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Go Back   SailNet Community > General Interest > General Discussion (sailing related) > How many insure their boat with only liability insurance?
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Thread: How many insure their boat with only liability insurance? Reply to Thread
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Topic Review (Newest First)
12-10-2013 12:39 PM
chucklesR
Re: How many insure their boat with only liability insurance?

Quote:
Originally Posted by MikeOReilly View Post
Sounds like a good deal Chuckles, although we'd have to know the value of your boat, and where/how you sail to be able to truly assess the $500 bill.
50k value of the boat, adjustable on survey once I get done upgrading, Chesapeake Bay area. The only limitation is I'm not permitted to race in anything larger than a local yacht club type (beer can) race.
I've been semi-quoted a 1100 a year policy for NE to Key West as live aboard.

The important part is that 38.95 of that is to cover MY loss if I'm hit by, or damage to my vessel is caused by an uninsured boater. Of course I also have all that environmental damage stuff and coverage for damage I might cause to someones dock etc (you know, being responsible for myself and all).

I get the distinct feeling that the vast majority of older, and certainly smaller, boats don't have coverage. Frankly I'm willing to pay a small bit to make sure they don't ruin my day/year/enjoyment of my property.

And again, I have car insurance, house insurance, medical insurance and life insurance; all for the same reason. It may nickle and dime me a bit, but I'd rather have that than ruin someone else's day/year/enjoyment too.
12-10-2013 10:45 AM
Sal Paradise
Re: How many insure their boat with only liability insurance?

Thanks Greg.

Here is some relevant reading on this, and as I am in the NY jurisdiction -

maritime lawyer role in contesting limitation of liability counsel


Limitation of liability has even been applied in boating accidents. For instance, a boat owner raised limitation of
liability when his recreational boat caught fire at a Lake Michigan marina. The fire spread and damaged several of the
surrounding vessels.8

When the owner attempted to limit liability to the $800 salvage value of the boat, the federal trial court dismissed his
petition, finding that it lacked jurisdiction to hear the case. The circuit court affirmed, but the U.S. Supreme Court
reversed and remanded back to the trial court, finding that maritime jurisdiction is appropriate “when a ‘potential
hazard to maritime commerce arises out of activity that bears a substantial relationship to traditional maritime
activity.’”9

This means that if the steering cable snaps on a worthless outboard skiff, causing it to crash into a blameless vessel,
the owner of the skiff may limit a paralyzed passenger’s award to the $150 scrap value of the wrecked skiff. This
concept has even been extended to personal watercraft, with the Eleventh Circuit limiting recovery for injuries caused
by a Jet Ski accident.10

The act does not apply to every maritime mishap. The act cannot be invoked in environmental casualties involving the
Oil Pollution Act of 1990 (OPA 90),11 Rivers and Harbors Appropriation Act,12 or Wreck Act.13 However, OPA 90
establishes its own limitation guidelines, providing that with respect to each incident, the liability of a responsible
party shall not exceed:

1. for a tank vessel, the greater of $1,200 per gross ton;

or in the case of a vessel greater than 3,000 gross tons, $10,000,000;

or in the case of a vessel of 3,000 gross tons or less, $2,000,000;

2. for any other vessel, $600 per gross tons or $500,000, whichever is greater.
12-09-2013 05:43 PM
Stumble
Re: How many insure their boat with only liability insurance?

Quote:
Originally Posted by Sal Paradise View Post
what is to stop an insurance company from using admiralty law to say - "your boat is worth $300k, but under admiralty law here is a check for the value of my clients boat, that is what you are entitled to. if you want more tell the judge... have a nice day...."????

The main benefit is to the insured who doesn't even have to deal with you at all, just put duck tape over the scratch, goes sailing and lets the insurance handle it, including legal expenses. Which is my point ; my liability insurance protects me. Its not there to pay off some one else's gel coat scratch. Its for if someone is seriously hurt, or something else beyond what I can pay.
Because admiralty law doesn't work this way. Certain parts of salvage law do, but not generally. As a general rule if you do damage to something you are responsible to fix it, regardless of the value of the boat you are on when you do the damage.

Environmental damage, including fuel leaks and spills, are specifically excluded from any damage limitations. With the exception of some very high exclusions for oil companies.
12-09-2013 04:52 PM
MikeOReilly
Re: How many insure their boat with only liability insurance?

Quote:
Originally Posted by Stumble View Post
I think the real problem here is that despite your best intentions things happen, and there are very few of us that could possibly cover the resultant damage. If you want to put yourself at risk, that's fine and I appreciate it, but marinas have to deal with everyone, not just the 1% who actually take care of their boats.
I fully agree Stumble. Stuff happens. We cannot control everything. Despite our best efforts bad things can still occur. This is true of every aspect of life. But the possibility of an event occurring says nothing about the probability. And since Risk to Probability x Impact, as either P or I approach zero, so too does R.

So here's the actual data, (again). This data is USCG, so US-only. Go play with it yourself.
  • In 2012 there were 12.1 million registered boats. Federal law requires owners of recreational boats to register them.
  • In 2012 there were 4515 reported accidents. "An accident occurring on a recreational boat must be reported to the Coast Guard if a person dies or is injured and requires medical treatment beyond first aid, if damage to the boat or other property exceeds $2,000, if the boat is lost or if a person disappears from the boat."
  • Of these, there were 264 fire-related accidents.
  • There were 1010 "Collision[s] With Recreational Vessel".

OK, so lets crunch the numbers. 4,515 accidents / 12,100,000 registered boats = 0.00037314049587 accidents / boat. So in 2012 you had a 0.037% of being in some sort of accident with your boat in the US. But that is for all types of boats, from canoes to huge power yachts. Sailboats (all sailboats, from dingys to huge cruisers) were involved in 330 of the 4,515 accidents. So Sailnetters real odds of being involved in an event in 2012 was:

330 / 12,100,000 = 0.00002727272727, or a 0.0027% chance of being involved in an accident.

Once again I say if you are worried about this low a risk, then you best stay at home... actually, scratch that. The home is full of higher-risk dangers. Best just stay in bed .
12-09-2013 04:23 PM
Sal Paradise
Re: How many insure their boat with only liability insurance?

what is to stop an insurance company from using admiralty law to say - "your boat is worth $300k, but under admiralty law here is a check for the value of my clients boat, that is what you are entitled to. if you want more tell the judge... have a nice day...."????

The main benefit is to the insured who doesn't even have to deal with you at all, just put duck tape over the scratch, goes sailing and lets the insurance handle it, including legal expenses. Which is my point ; my liability insurance protects me. Its not there to pay off some one else's gel coat scratch. Its for if someone is seriously hurt, or something else beyond what I can pay.
12-09-2013 04:07 PM
Stumble
Re: How many insure their boat with only liability insurance?

I think the real problem here is that despite your best intentions things happen, and there are very few of us that could possibly cover the resultant damage. If you want to put yourself at risk, that's fine and I appreciate it, but marinas have to deal with everyone, not just the 1% who actually take care of their boats.

And frankly most people greatly undervalue the risks involved. Just take a pretty common problem that doesn't require the drama of a marina fire. A simple diesel tank leak can easily cause the stored fuel to dump into the bilge, the bilge pump cuts on and pumps the diesel fuel overboard.... Fuel spills carry potential environmental fines of $10,000/gallon released, with $1,000/gallon being more common. In addition to this if it's your boat you may also be buying everyone in the yard a new bottom job from the fuel etching the bottom paint. At $2,000 a bottom...

I worked on a case where this happened, and the guy who actually took very good care of his boat wound up with a $300,000 bill from the release of about 40 gallons of diesel fuel. No fire, no major drama, just a bad spot of corrosion on an aluminium fuel tank, and all of a sudden this guy was looking at having to sell his house and declare bankruptcy because he couldn't afford the bill.

Does everyone need insurance, probably not, as long as you either have enough money you can afford this type of bill, or are poor enough you are judgment proof. For the rest of us at a minimum of catastrophic insurance is a pretty smart buy.

As for me, I carry $5 million in liability with a $25,000 deductable. Because in a worst case scenario I could afford to loose that much.
12-09-2013 03:46 PM
newhaul
Re: How many insure their boat with only liability insurance?

I insure through foremost a hundred a year not worth loosing everything I have to save a c note and marina fires happen here we have had loss of life in a couple of them. Imho the statement the whole marina burning down was for dramatic effect even most house fires don't completely destroy the home. But for insurance purposes are a total loss. That's how I interpreted the statement
12-09-2013 03:31 PM
MikeOReilly
Re: How many insure their boat with only liability insurance?

Quote:
Originally Posted by delite View Post
So in your mind the marina has to burn to the water to be a fire or do damage? Marina fires are far more common than you claim:
Nov 11, 2013 LYNN — Officials are investigating a fire at a marina on the Saugus River that destroyed five boats, a personal watercraft and a section of dock early Sunday morning.
July 25, 2013 EDGEWATER, Md. (WUSA9) -- Anne Arundel County firefighters battled an early morning blaze that consumed three large boats docked at Oak Grove Marina in Edgewater.
First off, I was responding to TakeFive's comments. He is the one that used the "marina burning down" benchmark. I simply pointed out there have been none that I could find. I already said there are a lot more boats that burn, and do cause damage. The numbers are very low.

If you are really worried about the risk associated with boats burning in marinas, then you should never get in a car, never eat at restaurants, and you better not be breathing the air in most urban environments. All these things bring greater risk of loss.

Look, I'm not saying shyte doesn't happen. I'm just pointing out that the real risk for most sailors and cruisers is very, very low. I'm not making this up. The data is readily available. Look it up.

We in the rich western world, and I would say particularly in Canada and the US, are trained to be fearful. Fear is a great way to sell us crap we don't need. Everything that is possible is not probable. Citing individual events is meaningless. Put it in context. Look up the data. Heck, ask your insurance company what the risk is. If you really can't live with it, then buy insurance ... buy as much as you can possibly afford. But don't impose your irrational choices on others.
12-09-2013 03:16 PM
MikeOReilly
Re: How many insure their boat with only liability insurance?

Quote:
Originally Posted by TakeFive View Post
If your inexpensive boat breaks loose from a mooring and causes extensive damage to someone else's $300,000 yacht, what is your "different path?" This is not a rhetorical question - I'm interested in hearing what you would do.
If the fault was mine, then I would do my best to make things right. Through money, hard work and any other means at my disposal. But I would already have put in a lot of effort to ensure my mooring was in top-notch condition. I may even have put in more effort than some people who feel protected by insurance.

My turn: What's your liability limit? $2M? If so, what would you do if your negligence causes $3M worth of damage? Since you seem to be suggesting the risks are a lot higher than the data shows, you must have considered what happens when your insurance coverage is not enough.

What are the odds of causing $3M worth of damage? Surely less than causing $2M, or $1M? But all you're doing is playing the odds, or more accurately making a risk assessment based on your purchased liability limit. It's the same assessment others make who go without insurance. The only difference is the dollar mark.

BTW, we can play "what if" games all day. What if my cooking oil grease wafted out my galley port and landed on the dock, causing it to be slippery. What if my taller mast attracts lighting, leading to damage to a neighbours boat? What if a meteor hits??? As I said, if you want to try and buy your way out of all possible risk, then go for it. It's fundamentally irrational, but it's your money.
12-09-2013 03:03 PM
delite
Re: How many insure their boat with only liability insurance?

Quote:
Originally Posted by MikeOReilly View Post
Yes, agreed. But how many marinas have burned down? In the US I can find none, zero, nadda in the last 10 years of data. Perhaps you can point to the incidents of this happening. There are a small number of cases over the past 10 years of boats burning in marinas, and in some cases this spreads to other boats, not whole marinas. But even here we're talking single-digit numbers. Once again, compare that to the millions of boats that in ownership and you arrive at a real risk of almost zero.
So in your mind the marina has to burn to the water to be a fire or do damage? Marina fires are far more common than you claim:
Nov 11, 2013 LYNN — Officials are investigating a fire at a marina on the Saugus River that destroyed five boats, a personal watercraft and a section of dock early Sunday morning.
July 25, 2013 EDGEWATER, Md. (WUSA9) -- Anne Arundel County firefighters battled an early morning blaze that consumed three large boats docked at Oak Grove Marina in Edgewater.

While you may be correct in saying there is no case of an entire marina being destroyed by fire in 10 years it clearly doesnt require the entire thing to burn in order to do significant damage. Its also not the number of fires/accidents but the resulting damage that is important in setting insurance premiums and that includes environmental damage these days. Suppose those boats are $1 million powerboats and as a result of this fire have now spilled thousands of gallons of fuel into a river and estuary. How does your $300k liability policy look now assuming you are responsible for this?
Marina fires can spread quickly given the close proximity of boats and structures which are often coated in creosote or other flammable wood preservative. About 15 years ago I watched a powerboat with engine problems catch fire while tied to a coast guard dock. The entire dock was fully engulfed within 5 minutes and the other boats and coast guard station lost.

I'm sure those that lost their boats in the fire will find great comfort in your post Mike, after all it was single digits. I'm sure they will find even more comfort when the person responsible is under-insured or has none and they have to litigate.

If you think insurance is expensive, try being responsible for a problem and having none.
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