Burnt-Out Ship Carrying 4,000 Vehicles Sinks, Costing VW At Least $155 Million (autonews.com) 93
McGruber shares a report from AutoNews: The cargo ship that caught fire in the Atlantic while transporting roughly 4,000 Volkswagen Group vehicles to the U.S. has sunk despite efforts to tow it to safety. The Felicity Ace sank 220 nautical miles off the coast of Portugal's Azores Islands around 9 a.m. local time on Tuesday after being battered by waves and leaning 45 degrees to its starboard side, the ship's operator said. Joao Mendes Cabecas, the captain of the nearest port on the island of Faial, told Reuters the Panama-flagged Felicity Ace had sunk as efforts to tow it began due to structural problems caused by the fire and rough seas.
Volkswagen had VW, Porsche, Audi, Bentley and Lamborghini-branded models on the vessel, which was on its way to Rhode Island from Germany's Emden port when the fire broke out on Feb. 16. [...] In a projection assuming all vehicles would be lost, the risk-modeling company Russell Group last week estimated that the incident could cost the automaker at least $155 million. About $438 million worth of goods were aboard the ship, $401 million of which were cars.
Volkswagen had VW, Porsche, Audi, Bentley and Lamborghini-branded models on the vessel, which was on its way to Rhode Island from Germany's Emden port when the fire broke out on Feb. 16. [...] In a projection assuming all vehicles would be lost, the risk-modeling company Russell Group last week estimated that the incident could cost the automaker at least $155 million. About $438 million worth of goods were aboard the ship, $401 million of which were cars.
Not as well insured as I would have thought (Score:2)
Caveat that I don't know anything about maritime insurance, I would have thought prior to this article that almost all of the risk would have been insured. Which seems to also be what VW said in the article. So I'm confused about this headline.
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Most large corporations self-insure*. VW is very large.
*Once a company reaches a certain size, insurance premiums would be more than the anticipated losses in a given time period. The company is a large enough risk pool in-and-of-itself to average out the losses. It becomes cheaper to simply plan for a certain amount of loss each year. It is only a problem when a loss is significantly larger than anticipated.
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The article says that there were about 400 million dollars in cars on board (and 37 million in other stuff); I would guess the 155 million is their deductible or something along those lines?
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Although come to think of it, what they're worth and what they cost VW are not the same thing... but 245M would be a hell of a profit margin. Some of that cost has to be on someone else, surely?
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These are VW cars we're talking about. I don't think anything valuable was actually lost in this incident, except maybe the ship and the captain's stationery.
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I know this is a troll, but you’ve clearly never driven a VW compared to that US-made crap.
Aside from that, Porsche and Audi are relatively high-end, and both Bentley and Lamborghini start getting up there in price.
Re: Not as well insured as I would have thought (Score:2)
Actually the cars I own are all Japanese. And they actually last. The only thing VW is really good at is emissions cheating. They did get away with it for about a decade, which admittedly is impressive. But just because a car has a high price tag doesn't necessarily mean it's good. When I used to be around mechanics a lot, they referred to Porsche as Nazi go-karts because they were built like shit.
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They own an insurance company (Score:2)
An insurance company stands to make a nice profit selling hundres of millions of dollars of insurance.
There's an insurance company called Volkswagen Insurance DAC. They'd love to sell a few hundred million dollar policy. It's operated as a part of Volkswagen Financial Services.
If you owned an insurance company, do you think you might buy your homeowner's insurance from them, and take the profit on the sale? Yeah, me too.
Seeing that Volkswagen owns Volkswagen Insurance DAC, it makes sense for them to buy f
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Yeah, except that Volkswagen Insurance DAC has like 28 employees, all in Dublin.
There are quite a few small offices (in terms of employees) that manage a tremendous amount of assets.
And Ireland is/was a well-known tax haven for multinational corporations. So I wouldn't assume the company is small or poorly funded just because it has a small headquarters there.
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Hailstorm damage is relatively common (though it affects a relatively small number of cars). You might have seen orange VW cars driving around - those are usually "hailstorm damaged" and fixed by VW, but apparently can no longer be sold as "new".
Flooding damage is much less common.
There are smaller car components companies going out of business, which means new contracts must be negotiated - usually at a loss compared to the original contract.
I don't know how the "Dieselgate" losses were solved - via insura
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I don't know how the "Dieselgate" losses were solved - via insurance or not.
Most likely not insurance. You can not insure yourself against the consequences of committing a crime.
Re: They own an insurance company (Score:2)
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You don't have to be very big to self-insure - you can often do a lot of self-insuring stuff yourself. For example - we never do shipping insurance because
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You don't have to be very big to self-insure
I self-insure my vehicle, home, and life.
I have never bought more than the legally required minimum liability car insurance. If my vehicle is damaged, it is an out-of-pocket expense to me, but I have come out way ahead over the years.
Most of my home value is in the land. So even it burns down, I can rebuild for far less than it is worth. I have gone without homeowners insurance for 20 years. During that time, not a single house has burned down in my community of 200 homes.
I have never bought life insura
Re: Not as well insured as I would have thought (Score:2)
Liability insurance has little to do with your vehicle getting damaged. It may come into play if you hit someone and they sustain injuries, a guest falls in your house, etc.
Sure, you come out way ahead by having the minimum, unless some day, the risk shows up. And if it does, it could cost millions more than all the premiums you ever saved.
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Liability insurance has little to do with your vehicle getting damaged. It may come into play if you hit someone and they sustain injuries, a guest falls in your house, etc.
It is clear that the OP is aware of that. He said he buys the legally required minimum liability car insurance. That minumum is to pay for 3rd party claims (in the UK anyway). I do the same more-or-less except that if you only buy the legally required minimum they assume you are a disreputable person and the premium is almost as much as for comprehensive insurance - which any "safe, staid, middle-class person" is assumed to choose.
Sure, you come out way ahead by having the minimum, unless some day, the risk shows up. And if it does, it could cost millions more than all the premiums you ever saved.
Millions? I could replace my entire car, like-for-like, for about £
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except that if you only buy the legally required minimum they assume you are a disreputable person and the premium is almost as much as for comprehensive insurance - which any "safe, staid, middle-class person" is assumed to choose.
That might be a UK thing. At least in my experience, you need the "comprehensive" insurance for a new car as a condition of the financing loan, especially with how much value the typical vehicle loses in the first few years. Once your car loan is paid off, there's no one to care. Your main cost becomes out-of-warranty mechanical repairs that insurance doesn't cover, not the chance that you wreck your car with thirty thousand left on a loan.
The legally required minimum insurance is for someone damaged by yo
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That might be a UK thing. At least in my experience, you need the "comprehensive" insurance for a new car as a condition of the financing loan, especially with how much value the typical vehicle loses in the first few years.
From my understanding, that's a very US mentality. In much of the world, it's not safe to assume someone is going to take on a load of debt to purchase a vehicle.
Personally hoping to be able to put more than half down on my next vehicle, but the way my savings has been going and my 11 year old, 180k mile car, I might not be able to make it.
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From my understanding, that's a very US mentality. In much of the world, it's not safe to assume someone is going to take on a load of debt to purchase a vehicle.
The requirement for comprehensive insurance comes from the bank.
In countries where debt is less commonplace, I would assume that people who take large loans are even riskier than US debtors. Thus, there's an even bigger incentive to compel those debtors to insure the collateral for their loans.
Or perhaps those foreign banks have other legal remedies that render insurance moot.
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My point was, in my understanding, in most of the first world, you don't take a loan for a car. Period.
I know it was an issue for a lot of US organizations trying to enter the Chinese marketplace that they kept trying to force loans, when their culture basically avoids them.
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Actually on some states allow it:
https://www.caranddriver.com/c... [caranddriver.com]
Yeah, I own a lot of older cars and motorcycles and carry li
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If you are in the USA and you have any assets you would like to protect (eg. a house), you are taking a huge risk. A minor fender-bender could cost you 1/2 Million dollars.
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A minor fender-bender could cost you 1/2 Million dollars.
Not buying a lottery ticket can also cost you 1/2 Million dollars.
That doesn't make lottery tickets wise investments.
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A: I have 1/4 million dollars and if something of low probability happens I could end up 1/4 million dollars in debt. Should I spend money to guard against that?
B: If something of low probability happens I could end up richer by 1/2 million dollars. Should I spend money to increase that infinitesimal probability?
It's wise to say no to B but it doesn't seem like you can draw conclusions about A from that.
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Could be worth looking at more comprehensive car insurance options. I find that comprehensive cover is often within a few bucks of the minimum cover option, or sometimes even cheaper.
The general rule of thumb is that it's worth having insurance if you can't afford the loss. If you can afford to rebuild your house (and possibly other houses if they are destroyed by your negligence) without too much financial pain then maybe skip it, but for most people the rebuild cost would be crippling or unaffordable. Hom
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I find that comprehensive cover is often within a few bucks of the minimum cover option, or sometimes even cheaper.
IME in the US comp+collision brings you up to around double the cost of basic liability insurance. But the costs are amazingly uneven. For example it costs me less to get comp+collision with USD 5M in coverage for our bus to RV conversion (which weighs ten tons!) than it does to get liability coverage for my pickup truck. Literally. And I don't need any special license to drive the RV either, California lets us drive literally any RV up to 40' bumper to bumper on our basic license no matter how much it weig
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Most of my home value is in the land. So even it burns down, I can rebuild for far less than it is worth. I have gone without homeowners insurance for 20 years. During that time, not a single house has burned down in my community of 200 homes.
If you live in the US, are you also prepared to pay a couple million dollars if someone gets hurt in your home?
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If you live in the US, are you also prepared to pay a couple million dollars if someone gets hurt in your home?
I don't have visitors.
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Most of my home value is in the land. So even it burns down, I can rebuild for far less than it is worth. I have gone without homeowners insurance for 20 years.
Home insurance is based around the value of the house as a building and the cost of re-building it. The value of the land does not come into it - even insurance companies realise that the land area cannot vanish.
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No, the value of the cars was about $400M, of which VW is on the hook for about $155M. (Almost 3800 cars, with an average value of a bit over $100k each.)
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Wow, I just found out that VW owns Porsche. I can't think of a more appropriate pairing.
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Porsche designed the VW Beetle.
(Under Hitler - it's a Nazi car)
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That explains a lot/
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"Wow, I just found out that VW owns Porsche"
In Federal Germany, Porsche almost owned Volkswagen
Let me fix it for you ... (Score:2)
Re: Let me fix it for you ... (Score:2)
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That's kind of their business model.
Important Missing Fact for the Summary (Score:3)
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And how many fish get to have a Lambo as an artificial reef?
The Felicity Ace is over 3km down. At that depth there are no reefs and the the only sea creatures in that permanent dark are weird nightmare-fish.
It sure as heck ain't Nemo and Dory.
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Yeah, hundreds of millions of dollars of cars were lost forever to the sea
The cars were lost in a fire at sea. The fact that the burned-up remains of the cars sunk along with the boat is pretty much academic.
Re-insurer, not insurer (Score:2)
Few insurers accept 100% of the risk for a single event greater than $50 million. The whole point of insurance is to spread out the risk, the insurarer is not going to take all $155 million of risk.
Most likely this cost VW a deductible, (less than 1%), an insurer a large portion (perhaps a third) - but less than 1/2, and a re-insurance company the rest.
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Oooh, that makes sense. The overall value of the cars was 400M; 155M would be a sensible amount for a primary insurer, and if VW self-insured that, it would explain why they're reportedly on the hook for that much.
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As others have said, it's likely VW self-insures. There is no insurance company to pay.
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VW is basically a German company, so it is most likely _not_ self insured.
Self insuring only makes sense in the USA.
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Why would self-insuring make sense in the USA, but not in Germany?
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Because in the US insurance rates are absurd high, and the insurance always tries to weasel itself out of paying.
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This isn't consumer insurance.
A big company like VW can buy insurance on international markets at international rates, even in the USA. Remember this is shipping, which by its nature is international.
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A big company like VW can buy insurance on international markets at international rates,
And that is what they are most likely doing. No big corporation in Europe is running around without insurance, just because "they are big". No one would let them.
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So your are saying that it is regulations in Europe, or perhaps shareholder pressure on European companies that requires the insurance and that there isn't a cost differential to explain why a US company would self-insure?
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Self insurance makes sense throughout the world, for those that are well off. In fact, NO ONE should ever buy insurance for something that unless the potential pay out would be more than your cash balance in the bank.
Let's say you are a millionaire. You have $3 million in the bank, with $300k in cash. (about the minimum you need to never work again.) You own a luxury car that costs less than $300k, so you could easily cover a total loss. Why pay the insurance company when the worst that happens is it us
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It is pretty obvious that this does not work.
The insurance would just be a tiny fraction of the amount of money you have to put into your "insurance account" to replace a 300k car.
The insurance is perhaps 3,000 a year. So you have to save 100 years to get a car back ... when you self insure, that is idiotic.
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The whole point of insurance is to spread out the risk, the insurarer is not going to take all $155 million of risk.
For that you have second level insurances, which sell insurances to standard insurance companies. E.g. https://www.munichre.com/en.ht... [munichre.com]
FH6 (Score:3)
The next Forza Horizon will be at the bottom of the ocean.
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The gameplay is fire.
pollution (Score:2)
VW is all about pollution, in the air, in the sea, no space untouched. They are probably over-insured and planned this, given their history.
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VW is all about pollution, in the air, in the sea
What pollution? The ocean already has 230 billion tonnes of lithium, and plenty of iron, aluminum, cobalt, etc.
The only significant pollution is the bunker fuel for the ship, and that didn't belong to VW.
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Nope. Those vehicles certainly didn't have anything like gasoline, oil, transmission fluid, or power steering fluid inside...
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Nope. Those vehicles certainly didn't have anything like gasoline, oil, transmission fluid, or power steering fluid inside...
Oops. My bad. Some of the cars were EVs and I misread that they were all EVs.
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They put a minimum amount of gasoline inside each car transported by ship, enough to park it in the ship, then drive it off. It's not just for safety, it's also because of the cost. I've heard that sometimes people actually have to bring a gallon of gasoline when they come to pick up their delivery at the port.
The real question is the battery charge on the EVs. Apparently a ~30% charge is significantly less dangerous than a full charge. The extra energy is what causes the full-on "venting with flame". That
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It's much easier to get the cars on and off the ship and move them around the yard when you can drive them. They put a minimum amount of gasoline in them, but if they are starting and driving them around they need to have oil and their other fluids filled.
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Plastics, foams, rubber, oil, and more. Yep, you're right the ocean is full that stuff.
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They didn't plan it, but some low-level engineer will be blamed for it anyway.
Coming to your garage soon (Score:2)
Peanuts (Score:2)
VW is used to pay billions of fines for fraud, this is nothing, you'll just pay more for your next car.
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Nope.
If you buy one of those cars, you'll have a hell of a time locating your burned out car remains inside a ship at 3km depth.
Don't get scammed this way.
but straws are the real issue (Score:2)
Yeah, but is the fire out yet? (Score:1)
hmm let it sink (Score:2)
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James Cameron (Score:1)
list (Score:2)
List is a word commonly used to describe a "leaning" ship.
How deep is the ocean where it went down? (Score:2)
It'd be kind of interesting to know what the impacts are at that depth. I'd guess most everything that's a "container" at the depth has been crushed.