize" is equivilent to more dangerous but hey...I'm probably just misunderstanding.
If exposure to loss is the same (i.e. no more likely to imperil the vessel) ...doesn't that make anchoring next to one no more dangerous than anchoring next to any other boater? Unless of course they are better at some other things and worse at anchoring.

[Gary1]

Each year for the last five or so years when it's renewal time, I look at what the insurance company has done to hedge it's bet. Basically, if you're anywhere south of Hilton Head, you don't have any insurance during hurricane season.

The boss took Island Breeze north this year because of insurance. Personally, I'm not sure I understand the thinking in the insurance business. Taking a boat from Jacksonville, which hasn't been directly hit by a hurricane in 120 years to the Carolinas or the Chesapeake seems dumb to me.

But what do I know?

Get the boat out of South Florida? Sure, that I understand. But take it from North Florida into the hurricane target zone? What's wrong with this picture?

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A thought on why cats are more prone to damage: Power boats have two targets to aim at instead of just one.

[tomaz_423]

Why cats are more exposed to loss ?
- I know a few power boaters, who are thinking to try sailboat charter - but they all prefer to take a cat as it does not heel. This by itself (power boaters) increase risk of loss
- Mono hull have a larger draft, so we have to be very careful with depth. Cats have shallow draft, so they can go almost everywhere - and hit the rock trying that. This does not mean cats are worse - it just means to me that more people on cats are less careful about depth. And people attempt to go places a mono would never even try to go. Example: BVI between Virgin Gorda and Mosquito island. No mono attempt to go there. Several cats do it. I once went through with the dinghy and almost got killed in a surf.
- if a mono hull hits the rock it is usually with the keel. In most cases it is no structural damage. If cat hits the rock it is with a hull. Can be structural, can be water penetration, ... They would not go down, but may have enough water damage to be considered total loss by insurance.
- they can go to shallow waters. By itself this is a benefit, but in wrong hands it can be more dangerous. Can come into surf zone when anchoring too shallow.

[chucklesR]

Bah humbug says the catamaran owner.

I pay 960 a year for replacement value(168k) insurance on a 2007 34 ft catamaran in the Ches. Bay.
I paid 300 a year for 16k worth of replacement value on my 1986 Hunter 31, same area.
The ratio doesn't add up folks. 1/3 the cost, 1/10 the exposure on my hull.
Yeah, I realize insurance isn't covering just my boat but that exposure is even - the boats weight is the same and so is the likely damage I can cause to others.
What this is telling me is the insurance company saw my mono as a higher risk of loss, not a lower risk.


I also pay 850 a year for my 25 ft express cruiser, replacement value 50k - now I can do some serious damage with it at 43kts.

Overall those rules just are not adding up to premiums paid.

[LittleMissMagic]

The real bottom line is that insurance companies are really just a poor excuse for legalized organized crime. They only look out for the good of the company and will take any loophole to keep from paying a claim. True, some are better than others, but they all seem to have the same philosophy, be it home, auto or boat insurance. Just ask some of the people that filed hurricane damage claims in coastal Mississippi after hurricane Katrina. The "flooding" that occured wasn't covered by most companies because policy holders did not have "flood" insurance. Never mind that the policy holders were under the impression that they were covered in event of a hurricane. Apparently storm surge driven by a hurricane is a flood and not applicable to hurricane coverage. BOHICA: We keep paying, and they keep ....well you fill in the rest.