boat insurance

[Stacer560]

gents and ladies

i know this topic has been mentioned a few times, but i just received my insurance renewal from club marine.

I have noticed the last 2 years, my insurance premium has stayed the same, same amount of cover and same premium per year.

Whilst i am not complaining as it is only $450incl GST, i am just use to premiums reducing each year especially when you have never made a claim ever in my life (boat, car, bike, house, contents the lot).

Is any here in the same boat with club marine? Or should i call and get a discount?

Your thoughts?

My second option is to go to a broker and get insurance accross the board.

(house, car, boat, contents, jewellery, greenslip, phone packaged for a discount)

[helliconia]

Up until recently I worked for one of the bigger insurers in Australia and the questions you are asking are pretty common.

It's probably best answered with a brief description of how premiums are calculated so you can understand why they fluctuate.

I like to use a horse racing analogy, although it was never popular with my bosses

Basically, when an insurance company quotes a premium they are putting a dollar value on the chance you'll make a claim compared to other policy holders and how much that claim is likely to be. Like a bookmaker, they have to make a profit across the whole spread of risk for the particular policy type. Bookmakers look at things like previous performance, track condition, who they're racing against, the weather, and lots of other factors. Insurance companies are the same, they balance your claim history against the value of the policy (how much they pay if you sink it), the average claim amount for the policy type, any forecast weather events (like the floods, cyclones, storms etc) and a bunch of other stuff, and using pretty scary looking formulas they come up with a percentage chance you'll lodge a claim and how much it will cost, add a profit margin and that becomes your premium.

Like a bookmaker they make attractive offers to those in low risk categories. Bookmakers offer better odds if a horse is less likely to win to encourage betting, insurance companies offer lower premiums to good risks. In both case no claim = all profit and this offsets the higher risk customers who may make a claim. In the industry this is called "spread of risk".

The important thing to remember is your claim history accounts for a very very very small part of the risk. The fact you didn't make a claim last year has no mathematical impact on your chance of making one this year, just like flipping a coin and it landing heads has no impact on the next flip. Calculating insurance premiums is just a very advanced form of probability theory. The yearly fluctuations in premium are more likely the result of lower claim incidents overall, better weather predictions, or reductions in the cost of repairs for the type of boat you own. Even changes in maritime law can have an impact, for example the new lifejacket laws reduce the chances of a loss of life and hence reduce the chance they'll make a public liability payout.

While I'm not a broker and don't want to give you specific advice, I think your idea of trying some brokers for whole packages is going to give you the best deal. This isn't always the case but if you have a lot of insurable assets you'll often get a better deal by marketing them all together than you will with individual policies.

The reason this works is because overall the portfolio is more attractive, they make money on your low risk assets and can balance that against the higher risk policies like your car.

Hope my long winded reply helps!

Edited January 17, 2011 by EmptyHooks

[Catchin Jack]

I like to use a horse racing analogy, although it was never popular with my bosses

Interesting read EmptyHooks, thanks for sharing that with us, makes sense.

But, i'm not a horse to bet on

[adzzy]

Awsome read emptyhooks!!!!!!!!

[Stacer560]

haha empty hooks, nice answer and makes sense.

I hope then, if they make that assessment and you pay a higher premium, a pay out should be within 7 days???

But i just thought, with each year that goes by, no issues, you pay on time, the risk should lower. Two years straight and still the same. But to their credit, they have not reduced my agreed value all along.

Car insurers tend to reduce 5-10% per year on agreed values.

On that note, i wont question the amount, its under $500.

Just wanted your thoughts.

[NickF]

The other question is, what type of boat do you own, what is the agreed value and how many people does it carry etc?

I paid $440 this year with Club Marine, I'd be curious to see what boat you own vs what I own and see how it stacks up.

[Stacer560]

nick i have a stacer 560, mercury 90hp 2003. It holds 6 adults.

Has all the usual goodies as all keen to fishos.

all insured for $24k

The other question is, what type of boat do you own, what is the agreed value and how many people does it carry etc?

I paid $440 this year with Club Marine, I'd be curious to see what boat you own vs what I own and see how it stacks up.

[NickF]

I have a Haines Sig 600 Bowrider, 175hp V6 outboard and holds 8 adults insured for $25k, so it seems we are paying similar amounts. Perhaps it could be related to the length of boat or something?

I know with cars they take into account location and how you will store the vehicle.

[helliconia]

haha empty hooks, nice answer and makes sense.

I hope then, if they make that assessment and you pay a higher premium, a pay out should be within 7 days???

But i just thought, with each year that goes by, no issues, you pay on time, the risk should lower. Two years straight and still the same. But to their credit, they have not reduced my agreed value all along.

Car insurers tend to reduce 5-10% per year on agreed values.

On that note, i wont question the amount, its under $500.

Just wanted your thoughts.

Can't guarentee the 7 day thing...we are talking about an insurance company here! The only thing they do quick is cash cheques!

You would imagine that each year you accumulate more experience driving a boat or car your risk would go down, but this could be offset by complacency. Just read my other post about my last trip out in the boating section and read some of the replies Also, I saw a couple of guys from a boat dealership, can't remember which one, sink a very expensive and brand new looking boat by forgetting to put the bungs in so experience doesn't always count for much

The other thing to remember about the sum insured is they compare it to other policies. So if your boat is insured for say $5K more than the other policies similiar to yours you'll pay a higher premium. If they wanted to be REALLY nasty at claim time, they could charge you the premium then argue the sum insured is not indiciative of the condition of the vessel and pay you less. They use the "disclosure" clause for stuff like that - it basically says you have to inform them of any changes, and this could include the value of the boat.

The other factor is the age of the boat. Theoretically over the years better technology is available to increase safety, so a newer boat is a better risk than an old one. Maintenance and deteriation are also age based factors.

I told you it was scarily complicated!

PS to insurance companies we are all donkeys!! hehe

Edited January 18, 2011 by EmptyHooks

[NickF]

Just look at what some of the insurance companies are doing to flood victims, there is your proof they think nothing of us!

[Stacer560]

empty hooks funny you should say that about agreed value and true value at a claim.

Who is the insurance company to say your boat is not worth that amount? We can all go on boatsales and say, oh hey there is another stacer 560 for $18k, thats all yours is worth? Bull crap, each boat owner to themself know there boat has added value.

like new electrical, lighting, baitboard, gps/sounders, steering,batteries, hatches, carpeting, engine, new canopy, boat covers????

These things do depreciate - sure, but i can look on boat sales, get the same boat as mine for $18-$20k with some solid negotiating, but i can guarantee, it will not come close to how modified my boat is to suit fishing / day out on the water.

Thats what i ahte most, cars yeah fair enough, but boats, i am upto my second boat, and i tell you know after the $$$$ i spent to get my rig to how i want it, in the future if someone has done what i have to my boat, i will be more then happy to pay them a bit extra $$$ as i know DIY with new parts can cost thousands.

PS - not having a go at you, but we can all hide behind a PDS that they know not many people will read but most importantly, UNDERSTAND it.

[helliconia]

empty hooks funny you should say that about agreed value and true value at a claim.

Who is the insurance company to say your boat is not worth that amount? We can all go on boatsales and say, oh hey there is another stacer 560 for $18k, thats all yours is worth? Bull crap, each boat owner to themself know there boat has added value.

like new electrical, lighting, baitboard, gps/sounders, steering,batteries, hatches, carpeting, engine, new canopy, boat covers????

These things do depreciate - sure, but i can look on boat sales, get the same boat as mine for $18-$20k with some solid negotiating, but i can guarantee, it will not come close to how modified my boat is to suit fishing / day out on the water.

Thats what i ahte most, cars yeah fair enough, but boats, i am upto my second boat, and i tell you know after the $$$$ i spent to get my rig to how i want it, in the future if someone has done what i have to my boat, i will be more then happy to pay them a bit extra $$$ as i know DIY with new parts can cost thousands.

PS - not having a go at you, but we can all hide behind a PDS that they know not many people will read but most importantly, UNDERSTAND it.

Your right, it's hard to see how they can know the value of your boat better than you. At the end of the day the sum insured should represent the replacement value of the boat to the same condition it is now. If you "know" that your not going to buy one with exactly the same changes you should factor these in BUT there are a couple of things that insurance companies take into account when viewing these things.

1. Spending $5000 on mods to a 20 year old boat does not add $5000 to the value. As a general rule of thumb they will depreciate any modifications as if they were installed new.

2. The mods you make to your boat are based on your needs and won't necessarily be the same as someone else might do in your place. Therefor what the boat is worth to you is different to what it is worth to the market. I know from my 2nd hand boat studies that the changes gys bragged about meant little to me when I was working out what I thought it was worth.

The reason for these "rules" is to mitigate the cost of claims where every boat is highly individualised. If they didn't do this and allowed significantly higher sums insured there would be 2 large effects.

Firtly our premiums would go through the roof due to the increased risk associated with managing and paying higher claims.

Secondly, paying your claim would become a long nightmare process where they had to verify every change, try and find a replacement, and then after finding the closest match get the work done to bring it back to the same vessel you lost.

Insurance companies are in business to make money, if they didn't then they wouldn't be there to pay a claim at all.

I'm not offended by any of your comments on my post. I don't even work in the industry anymore, I just hope to throw a little of my insight out there so that you guys understand how the industry works. There are some really crappy insurance companies out there, some have a policy to refuse the first couple of claims received for an event just to weed out the ones that can't be bothered to push them hard enough to get paid. Others will go out of their way when they can to make things right for their customers.

As for the floods, they are a tragic situation for anyone to be in, but there is likely to be billions of dollars in damage to clean up. When your talking about these kinds of freak events and those amounts of money it's enough to drive the whole insurance industry into bankruptcy if they jump in an admit total liability. The industry average profit made by insurance companies is around 10-12% of total income. If you don't have the money in the bank to pay these claims you can take on enough debt that you drown to pay them or go bankrupt. That isn't in the interest of their customers, the public, or their shareholders. Expecting a small group of companies to foot the bill is unrealistic. It's a cost that must be born by the whole community via insurance, donations, volunteering, government help, and corporate assistance. I'm just proud to be an Aussie when I see all these things coming together to help a community that has been shattered by an event such as this.

[locodave]

Try GIO, mine was heaps less than Club marine!

[myocard]

What about 3rd party insurance to cover both people and property?

Particularly for boats that are not worth insuring for loss or theft.

[bullfrog]

I also think that it's a good idea to insure your boat with the same insurer as your car. If there is a problem, your boat insurer may say that you have to make a claim against your car policy (say for instance that your brakes failed - car's fault therefor car insurer pays!). Might get a bit ugly - less hassle if same company for both.

[Stacer560]

myocard, sorry i disagree. How could you not fully insure a boat worth over $20,000?

Sure enough, if i had a $4000 tinny not worth it, but $20,000 k for $450 a year cover, its insurance on your money.

Not only for theft, what if you have an accident and your boat is totalled?