Similar observations vith regard to inadequate restriction of 

 protection and indemnity insurance coverage may be made for New 

 England. All policies did not provide for a deductible o:n personal 

 injury; in those cases where deductible clauses were included, 

 amounts provided for were small. This relatively liberal coverage 

 may partly explain the fact that as much as kQ percent of claims 

 in New England were {1">100 or less, while they represented no more 

 than 2.7 percent of all protection and indemnity losses (cf . dis- 

 cussion of table 16 in Chapter IV) . By comparison, the effect of 

 a large deductible in California can be seen by the fact that claims 

 of less than $101 constituted only 10.6 percent of all losses. The 

 reduction in the amount of losses which New England insurers could 

 have realized by increasing their deductible from an average of $226 

 to an average as high as that in California ($658) and including a 

 deductible clause in all policies, would have been approximately 11 

 percent of all losses. 



In conclusion, if insurers had been able to restrict more than 

 they did the key coverage provisions of the insurance contract, namely, 

 the Inchmaree clause and the deductible amount for hull insurance; and 

 the deductible clause and amount on personal injiiiy for protection and 

 indemnity insurance, their losses might have been substantially smaller. 

 Many of them might even have made a profit. But the realities of the 

 market are different, and the past can only help better anticipation 

 of the future. 



3. The importance of overinsurance on hull . Insuring a vessel 

 for more than its current market value was a practice which may have 

 contributed to hull insurance losses more than any other single 

 provision of the insurance contract. 



Available evidence, shown in table 33^ indicates that overinsurance 

 in 1950-5'+ was widely practiced in New England and, to a lesser extent, 

 in the Gulf Area and California. If vessels whose owners reported an 

 insurajice amount equal to market value are combined and considered 

 similarly as the overinsured vessels, as much as 57 percent of the reporting 

 New England vessels were overinsured, while the percentage was 32 per- 

 cent in the Gulf Area, and 26 percent in California. In view of the 

 fact that quite a few vessel owners declined to disclose the estimated 

 market value of their vessel and that they were well aware of the 

 importance of overinsurance, the above percentages might have been 

 higher than the data disclosed. It will be seen also in table 33 that 

 overinsurance was practiced on all types of vessels irrespective of the 

 quality of the risk. It may be highly significant that vessel owners 

 who lost their vessels were less responsive in stating the estimated 

 value of their vessel than were owners of active vessels, but all those 

 who responded quoted a market value smaller than the amount of insurance 

 they collected. 



139 



