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Boat Insurance - Do you need it?

We have offshore boat insurance.  We originally needed boat insurance because we financed our first boat.  See Boat Financing - Do You Need It?

Many offshore boats do not carry boat insurance.  The reason most often given is cost.  However, for many people this may be false economy - as we discovered.

In 20 years of cruising we have had 2 claims.  Total damages about equal to the value of our boat.  None of these incident was ruled to be our fault.  Our insurance company paid us, and they went after the party at fault and got their money back with interest.

Without boat insurance, even though we were not at fault, the chances of us getting our money would have been almost zero.  We would have had to pay for the repairs, take the people to court, get a judgment, and then try and enforce the judgment to get our money.  This is next to impossible for a cruiser, where immigration limits will force you out of the country, and the cost of repairs and a court action is beyond your budget.

If we had not had boat insurance our cruising days would have ended long ago.  Our story is not unique.  We know of many boats that have been damaged by other boats, or damaged in yards, or damaged as a result of faulty gear.  The only cases that I know of where the people got reimbursed for anything more than minor damages is when they had boat insurance. 

Most boat yards and marinas require you to have boat insurance as a condition of entry.  What happens if you don't - and say you do?  One boats we cruised with was dropped in a yard, braking his masts (ketch rig).  The yard refused to pay because he was required to have insurance as a condition of being in the yard - upon learning he didn't have insurance the yard owner actually laughed at him and walked away.

Another boat we cruised with had their mast fall down off Australia.  Their insurance company paid 1/3 the value of the boat for repairs, and went after the manufacturer, claiming that because the mast was deck stepped and single spreader, the design contributed to the failure - it was not redundant enough for offshore.  The owner got a new mast and sails, re-rigged with double spreaders.

Cruisers without insurance are a risk to other cruisers.  A number of boats we know of have been hit by other cruisers and damaged.  In most cases the offending boat has fled without making repairs.  In one case a small boat was left dismasted offshore as the offending boat fled without rendering assistance.  We have been hit twice at anchor by other cruisers. 

The problem is not unique to cruisers.  Local boats and tourists on jet skis especially can be a problem.  If you get hit you often end up being sued locally, usually for anchoring where it was dangerous to do so.  (It doesn't matter if you were anchored in a marked anchorage.  It must have been dangerous to anchor where you did - otherwise you would not have hit).  Boat owners have lost their boats and have had to flee the country because they didn't have insurance.

In the Pacific, 1 in 8 cruisers out for 2 years or more lose their boats to reefs (Dashew).  In our case I feel we have been very lucky not to have lost the boat in 20 years.  We have hit reefs.  It is very easy to do. 

The charts are old, inaccurate, and the visibility is often poor.  If you stay out long enough and travel far enough you will hit a reef.  We were lucky in all cases.  The tide and sea-state were in our favor and our metal hull minimized damage.  Lots of other boats have not been as lucky.

At some point in time you may need to make a decision to leave a boat stranded on a reef, rather than risking your life and the life of the crew to save her.  Even if your life is not at risk, usually when you leave a boat stranded to seek help you will return to find the boat stripped. 

To me boat insurance provides the peace of mind to walk away from a boat when there is no other choice.  Peace of mind is an important ingredient while cruising.  It is one of the main reasons to go cruising.  What price can you put on peace of mind?

Not all insurance is equal.  It pays to shop around for rates.  Equally, check the company's reputation.  There are reports of some companies collecting premiums but not paying when there is a loss.  These reports need to be examined with an open mind.  Boats have been scuttled for the insurance and it is understandable that insurance companies are on the lookout for this.