We spent many years down in Mexico but always moved out of the hurricane areas.
It is because of these irresponsible owners that don’t have a proper hurricane action plan that are causing our insurance to escalate out of control.
Here are some thoughts about the carnage in La Paz and the effects it may have on insurance underwriting on a broader scale.
Insurance companies do identify a hurricane zone on the Pacific coast. To be out of the hurricane zone you must be north of 25 degrees north latitude during the period of June 1 to November 1. La Paz is at 24.85 degrees north latitude.
The 'hurricane' that hit La Paz recently was not, in fact, a hurricane. It was a remnant of hurricane Norma that I am not sure even qualified as a tropical storm by the time it hit the La Paz region. The highest sustained winds I heard reported there was more than 50 knots but less than 60 knots. I will see winds that high where I moor my northern boat during winter which at 48 degrees north latitude, is not close to any hurricane zone.
I am not sure any insurance company will insure a boat for named storms in the Pacific hurricane zone at any price. If they do, I am sure the actuaries have priced it high enough to cover the risk they would take there without causing that risk to be carried by pricing outside of that zone and onto anyone else's property. That is not how insurance works. The insuring of high-risk property is not purposely socialized to low-risk property.
I chose to leave my boat in La Paz this season. I self-insure the property I can afford to lose and insure the property I cannot afford to lose. That is, I carry the risk on my own boat for casualty, and with liability insurance only from Chubb, I insure the property of others that I cannot afford to lose.
I do not consider mooring in a well-constructed marina in La Paz a high risk. Marina de la Paz has good breakwaters and well-constructed docks. As far as I know, there was no loss of property there other than one boat that was poorly moored and broke loose of the dock.
The losses came from the anchorage and from a marina next door to MDLP that has no breakwaters. Those losses would have occurred during a run of the mill gale in the Pacific northwest. In the majority of cases I suspect the losses were at least in part due to poor seamanship and poor storm season preparation. In looking at images of carnage I see boats with sails still on the booms and even canvas on bimini. Most of the losses seem to be from boats in the anchorage with inadequate ground tackle.
There was 8-12 inches of rain with this event. At least 8 boats sunk at the dock. What is that? Isn't that what bilge pumps and boats that do not down-flood in a storm are supposed to prevent? Are not there many areas that could be subject to this amount of precipitation outside of 'hurricane zones'?
Insurance has become ridiculously expensive in most areas these days which is why I self-insure both of my larger vessels. I think that is due in large part to an increase in indiscriminate underwriting that has led to large losses, and to an increase in poor seamanship and preparation across many geographies. This combination is coming home to roost in higher premiums, more exclusions, and more navigation limits. As it should.
I do not think the La Paz event will cause a major change in that overall situation.