An Insurance Question

[Gina Marie]

With the price of our vessels falling should we lower the value of our insurance policy to reflect the decrease. If so how does the insurance company calculate the value??????

My Policy renews in August

Thanks

Gina Marie

 

[Passages]

Well....it depends.

Usually the insurance companies want to balance their risk and will notify you that the hull value should be reduced unless you have a compelling argument to the contrary. They may use "Blue Book" values or research Yachtworld sold boat records.

How much do you owe on the boat? Most banks won't let you insure for less than you owe. If you are up-side-down, you could be in for some uncomfortable discussions with the bank & insurance company.

If you own the boat outright, then you have a choice. You could revalue to current markets of if you are really brave, go with liability only policy. (I'm not that brave)

The simple answer is yes, you can. You just need to understand your personal needs for an insurance hedge and the requirements of your lender.

 

[Angela]

You can IF the insurance company will LET you. I'm not kidding!! That's why I canned my last insurer way back when....I wanted to decrease my value. We were at $350,000 hull value which was way over value, but that's what the survey said that the insurer had in hand. The insurer boldy told me that they would not insure for anything less "because we don't want to lose any money on the premium." I told them to go pound sand and for that comment they lost the entire premium.

I am in the same boat again right now with a policy renewing August 3. My $10,000 premium did not increase, so I guess I should be delighted that I'm not paying $20,000 this year and that it's still $10,000 and that's for $300,000 hull value.

I am trying to get a premium quote from my current insurer with an agreed hull value of $225,000 or $250,000 to see what that does to the already outrageous premium.

Bottom line...my experience with more than one insurer has been that they do not like to reduce values in order to reduce premium, but I am wishing both (all) of us good luck on this one. I'll let you know how mine turns out.

 

[LENZ]

I have a 1972 43dc and I have it insured for $130.000 and my yearly insurance is about $1200, It's dock in Michigan. After reading some threads over the last 6 or so months I'm seeing some of you guys/girls are paying around $10,000.00 or more? Is this because your down south in salt water with a lot of Hurricanes? Whats up with that? My plan is to have a 53 or 58 yacht fish kept down in Fla. when I retire (10 more years or so from now) as a floating condo. Is the salt water and weather that much of a factor down south? Just curious.

Thanks Lenz

 

[Angela]

Lenz, it's the Florida factor, particularly Broward, Dade and Monroe Counties (Fort Lauderdale to Key West). Unlike Michigan, boating is year round and we get hurricanes. Thus, the risk from an insurer's standpoint rises exponentially along with the premium we pay. Prepare yourself for that sticker shock, and that's assuming you can even find an insurance company to issue a policy down here which is another giant hurdle. Most everyone told me NO until I said, "OK, I need a commercial charter yacht policy." A few more doors opened up at that point.

It's part of the price of living in paradise.

 

[LENZ]

Angela, So if the boats insured in MI. and I take it down to FLA. for a couple of months or so a year what does that do if any?

Thanks LENZ

 

[Angela]

You'd have to ask your insurer, and I'm sure they will want to know WHICH couple of months, too. Many will not allow their non-Florida insured boats to be covered in Florida between June 1 and November 30 (hurricane season). I have a friend who is cruising, and he had to be north of some point (can't remember which city) in North Carolina by June 1 or his insurance was not effective unless he wanted to pay the freight we pay here.

 

[DuckWalk]

Angela, So if the boats insured in MI. and I take it down to FLA. for a couple of months or so a year what does that do if any?

Thanks LENZ

You would need full atlantic coverage (they will charge you accordingly) and they would put a nav restriction on your policy during hurricane season so you wouldnt be allowed below NC I belive between June 1st and November 1st. The insurer will put an exact lattitude and longitude restriction in your policy terminoligy.

 

[(Nobody You Know)]

Just a week or so ago I lowered the value on my policy. A phone call to a broker at Jarrett Bay rendered an "approximate" value. My policy is one that pays the stated value on the dec page in the event of total loss. Unfortunately, like the whole lot of us, my old boat ain't worth what it was say 2 years ago. The only good news is that the premiums are reduced.

 

[Angela]

I just received a response from my insurer that they will only allow me to reduce the value by 5% and that's for "depreciation." I'm still negotiating on the basis that this is not about depreciation. On a 28 year old vessel, there is nothing left to depreciate. This is about market value in today's economy. This is about how much risk I, as the owner, am willing to assume which is my choice to do so. One of my choices is to assume the entire risk and purchase a liability only policy. I don't want to do that, but my point to the insurer is that that is MY choice.

I've put the question to them, "What is your position if I put a new survey in front of you that states a much lower value than $300,000?" I'm waiting to hear back on that.

This plays right into my previous response...IF they will LET you reduce the value.

You see why I just hate insurance companies! They are all the same.

 

[Boatsb]

I bet if something happened they would be quick to point out the value of the vessel has dropped and would try to pay less for the loss.

 

[(Nobody You Know)]

Ang,

you may want to try to get in touch with any prominent S. FL brokerage and see if you can get a statement that reflects what similar yachts to yours are bringing. They all now have access to a "What Boats Sold For" proprietary site. Hopefully this info will satisfy your insurer and you can avoid paying a surveyor who may insist on a haul out.

I hope you can beat this thing.

 

[MicroKap]

Angela,
I believe there is a yacht broker right near you that sold a 1980 58' MY in the past couple of weeks. In fact, the boat looked just like yours in their pictures. Maybe they can help you get a lower valuation for your boat based on their sale price. Now is the time that you can use them. Make sure to show them pictures of your boat and the reason you need to get the new valuation.

 

[Angela]

Angela,
I believe there is a yacht broker right near you that sold a 1980 58' MY in the past couple of weeks. In fact, the boat looked just like yours in their pictures. Maybe they can help you get a lower valuation for your boat based on their sale price. Now is the time that you can use them. Make sure to show them pictures of your boat and the reason you need to get the new valuation.

Yes, I've been meaning to pay them a visit.

 

[Angela]

Just as I expected, my insurer would not let me lower my hull value any more than 5% which they claim is for depreciation. She's 28 years old...what depreciation??? In order to lower it to what I would call in line with market value, I'm going to have to get another survey report that states the value I want and start the process of going through underwriting all over again. I'm insured with Markel.

The only thing Markel would let me do is insure it on their terms or not insure it at all, so I suppose I did have a choice.