Have you ever noticed how life goes around in circles? We usually get here bald and broke and many of us go out the same way.
I would like to opine on how the marine insurance circle goes around. We’ll start at north and use the boat owner as the north star. He or she wants some insurance coverage. We now navigate east to the agent who steers you south to the underwriter who in turn requires the western involvement of the surveyor who helps complete the circumnavigation of the entire voyage. Hopefully, the 0° position gets to the right 90° agent who in turn gives you sailing directions to the 180° underwriter who in turn gets you to 270° surveyor and you eventually land back at your departure point with no hard groundings.
If you preplan your course and lay out your way points, taking into consideration the hazards to navigation, you may have to make some minor course adjustments, but will eventually reach a safe anchorage. Shipmate be advised that agents are high up in the food chain and whales provide more food than minnows and the underwriters can be distracted by elevated values because premiums are based on agreed value. What you want is a real value for the boat, and let me tell you why. The biggest problems a boat owner or an underwriter can encounter are fantasy values. Insurance after all is just a form of legalized gambling and sometimes when something goes south the odds suddenly get bad. When a vessel is overvalued, things may go okay until a loss occurs. When a loss occurs, a strong bright light shines on the risk and things get looked at through a microscope. The biblical advice of nothing’s hidden that won’t be found applies here. As long as we swim in schools, we’re pretty safe, but become crippled and unable to blend in, we suddenly stand out like a red-headed cousin. I don’t want to flog a dead horse, but get real, just because you gold plated the gear shift on your VW bug does not make it a Lamborghini. A hog is a hog is a hog. How do I know this; from the school of hard knocks. If you are going to be dumb, you got to be tough. One of the worst claims I ever handled was a 50′ auxiliary sailing vessel in St. Thomas after Hurricane Hugo. It had a fantasy value that mysteriously fell through an underwriting crack. Unfortunately, fantasy values are generated by Surveyors who don’t adhere to acceptable valuation procedures and ethical methods. When a vessel gets overvalued and a loss occurs, the policy holders who have real values on their vessels end up paying the difference for the fantasy vessels. The owner believed the vessel was totaled, but because the policy value was twice the boat’s worth, it could be fixed with the excessive agreed insured value. We obtained two reasonable repair bids, and the insured refused to repair his vessel and sued the insurance company. Over a year later, the judge banged the hammer down and the claim was paid on the higher bid. Meanwhile the vessel had accrued quite a sizeable storage charge because the owner fell dumb and would not repair his vessel. The judge informed him the parking meter fees were on him because the underwriter was more than willing to make him whole.
He had also refused to take any preservation steps to his vessel, and some locals had been using his vessel as a crash pad. He now has a huge storage bill, a wreck of a boat, and a settlement check in hand with no hallelujah chorus to be heard.
This was a bad case, but anytime values are unreal and things do happen, the course of things is usually south. We all pay into the insurance pot, and it’s designed to indemnify your loss, not make you rich. Don’t fall into the overvalue trap and remember, the Lord still loves boaters, dumb or smart.
Neil K. Haynes August 2003