Have you ever asked yourself, what will most affect my grand children’s ability to go boating and enjoy what I’ve been able to enjoy? Will it be the escalating cost of boats and boat yard rates? Will it be environmental issues or government regulation? Will it be the ever rising insurance premiums or gas prices?
It will probably be a combination of all of the above. Do we really care, or do we maintain the mind set of what can I do about any of this anyway? I don’t have any grandchildren, but I hope my daughter will be able to experience some of the wonders my wife and I have experienced while cruising, if she so desires.
The section of the industry I’ve been involved with for the last 28 years has a great deal to do with the future of boating. A large portion of my business involves being an independent set of eyes and ears for marine insurance companies when a claim occurs. Here’s how it goes. A boat owner purchase a boat. He or she has a survey performed to discover the condition and value of the vessel. The new owner retains an agent to assist him or her in obtaining a policy to insure this new toy. The survey report gets hopefully reviewed by boat savvy underwriter and a policy is issued or declined based on the information contained in the survey.
Sounds simple, but as my old papa used to say, “Son, life is like crawling through a barrel of fish hooks naked, one must be careful”.
When a claim is made against a policy, the claims department of the insurance company usually assigns a claims adjuster or a surveyor to inspect the vessel. Their job descriptions may vary a bit, but they should report how much damage has been done, what the cost to repair should be, and most importantly, what caused the loss. The good news is that if the boat owner made a mistake, let’s say, ran over a granite jetty or got a bit too far out of the channel and ran aground causing damages, no big deal, the boat owner should be covered. Doing dumb stuff like colliding with four other vessels while making a docking maneuver should be covered and hopefully the lesson learned will be faster coming than the shame is leaving. Basically, you can do lots of stupid stuff if no gross negligence is involved. Where the fish hooks start to appear is if the loss is directly related to such things as lack of maintenance, wear and tear, corrosion, vermin, etc., don’t worry about an exclusion due to nuclear war because if that one is applied, you probably won’t be around to make a claim. I tell all my clients to go directly to the exclusion portion of the policy when he or she receives it in the mail. Read it carefully to see what you aren’t covered for, If you don’t understand it, call your agent and get an interpretation you understand. This contract is a good faith contract; you do your part and they should do theirs. If you have a loss, report it promptly don’t get your boat fixed and then file a claim because you might get a Reservation of Rights letter saying tough luck, you didn’t allow us to determine what caused the loss, and the broken pieces have already gone to the local land fill.
I’m trying to get to your grandchildren but I wanted to lay the keel first.
Lots of times, and I mean lots of times when I get to a loss, I’m wondering why this vessel ever had a policy issued in the first place. The answer is simple, when you mix money with greed what you get is probably the strongest and most driving factor in the boating industry, the bottom line. Whose bottom line are we talking about. Well, there are lots of players, surveyors, brokers, insurance agents, lending institutions, and underwriters. We all get a slice of your pie. The surveyor gets a fee for inspecting the boat, the broker gets a sales commission, the insurance agent gets a slice for placing coverage, the lender gets a slice for helping procure a loan, and the underwriter gets to sell you a policy with annual premiums.
In a perfect world, you get an honest and thorough survey. Your broker usually gets an agreed upon commission with maybe some adjustments depending on how the boat surveyed and what needs to be fixed. Your lender gets you the best interest rate. The agent finds the best underwriter for your particular boat and intended usage. The underwriter issues a policy that gives you good coverage with not a lot of hard to interpret legal mumbo jumbo, and away you go casting off our lines for fun and sun and trouble free boating.
Here are the fish hooks lined up on the bait station waiting to snag the unwary boater:
#1 Maybe your worst enemy is the surveyor. He or she could have a host of flaws such as being in the brokers pocket. He or she may actually be unqualified even though belonging to a recognized survey organization. Issuing reports that guarantee a sale but don’t tell you a damn thing about the vessels real condition. Lots of surveyors will write whatever some one needs written for a fee. Facts be damned. These reports are usually brief and read like a sales listing. Surveying in my life time has gone from a few good men to a large industry. These brief and scant surveys are preferred because its easier to sell a smelly fish if you mask the smell or have a bad sniffer. Lots of surveyors are seen with the same broker on a regular basis because they know what the broker needs and are happy to supply the verbiage designed to launch the deal. The insurance agents have an easier job placing a policy if the wreck of the Hesperus looks like the Queen Mary. The same goes for the underwriter who often don’t even take the time to see if this 1980 vessel which was valued at 130 m on the survey is listed in BUC, NADA, Power boat Guide or ABOS as being worth 50 m in really good condition on average.
When you file a claim, the insurance company sends out a surveyor or claims adjuster. He or she often takes the easy path and writes up their assessment of cause of loss so it is a covered loss when he or she knows it really wasn’t. So the loss that really wasn’t covered now is, to relieve the claim’s handlers grief. Guess who gets to pay for these acts of what really amounts to fraud against the policy pool. Why you, of course.
I am sad to say there are companies who hire people to write damage reports who come up with some mighty creative ways to denying a claim and some who interject some interesting language so all claims are covered. These people should to jail for fraud or boat owners should take responsibility for the proper care and maintenance of their vessels and not depend on a settlement check to cover their lack of maintenance and due diligence.
So what about our grand babies, What can we do for them? #1 Hire a known experienced and qualified surveyor. There are still some left but their numbers are declining. If you discover you have bought a pig in a poke, make noise, write letters to the organization who said their man or woman was qualified. If you are an agent, don’t let your desire to place coverage on every vessel in the world blind you to the truth about the vessel. More business maybe hurting us all by increasing all insureds collective risk. Same goes for underwriters at least take the time to compare stated survey values with the many available price guides. If an over 20 year old boat has no deficiencies in the report, it must have been kept in an environmentally controlled storage facility well away from any body of water. Lets all ask ourselves the question did I have breakfast this morning. Do I have shelter, didn’t I drive to work this morning in a car. Are we all really supposed to be millionaires. Does anyone get to take stacked dollars past the grave, are we really doing our jobs or is our mantra he who dies with the most toys or money wins.
We live in a wonderful country and enjoy lots of freedoms and maybe just maybe doing our little jobs the right way will protect our grand babies.
©Neil K. Haynes March 2008