insiirance." A second owner observes: "I never have enough damage 

 to cost as much as the insurance premiums would." A third owner 

 considers both kinds of insursince: "Money spent on insurance coiild 

 cover any damage to boat or personnel unless it were a total loss'." 



Partly as the result of this view, noninsurance is more 

 extensively practiced in the Gulf Area among fleet operators than 

 one-vessel owners. Of course, the higher the premium and the larger 

 the fleet, the greater the inducement for noninsurance. Assuming a 

 fleet of 20 vessels with average replacement value of $30,000 per 

 vessel at a 5 percent rate, the premium paid would be enough to meet 

 the total loss of one vessel or partial losses amounting to $30,000 

 per year. If such a fleet o-ner has no insurance on his vessels but 

 keeps these premiums in a reserve in order to meet total or peirtial 

 losses eigainst insurable risks on his vessel, he is self-insured. A 

 self -insured owner would be able to reduce appreciably his cost of 

 insursuice, and might also enjoy tax advantages sind interest gains. 

 A similar reserve may be established to meet losses arising from 

 risks covered by protection and indemnity insurance. 



But as far as could be determined in this study, self-insureince 

 does not seem to be widely practiced by fleet owners. Uith the 

 exception of one fleet owner who indicated that "this company sets 

 aside a sum equal to premium each year and has a surplus," no other 

 interviewed owner disclosed a similax practice. A special inquiry 

 made in the Gulf with a score of large operators after the completion 

 of field work disclosed that none of those who responded had a self- 

 insurance plan. The few financially strong fleet owners might be 

 able to carry a considerable part of their risks themselves. For the 

 majority of the owners in the Gulf and in the other two areas, 

 especially the one vessel captain-owners, noninsurance may sometimes 

 spell economic disaster. Two of the tvTF.nty-six lost vessels in New 

 England, eight of the eighteen in the Gulf Area and nine of the thirty 

 in California had no insurance coverage . An owner from the Gulf Area 

 wa^ "bitter about high insurance rates," an interviewer reports, 

 "because he lost his boat with no insurance coverage." He had carried 

 hull insuraJice on his vessels during the whole five-year period, 1950-5^« 

 A New England owner who had similar experience remarks: "Innocent 

 suffer with the guilty policy should be abolished." The interviewer 

 explained the owner's plight as follows: "Owner is bitter toward 

 insurance company. In 195^ insurance company radsed premiums. The 

 owner cancelled policy. Some months later vessel was lost. Toteil 

 burden fell on the oirmerl " 



38 



