The Gam, Part II

Eau Gallie, FL

Noll

The fun and interesting stuff continued today. I went to seminars on marine insurance, survival in life rafts, adjusting to the cruising life, and offshore survival techniques. Libby went to the "couples forum", and then accompanied me to the adjusting and survival talks.

We also took care of some other business today. We met with Scott. Scott is the sailmaker who made our foresail two years ago. The sail was in need of restitching in a few places. Therefore, at lunch I fetched the sail from Tarwathie and took it to the parking lot to let Scott put it in his car. Scott will deliver it to us in Vero when it's ready.

At the close of the insurance session I buttonholed the speaker. I have been irritated about the insurance costs for more than a year. We pay nearly 4% of Tarwathie's value per year as our insurance premium. I heard that others pay only 2% or as little as 1/2%. What? I tried getting quotes from other insurance companies. Three of them declined to give me a quote. I don't know why. I posted a query on the SSCA bulletin board. A reply came from the same man who was speaking here. His reply merely said that a fixed percent rule can't be valid. I thought his reply flippant and disrespectful.

Today, I asked him face to face. This time I got a very simple, straight forward, and rational answer. If only he had provided that answer on the bulletin board I wouldn't have been mad.

Here's the answer: Tarwathie is worth about $55K on the open market. A brand new comparable boat (ha nothing is comparable to Westsails) would cost about $550K. However, most insurance claims are not for total loss of the boat but rather for damage and partial loss. Things like electronics and rigging on Tarwathie are just as costly to replace as they are on a brand new boat. Therefore, as the value of the hull goes down, the insurance premium as a percent of the hull price must go up. Say that 90% of the claims are for partial damage, and the average partial damage claim is $40K. In that case, if a $550K boat pays 2% then the $55K boat needs to pay 2*(550*.1+40*.9)/(55*.1+40*.9) or 4.28% to cover the same risks. Don't you think that the insurance companies could explain that?

We also learned that each boat is only allowed two claims before getting cancelled. We had a claim in 2006 for about $8000 damage caused by a lightning strike. If we ever need a second claim, they'll pay but future insurance would be very expensive or unobtainable. Ouch. We didn't know that. That creates a very unfavorable pressure to not submit a claim even if it exceeds our $2000 deductible. No wonder so many people hate doing business with insurance companies.

I'll write more on other gam subjects next week.

Tomorrow, we're off to Cape Canaveral to watch the space shuttle launch on Monday. We hope to meet with friends Kerry and Suzette who will drive down from Port Orange to meet us. It should be lots of fun.