Marina Dock Age, March 2005

Some Practical Tips on Purchasing Marina Insurance
By Mark Yearn

Insurance, as a fixed cost of doing business, is one of the largest single line items of every marina’s budget. Because most marinas go their entire business lifespan without ever filing a claim, they often view insurance as an expense that’s too costly and unnecessary — that is, until disaster strikes.

A sympathetic ear

Many business people — including me — must purchase insurance, and there seems to be an almost universal expression that insurance costs are too high. Right here in Michigan, the cost of auto insurance seems to be out of control. My corporate auto policy currently insures three vehicles, and the premium for these vehicles is 40% higher than it was three years ago — but not because of any claims, tickets, or accidents on my part. It’s simply the increased cost of purchasing insurance in my area.

Over the last couple of years, I have been invited to speak to a variety of trade groups about the best way to purchase marina insurance. It seems that every group is hoping there is some magic formula that will permit them to greatly reduce their insurance costs. The groups even have some creative ideas of their own! For instance, one idea involves combining attractive packages in order to entice an underwriter to reduce rates due to the large amount of business he or she will write. Kudos to everyone for this creativity.

However, to put it bluntly, there is no magic formula, package or creative idea that will allow a marina operator to greatly reduce his or her overall insurance costs. Sorry to say, but that is the unvarnished truth. The reason? Underwriters know what they are willing to take as a risk and for what price — regardless of who you are, what group you belong to, or what your loss experience is.

For example, a great marina operation in the Southeastern portion of the United States spared no expense in its recent construction activity. The marina was well maintained and operated, and had a great loss experience. Even with all this, one of the leading marine underwriters in the country looked at the risk and determined that the amount of premium available was not large enough for the overall risk size that existed in this hurricane-prone area. Therefore, he passed on quoting the insurance program.

At a recent trade conference in the Midwest Region of the United States, the group members asked me if they could combine their membership to obtain lower dock insurance rates. The answer was “no.” I explained that the amount of premium available to an underwriter from the group was too small in comparison to the amount of risk the underwriter would take on.   Continue »