Gear Insurance. Any recommendations?

[Jeff S]

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. Average that on a lifetime and do the maths yourself ;-)

 

I did the math (post #6). So far you've yet to poke any holes in it.

 

Whatever works for you is fine, but your generalizing for everyone else, given potentially vast difference in individual and company specifics, is simply nonsense.

 

Jeff

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[dave_d]

There are a few things not mentioned that need to be taken into consideration when deciding on insurance and if it is worth paying for or not. The first thing is whether you are insuring for the "Full Replacement Cost" or "Actual Cash Value" of the camera. The second is how much is that camera going to be worth in three years if it is stolen and how much is the insurance company going to estimate the value of the equipment at. The value of camera equipment depreciates quite rapidly today compared to 15 years ago, like any other electronic device. A top of the line 24 megapixel Leica costing $7,000 today may be estimated by the insurance company to be replaced with a bottom of the line $2,000 24 megapixel Leica in 3 years. Of course this is a hypothetical situation because we don't know what may be available in three years. Either way you look at insurance it is a gamble. Personally I prefer to insure my gear and rest comfortably knowing my gear is covered. I guess it depends on how lucky you feel you are.

[Jeff S]

A top of the line 24 megapixel Leica costing $7,000 today may be estimated by the insurance company to be replaced with a bottom of the line $2,000 24 megapixel Leica in 3 years.

 

Or, like in my case, that $7000 camera, if lost or ruined, will be replaced by either $7000 in cash (or whatever I declared to start), or up to 50% more cash ($10,500) if that camera is discontinued and replaced with a new iteration, e.g., an M9-P for an M8.2, or the upcoming M if the M9 is long gone, etc. My company deals with large assets and this would be considered small stuff.

 

All those factors are built into my premium, and I can decide accordingly if it's worth it for me. I decided it's a no-brainer to buy the insurance given these terms and quite reasonable premium.

 

Jeff

[sblitz]

All my camera equipment, bodies and lenses are fully insured in a personal articles policy attached to homeowners. Or now renters since I moved from house to apartment. It is How it works in US. Now if u use cameras for work then different avenue for insurance including business continuity. Once again not sure how it works in other countries. But I would always insure. Cameras r to be enjoyed and used and insurance gives u the piece of financial security to do that

[Bill W]

I worked in insurance for 28 years. I worked for an insurance company. We were in business to help people knowing losses were going to happen. I had my gear insured through them and I had losses. The concept of insurance is spread of risk. Your premiums help pay for losses of others as well as your losses if that should happen. Yes insurance companies are in the business to make a profit, if they don't, they are out of business. Yes there are those that have bad experiences but I still believe you get a big bang for the buck by purchasing insurance.

[flyalf]

...

But, let’s expand on your second scenario . Based on my experience, I have a camera stolen or damaged by weather or something else once every 7 or 8 years. Let’s assume I’m worse than the average person and on average you can expect to have a total loss once in 10 years. And let’s say we have Leica M9’s/M’s which cost $7,000.

 

We can now say we have a 10% chance of a loss each year. We can save $700 each year and incorrectly assume we are covered. For example, we could have a camera stolen in the 3rd year… We would have to pay the $7,000 to replace it, but we would have only saved $2,100 (at $700/yr), but you will say, “no problem. I’m saving over 10 years and I still have 7 to go to pay for this camera”. But you still have a 10% chance of loss every year (remember you said above that “However much you pay in insurance the risks for an accident are the same”. At 10% risk per year with 7 years to go the laws of probability and statistics say that you still have 52.17% chance of loss over that 7 years at 10% / year. YIKES!!!

Now, the insurance company has the luxury of looking at it differently. Let’s say they insure 10,000 cameras. Because this number is sufficiently large, probability and statistics tells us that at 10% probability of loss, there will be almost exactly 1,000 claims/yr – $70,000 that they have to pay out. And it will be the same the next year and the year after that and the year after that. That is still $700/camera insured per year, but they know that is it for every year. A rational camera user seeking financial protection from loss who did the math in the previous paragraph would be willing to pay more than $700 / yr for protection because he is uncertain of what his actual loss will be.

The point is that if you have a savings account as your insurance you can do nothing about the uncertainty of being unlucky. You may have no losses in a 10 year period ($0 exposure) or you might have 3 or 4 ($21,000 - $28,000)… and luck does play into it.

The insurance company, on the other hand… because they are managing risk on a large portfolio, they can virtually eliminate uncertainty and better quantify the actual risk (is it 10% or 9%?), making them much, much more efficient than you and your savings account. Thus, they can provide ‘financial’ protection much cheaper than you and your savings account.

Now, they still charge money for the service and we each have to decide how careful or lucky we think we are and is it worth it. But it is a mathematical fact that they can provide financial protection more efficiently… Just because one likes to gamble doesn’t make him efficient.

 

Hi and thanks for patience

 

First, you need to take into account if the insurance company are paying out a depreciated value or not. IME most do.

 

So to your example. You loose your $7000 camera after 3 years, what is insurance company refunding you in net value?

 

If you save $700 each year and loose your camera after 7 ear you will have $4900. Your $7000 camera will after 7 year be worth at best $1400? and the insurance will pay you that amount less the deductible amount (if any).

 

"Let’s say they insure 10,000 cameras. Because this number is sufficiently large, probability and statistics tells us that at 10% probability of loss, there will be almost exactly 1,000 claims/yr – $70,000 that they have to pay out.".

-> This means that they will have to charge you much more than $700/year to cover their profit and overhead. If you pay less this means either that the chances are lower than your example or that the insurance company reduce their payments somehow. Both these means that you will be better off for the savings case.

 

IMO you are partly correct in "they can provide financial protection more efficiently" since they can divide the OH on several customers, as I will have to bear the full cost myself of handling my own costs of establishing the financial protection. However I wont have to pay for their profits and salaries, and secondly my experiences is that claiming insurance is a tedious and time consuming process that eats up the so called free lunch. The life is to short to spend my time on insurance companies so that they can profit.

 

Sorry, we will have to politely disagree on this. I'm the one who don't want to gamble against myself by using insurance for my M9 . This doesn't mean I disrespect others that chooses different, its just my choice based on my limited understanding of financial & banking industry that might be wrong. Anyhow we will both sleep well in our knowledge

 

A merry Christmas!

[Bill W]

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Anyone purchasing a rider or separate policy for their gear should read the contract. Where I live and this can vary, if I schedule my equipment for a specific amount then my insurance company agrees that this is what my coverage is regardless of depreciation at the time of loss. It is called agreed value. You need to make sure you update the value of each lens or camera body. If I do not schedule my gear and just hope I have enough contents coverage on my home to cover any loss, I must first absorb a deductible and then my lens or camera body will be covered for replacement cost at the time of loss. I must replace the item or then they will only pay the actual cash value (replacement less depreciation). Hope this makes sense.

[kdriceman]

Hi and thanks for patience

 

First, you need to take into account if the insurance company are paying out a depreciated value or not. IME most do.

 

So to your example. You loose your $7000 camera after 3 years, what is insurance company refunding you in net value?

 

If you save $700 each year and loose your camera after 7 ear you will have $4900. Your $7000 camera will after 7 year be worth at best $1400? and the insurance will pay you that amount less the deductible amount (if any).

 

"Let’s say they insure 10,000 cameras. Because this number is sufficiently large, probability and statistics tells us that at 10% probability of loss, there will be almost exactly 1,000 claims/yr – $70,000 that they have to pay out.".

-> This means that they will have to charge you much more than $700/year to cover their profit and overhead. If you pay less this means either that the chances are lower than your example or that the insurance company reduce their payments somehow. Both these means that you will be better off for the savings case.

 

IMO you are partly correct in "they can provide financial protection more efficiently" since they can divide the OH on several customers, as I will have to bear the full cost myself of handling my own costs of establishing the financial protection. However I wont have to pay for their profits and salaries, and secondly my experiences is that claiming insurance is a tedious and time consuming process that eats up the so called free lunch. The life is to short to spend my time on insurance companies so that they can profit.

 

Sorry, we will have to politely disagree on this. I'm the one who don't want to gamble against myself by using insurance for my M9 . This doesn't mean I disrespect others that chooses different, its just my choice based on my limited understanding of financial & banking industry that might be wrong. Anyhow we will both sleep well in our knowledge

 

A merry Christmas!

 

Ok. We can politely disagree. This is a photography forum and not a financial services forum after all. Have a Merry Christmas.

[Jeff S]

However I wont have to pay for their profits and salaries, and secondly my experiences is that claiming insurance is a tedious and time consuming process that eats up the so called free lunch.

 

There never is a free lunch, but I think you need to try better insurance companies. I've never had a problem with a claim...home, auto, special items, or otherwise...over decades. Every business tries to make a profit (or at least cover expenses); using your logic, people wouldn't shop anywhere. It's all about your value equation.

 

I hope the OP got what he needs, despite this diversion.

 

Jeff