Insurance Scam?

[Capn Bri]

I am trying to find out if this is how it works?

We recently experienced some fairly sever damage on one of our boats from a lightening strike. After most of the estimates were in we found that the total cost of repair would significantly exceed our insurance deductible and so we contacted our insurance agent and requested guidance on how to proceed to make a claim.

This is where it started to get weird.

The long and short of it is, we were told to order whatever repairs we needed and to send a receipt showing that we had paid up through our deductible. After that the adjuster said to go ahead and continue to pay for repairs and that our insurers would then reimburse our expenditures for the post-deductible amount.

This seems very strange to me. I have had to make a few auto-insurance claims in my life. But I have never had to make a marine insurance claim. It seems strange to me that we have to pay out of our own pocket first and then find out later if our insurance company will really fulfill their obligation to cover those expenses.

We maxed out our American Express card on the deductible. We had to order a new credit card to pay in advance for the next 1/3 of repairs and we will run that card close to dry in the process. We are not sure yet how to pay in advance for the final 1/3 of the necessary repairs.

Is this procedure normal? Does marine insurance operate by having the customer pay up first and then reimburse them?

[nightowle]

This does not sound usual to me. Different carriers work differently in terms of when a payment is made. But it all usually starts with an approved surveyor/adjuster arranged by the insurance company. Assuming your boat is in a vendor's yard the adjuster tells the yard to work up a quote for repairs. The insurance carrier may pay you upfront less the deductible to go ahead and make the repairs. Other companies like Boat US/Geico authorize the yard to go ahead with the repairs keeping tab of the costs as the project proceeds. At the end, if there is no disagreement with the costs by the adjuster, the carrier sends you a check to in turn pay the yard. Beyond only speaking to an agent, have opened a claim with your carrier yet? Did they ever send an adjuster or surveyor? Hope this helps.

[Reefmagnet]

You're not insured with Edward William / Northern Reef by chance?

[Paul L]

Originally Posted by Reefmagnet

You're not insured with Edward William / Northern Reef by chance?

That's the first thing that came to my mind when I read the title.

[Sailmonkey]

In the commercial marine world this is how insurance works.
The purpose of insurance is to make you whole again, not to take over the business of operating and repairing your vessel.

[S/V Illusion]

What does your insurance policy state regarding claims processing? The process they follow shouldn’t be a mystery.

[JimsCAL]

I recently had an insurance claim for being hit on my mooring by another boat that broke loose from its mooring. Adjuster looked at boat, prepared estimate, and sent check last fall, months before work began this spring. When my contractor had some additional work that was not in the insurance estimate, they came up with an additional payment to cover the work. So I was never paying with my money, always theirs.

This does not smell right.

[Capn Bri]

Originally Posted by Reefmagnet

You're not insured with Edward William / Northern Reef by chance?

No. YachtInsure (UK) through Alliance Marine Risk in Ft. Lauderdale.

Thanks

[Capn Bri]

Originally Posted by nightowle

This does not sound usual to me. Different carriers work differently in terms of when a payment is made. But it all usually starts with an approved surveyor/adjuster arranged by the insurance company. Assuming your boat is in a vendor's yard the adjuster tells the yard to work up a quote for repairs. The insurance carrier may pay you upfront less the deductible to go ahead and make the repairs. Other companies like Boat US/Geico authorize the yard to go ahead with the repairs keeping tab of the costs as the project proceeds. At the end, if there is no disagreement with the costs by the adjuster, the carrier sends you a check to in turn pay the yard. Beyond only speaking to an agent, have opened a claim with your carrier yet? Did they ever send an adjuster or surveyor? Hope this helps.

Thanks skipper!

We have an unusual circumstance in that we are stranded in a marina with all of our electronics destroyed. We also appear to have hull damage, though water is not entering the bilges.

We have to get to a yard about 100 miles away to haul out so that the surveyor can assess the damage (if any) to the hull. But to do that we have to get our electronics fixed. But the insurance company does not want to send a surveyor until we get to the yard. We are stuck in sort of a catch 22, which might be the reason for the unusual treatment.

I also have not received anything directly from the insurance company, like a claim number or some other official communication showing that they have received our claim. The claims adjuster (the Matthews Daniel company in the UK) assures me that one is forthcoming. But so far ...nothing.

At this point we are tens of thousands of dollars out of pocket and running out of money in a $500/week marina, the only one we could get to after the strike.

[Bycrick]

I’ve been struck twice by lightning. I’ve also worked to help repair several other boats in the same circumstances. In every case, the repairs were paid for out-of-pocket by the boat owner. Weekly progress reports were sent to the insurance company. When the repairs were completed, the owner was reimbursed, in full and in all cases, within 10 days of submitting the original invoices, without a single question.

My insurance policy says that they will “reimburse me for covered losses.” That doesn’t mean they will pay up-front to buy new equipment or have the work done.

[boatman61]

Originally Posted by Capn Bri

Thanks skipper!

We have an unusual circumstance in that we are stranded in a marina with all of our electronics destroyed. We also appear to have hull damage, though water is not entering the bilges.

We have to get to a yard about 100 miles away to haul out so that the surveyor can assess the damage (if any) to the hull. But to do that we have to get our electronics fixed. But the insurance company does not want to send a surveyor until we get to the yard. We are stuck in sort of a catch 22, which might be the reason for the unusual treatment.

I also have not received anything directly from the insurance company, like a claim number or some other official communication showing that they have received our claim. The claims adjuster (the Matthews Daniel company in the UK) assures me that one is forthcoming. But so far ...nothing.

At this point we are tens of thousands of dollars out of pocket and running out of money in a $500/week marina, the only one we could get to after the strike.

Sorry but I do not understand why you need your electronics to motor 100miles to a yard.. a simple laptop and gps puck with OpenCPN should be enough if chartwork is needed.
Where are you that its 100nm to the nearest lift out?

[BenBowSirocco]

Or a borrowed chart and a compass. Its less than a day away and I am sure you know how fast you usually motor at cruising RPM.

You have a smart phone, download a free app and buy a $20 portable battery- gps included.

[skipmac]

I also don't understand the need for electronics to go 100 miles. When I first starting cruising I sailed a few thousand miles with no electronics but a VHF radio and a fathometer and even that isn't necessary. When my fathometer failed just before departure and the guaranteed compatible replacement wasn't I did the ICW with just a homemade lead line.

[Shrew]

In my experience, the marine insurance works the same as automobile insurance.

1) Survey of damage and repair costs in writing from a professional
2) Insurance cuts check minus deductible.
3) Owner arranges for repairs.

In the original post, there is no survey. Therefore the only way the insurance company will pay out is through documentation (in this case receipts).

[sailorboy1]

Friend of mine had a "near" lighting hit a year ago. The insurance company approved the estimate from the yard before work started, he didn't pay out of pocket during the repair.