Hacker News Reader

Comment by hazbot | Hacker News Reader

I just shipped about £25,000 of personal effects - they wanted to charge me 5% for insurance!

I’m really glad seeing the estimates for container loss in this thread that I decided to just wear the risk myself.

I remember something similar - I moved from Scotland to Finland and we used a shipping container to move some of our stuff.

Of course we sold/donated most things, and didn't try to transport furniture. We shipped 80cbft / 2.26 cubic meters of stuff. The price for removal was £570.00, and the price of insurance was £307.40.

So in our case insurance was damn near 50% of the shipping price.

(Quick edit: Found the actual emails so those numbers are correct.)

What would you estimate the value of the contents to be?

My memory would be £10,000-£15,000.

Mostly it was sentimental stuff, I know we shipped cutlery, paintings, a very small number of books, clothing etc. But roughly speaking we'd got rid of anything and everything we could easily replace.

(And it has to be said that the pair of us carried a few suitcases for our flights, we'd filled those with plants and other fragile items.)

Plants? Over an international border? :)

EU, so it's easier.

I was in a long-distance relationship with a Finnish woman for a few years. After a while she'd start packing/bringing a couple of small plants with her each time she visited.

Nothing too exotic, just things like spider-plants and some indoor vines. She'd lightly-wrap them with newspaper and then stick them in the middle of her suitcase surrounded by clothes.

So pretty much all the plants we took from Scotland to Finland were ones she'd already moved in the opposite direction a year or two earlier!

I know some countries have restrictions on plants/animals and similar things, but it never seemed to be a concern for her travels.

This is heavily restricted to avoid importing invasive plants. It's often some innocent behaving plants that end up completely taking over in the wild.

Heh Heh Heh

Don't do that if you visit Australia. They'll (for real) throw you in jail if you bring in plants or animals without a permit. ;)

https://www.agriculture.gov.au/import/goods/plant-products/h...

Internal EU border probably at the time, so it should be fine.

So the insurance is more like 2-3%...

> So in our case insurance was damn near 50% of the shipping price.

How does that make any sense? The probability of loss is nowhere near 50%.

50% of shipping fees isn’t 50% of insured value.

d'oh.

I only pretend to know how to read.

Shipping price is not the price of the goods needing to be replaced. So if the goods were worth £25k then £300 is just over 1% which would seem more reasonable.

I don’t know what the actual odds are and certainly can’t judge for you whether insurance is good for you, but your risk isn’t only container loss at sea. The container may be stolen, they may drop your container from a height of a meter, the ship may lists repeatedly for 40 degrees, your container may get flooded with seawater for a few hours, it may get misrouted and lost for half a year, etc.

Sure. There are lots of risks. But does the insurance policy actually cover those risks? Scaring people into buying insurance is a fun time, but it feels like half the time the things they scare you with aren't even covered.

If they're scaring you with something they'll cover it. I sold insurance for a tiny amount of time, they teach you all the loopholes and it's the loopholes is where they get you. An example and this is just an theoritcal example, if the container was routed around the world for 6 months then declared lost then it could be possible that the insurance would only cover being lost for 3 months after which the insurance expires.

Insurance is usually quite negotiable. In particular, instead of going for the "insure all the things" option the movers will heavily push on you, you can opt to nominate only select items and give them realistic valuations yourself.

But is the insurance only for nautical loss or is it more an insurance policy about portside mistakes and "mistakes" that also happens to occasionally handle loss at sea?

5% is nuts. They don't lose 5% of goods.

The house always wins. What did you expect? Insurance is for when a loss would be unacceptably big.

And I guess there are more things that can go wrong than dumping cargo. Breaking in transit.

When my parents moved from the UK to Nee Zealand all the valuable stuff went missing. This was some time ago but it seemed theft was endemic.

A buddy worked for a company that shipped many thousands of containers around the world each month. He said right around 10% of the containers are never seen again. Lost, stolen, overboard, whatever.

That being said I've shipped my vehicles are few times and always just taken the risk. Most recently (in early 2019) I shipped from Egypt to Canada was quoted 1.5% of the value for insurance.

10%!? That seems excessive. Were these containers packed with diamonds or something?

PS. Love http://theroadchoseme.com :)

He and I were shipping our vehicles together, and when we declined the insurance he told that story.

awww, thanks ! :D

Your buddy lied to you. 10% is 100% made up.

They have to charge more than the average or they couldn’t be in business.

Anyone insuring containers in sea transport probably can't wake up for less than a 1000 pound premium.

> 5% is nuts. They don't lose 5% of goods.

I don't know how you think insurance works as a business if you didn't already know that they charge more than the money they have to pay out?

Most insurance charges more than double what they pay out on average. That's why I self insure whenever it's legal to do so.

Sure, loss ratios are about 40-60% for many types of insurance.

But there's benefits from risk pooling. A small annual fee to not have to deal with most of the economic cost if my house burns down or if I get cancer is worth it in how it reduces volatility.

Once you have a high net worth, paying for small amounts of insurance becomes more questionable, because variability matters much less and because of the negative expected value of the transaction.

This model misses some of the corner cases. Title insurance and boiler insurance have loss ratios of almost nothing, for instance, but are extremely economically useful. (The real service they're providing is inspection and research to make sure that the risk is negligible before insuring the risk). Auto insurance has a negative EV, but when my carrier subrogated when someone rear-ended me it was useful and convenient. Insuring a package so that you don't need to investigate shipping calamities from your customers can be useful.

But given the “General Average” concept you could have received a bill for many times the value of what you shipped.

Yes, if that mythical container full of iPhones full of bitcoins got tossed first everybody else would be screwed. If that was common the next step might be clients with particularly cheap wares bribing the captain to sacrifice their containers first.

Which is great in theory, as everyone’s incentives align.

Absolutely! It's a highly theoretical scenario, but it would be that one time when refusing bribery would almost be borderline unethical (but if course deliberately sacrificing the value crate before others unless paid would be definitely unethical, and deeply so).

No, General Average is based on percentage of value, so the most you could have to pay is however much the stuff you were shipping was worth, if basically all the other cargo on board was lost except yours.

I wonder if insurance companies bribe captains on occasions to throw overboard couple of uninsured containers to "make an example" out of people who think they don't need insurance and to "spread the word".

Unlikely, if only because it's actually not easy to do that. You'd have to get the container placed at the edge of the ship when in dock, then get the locks on the container undone while underway, then either hope that the container gets washed overboard in a storm, and doesn't hit the ship on its way out, or get a couple guys to lever it off.

Which is totally doable, except that a container can weigh 30 tons, and you've got the space between rows of containers to use for working in. Admittedly, if it's at the top of the column, its probably a lighter container. But it's still going to be heavy, with the crew working up in the air, in a relatively narrow area.

Reply on news.ycombinator.com