B. REASONS FOR INSURANCE OR NONINSURANCE 



1. Physical characteristics and safety standards of vessel . 



Hull Insurance 



Age . Occasionally, age alone may be the determining factor for 

 insurance or noninsurance . Other things being equeJL, the older the 

 vessel, the higher the rate for hull Insurance. (Also see discussion 

 on rate making in Chapter VI.) Noninsurance may be the result of 

 outright refusal of an insurer to underwrite the vessel because of 

 age. However, this occurs rather infrequently because a vessel may 

 be refused by one and accepted by another instirer. More frequently, 

 the insurance rate is so high that the vessel owner cannot afford to 

 pay the premium, especially in the case of a small vessel. The 

 remarks a vessel owner made during one of our Interviews are a case 

 in point: "Rates are prejudiced against good, old boats." The 

 importance of age as a variable for noninsurance is clearly indicated 

 in table 2 by the fact that for all three geographical areas the 

 insured vessels axe, on the average, newer than the noninsured. 



Rig. A vessel equipped with gas engine is charged higher Insurance 

 rates because of the special fire hazard Involved. The laconic expres- 

 sion of a vessel owner "gas screw, too high insurance," is most appro- 

 priate. Thus, the proportion of vessels with gas screw which are 

 insured is much smaller than the sample percentage of insured vessels 

 in all three areas as shown in table 5. In part, this low percentage 

 may also be due to their relatively small size. (See discussion on 

 size, below.) 



Safety standards, communication or navigation apparatus, and 

 equipment . According to the responses of the interviewed vessel owners, 

 who furnished information, a laxger percentage of insured than of non- 

 insured vessels are built or classified under the rules of the American 

 Bureau of Shipping or other classification society and are manned by a 

 captain and/or engineer who has a license to operate a vessel of 200 

 gross tons or more. As will be noted in table 3^ this percentage 

 differential is consistent for all three above characteristics of 

 vessels in all three areas. A similar picture is shown in table k 

 with regard to communication or navigation apparatus and safety equip- 

 ment although in many cases the percentage difference in both tables 

 is not statistically significant. 



A word of caution here is in order. Because insured vessels are 

 shown to be relatively better than noninsured vessels in all the above 

 vessel characteristics, it should not be inferred that the insured 

 vessels are relatively better risks than the noninsured and therefore 



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