FAQ - Do you have boat insurance?

Well, it's boat insurance renewal time again … a depressing, expensive time of year and one which really impacts the budget. Comparative to house insurance or car insurance, boat insurance is over the top … thousands instead of hundreds of dollars. David's written about having boat insurance in the past and I thought I'd reiterate … mostly because misery loves company. big boats

If you have a mortgage on your boat, just like a house, you must have insurance. We never had a mortgage on Nine of Cups, but the investment was substantial enough (like a house without a mortgage), that we felt insuring her was important. After a couple of years in the Carib, when it was time to renew, the insurance company told us we could not go to Colombia. We took exception to their exception and canceled the insurance and muddled around until 2009 uninsured and without consequence.

When we arrived in New Zealand, we were required to have insurance to check into any marina, be on one of their moorings or be hauled out in the boatyard. Only third party liability was required and it was relatively inexpensive ($300-400). We bought it, so we could haul out. We sailed to New Zealand's South Island that year and while we were in Picton, cruising friends who were on a land holiday, stopped by to say hello. We talked about boat insurance at length. They were insured, but it was such a huge chunk of their budget, they wondered if it was worthwhile and they were thinking about not renewing. Fast forward one month later … they hit a reef near Whangaroa and their boat went down in a matter of minutes. The insurance paid up and they bought another boat. When news of our friends' loss reached us, it gave us food for thought and lots to ponder.

We investigated several insurance companies and finally found one through a local New Zealand agent that was underwritten by Lloyds of London and that we think provides us with the best coverage without breaking the bank. We now renew our insurance annually as painful as it might be. Have we ever had a claim? No … and really that would be the ultimate test of how good the insurance policy really is.

I will tell you that reading the fine print of our policy is a lesson in patience and, at times, incredulity. For instance, we are NOT covered for cyber attacks, civil war, insurrection or rebellion (or mutiny of the crew). We are not covered for radioactive contamination nor chemical, bio-chemical, biological nor electromagnetic weapon attacks including the explosion and subsequent consequences of a nuclear reactor. Oh, the list of exclusions is very, very long, but of course, we're hoping we never have to worry about them.

One thing to consider with the cost of the insurance is that some agents charge credit card fees; there are fees for foreign-currency exchange if that applies and if not, fees from your bank for a wire transfer.

We know many, many cruisers who do not opt to insure and just as many who do. It really depends on your peace of mind, what risks you're willing to tolerate and how much you have invested in your boat. Again, some marinas (especially New Zealand and Australia) require proof of insurance. Australia, by the way, requires AUD$10 million liability insurance, but our $5 mil policy from New Zealand sufficed when we discussed it with them and they made an exception.

Our liability insurance was reduced to US$1 million this year because we're returning to the USA … not sure why, but it did. Americans are a litigious lot, perhaps that's the reason. We are required to be either south of 12.07N (e.g. Trinidad) or north of Cape Hatteras between 1 June and 30 November or losses from a named or numbered windstorm (i.e. hurricanes or tropical depressions) are excluded. We're also not insured if we opt to go to Venezuela, Haiti or Cuba.

We'll be lucky if we get all of our work done on Cups and get out of the marina by June, so this time we're okay with the restrictions. Now if we can just keep the crew from mutinying ...