This is a rough outline of a self insurance or shared risk co-op, that I sent Kent and thought I would share with the group. It was prompted by the hassle I have had with obtaining insurance, the restrictions and expense. Bill suggested self insuring and just buying liability insurance, however in the event of a total loss, it would be a big financial hit, that I could not afford. However, if I could share that risk with even ten others or better yet many more, it would soften the loss. When you consider how few Amel's have been lost outside of a hurricane zone, the risk seems very low, and yet we need to insure against such a great financial lose.
1. A LLC. formed
2. An administrator and board to accept membership ,assess deposit amount , administer funds and assess claims.
3. A one time deposit could be a percentage of agreed fixed value, perhaps 2 or 2.5% ,eg. $200,000 boat would amount to a $5000 deposit into the fund
4. Coverage would be for total loss , fixed value minus say 10% deductible. Figuring most owners could absorb some loss ,and insurance companies have deductibles as well. Hurricane zones excluded.
5. Perhaps lightning strike coverage , perhaps coverage would be ,replace with new equipment ,minus a 30 % deductible.This would probably be the largest source of loss. May have a surcharge or higher deductible for Florida locations.
6. All funds would be in an interest bearing account,if you can find anyone paying interest.
7. Upon leaving the group , the owner would receive a 50% refund of his deposit assuming they had no claims.
8. Perhaps a .20% of fixed value annual fee to go to cost of administration .eg. $3000,000. boat x.20% = $600. annual fee
Assuming 200 owners/members at average boat value of $300,000 x 2.5 % = $7,500 deposit or $1,500,000.00 in funds.
a $300,000. loss of a boat would break down to a loss of $1,350. for each of the 200 members.
This could even work on a smaller scale . If ten owners shared responsibility for loss. $300,000 minus deductible of 10% ,would be $ 270,000.000 divided by ten owners or $27,000 per owner. Its all about spreading the risk.
I wonder why no group has formed a risk co-op as yet. Maybe because insurance used to be less restrictive and more reasonably priced .