Does insurance really not pay up?

[boating4ever]

insurance policies are hardly ever apples to apples. you have to read the policies. there are high end "all risk" policies that cover pretty much everything and other lower-end "named" polices that cover named perils. some times there are endorsements that can be added. i recently shopped nearly two dozen policies for a yacht and found they varied so much. out of nearly two dozen, only two policies were good after reading the full policy text. thats quite a few less than stellar policies, just based on the text, which sets aside price of the policies as well as the strength of the company, as well as their claims paid history. luckily the two decent policies were from rock solid companies that dont seem to have issues paying claims. always do your homework, fully read your policy, and be sure to understand it. there should be little to no guessing whether something will be covered.

[sailorboy1]

Originally Posted by sailorboy1

well so far on this after all the blah blah blah it looks insurance companies DO pay claims

well I am going to find out

for me it will be my first and I suspect the last

[lornolsen]

I had a 60' Nautical that I took to Ft Lauderdale to sell. I left it, docked, for 1 day. The cooling water">engine cooling water intake hose broke and the boat sunk. It was only in 6' of water but it did $300,000 worth of damage. The insurance company, Markel America located in Pewaukee, Wi, denied the claim and sued me in Mi where I live. I got the insurance thru an Annapolis broker. I counter sued and won. The lawsuit took 3 years.

They claimed poor maintenance but the judge disagreed.

Make sure that you pick an insurance company that has a decent reputation.

I had another insurance company's president lie in court under oath to save $10.000,000. It seems that it is ok to lie in civil proceedings.

Pay attention to your insurance company's reputation and not just the price, when considering which one to go with.

[DShant]

I have to chime in here even though I have almost zero experience with claims. As some of you may know insuring older boats is getting more and more difficult especially if that boat is larger.
For boats over 80 feet most carriers discussed here won’t play and for boats over 100 feet and older than 20 or 30 years there is only one carrier in North America and that is Concept Special Risks

They are a spin off of former Lloyd’s marine group that was closed years ago due to heavy losses. Since then they have morphed several times into new companies and were bought out by a private equity group in the US a few years ago. Excuse me for being cynical but I don’t believe a private equity fund has your best interests in mind.

Anyway when getting insurance with them I was astonished with the paucity of cover actually provided and the amount of weasel words. Of course since they are the only provider, there is nothing you can do but suck it up. I asked the insurance broker (the owner of the company with over 40 years experience) about their payment record and he told me confidentially that he had “never heard of them paying a major claim”. They always took the owner to court and found a loophole to get out of paying.

Unfortunately I believe all boat insurance is going this way. With climate change and the resulting extreme weather they will see huge increases in claims. The only thing you will be able to do is minimize your costs by selecting huge deductibles and reduced coverages as you still need these policies for marinas and yards.

The new boat market is not the same, although it will suffer as well.

[skipperpete]

In these times of economic distress, I’d wager that the insurance claims for sunken or burnt boats is on the rise. I have no evidence to support this suggestion but have seen my fair share of suspicious sinkings or fires and false claims for damage from lightning strikes. I have no love for the insurance industry and every time I read about another superyacht sinking in 5,000 metres or a destructive fire on a yacht a few weeks after a survey, I know that the lawyers are well greased and ready to deploy.

[motion]

I have state farm
I was grounded during a hurricane. Vessel was totaled they payed me full coverage. And insured my replacement vessel. No problem. A good company to do business with.
Motion

[sailingharry]

Originally Posted by OneBoatman

I can honestly admit I've never heard of fuel valves not being properly "aligned" as being the cause of losing propulsion. That is what the adjuster stated as the reason for denial? Electric, maybe. Was this an electrical failure of your ignition switch where your fuel shut off valves suddenly closed?

If you are referring to my incident, two comments:

First there was no denial! BoatUS/Geico paid incredibly smoothly!

The fuel alignment issue. In port, I changed my port fuel filter (it had high suction readings, so I had shifted to starboard the day before). Both filter-feed and filter-suction valves were aligned to starboard. I put the new port filter in, then shifted the filter-feed valve to port and used the electric "utility pump" to fill the filter housing. Turned off the pump, put the lid on the filter, called it a day. Note where the filter-feed valve is still pointing.....

The next day, the engine started fine, and ran fine, consuming the fuel in the starboard filter. Since the feed line was set to port, the starboard filter ran dry -- and the engine died (after we were in the main stem of the St Lawrence River with current over 5 knots). After the collision, I realized the error, shifted the filter-feed back to the starboard filter, started the engine, and backed off the wall. Fortunately, the Yanmar 4JH2E does not need to be bled!

Frankly, I'm surprised it had enough fuel to start the engine, back out of the slip, navigate the fairway/marina, and enter the river.

[sv_pelagia]

Unfortunately, we've had 2 separate claims 15-20 years ago (mishaps with a large log... and later a rock). FORTUNATELY, insurance paid fully both times (same broker and underwriter). And no increase in our rates back then.



So yes, I'd say insurance does pay up.

[Icarus]

A couple of years ago severely got damage to the main mast in a knock down of the northern tip of Mindanao in the Philippines.
My yacht is 40 years old and insured with a company in Australia.(Home port)
The insurance company was extremely helpful and paid for the damage and a replacement mast within three month.
No problem whatsoever.

[tsenator]

Just a few examples of "How Maritime Insurance Companies Justify Denying Claims When Boats Sink"

A boat is a significant investment, so owners want to know that their vessel is protected in the event of an accident that results in damage to the hull, motor, cabin or other areas of a boat. While the greatest form of property damage that can be experienced by a boat owner involves a boat sinking, this type of claim is often denied under maritime insurance policies.

Insurance companies routinely assert that exclusions or limitations in coverage preclude payment of claims related to this penultimate type of disaster for boat owners. One of the most common rationales for denying such a claim involves the assertion that the policyholder’s boat was not subject to any “accidental physical loss”. The “fortuity rule” provides that maritime coverage requires proof of an “accident”. This principle of maritime insurance coverage is a longstanding and clearly established rule of federal maritime law.

A case decided by the Southern District of Florida, Great Lakes Reinsurance v. Soveral, provides an example of how this basic rule can impact coverage decisions. The policyholder’s boat was secured to a dock near the insured’s vacation home. The insured did not cover the vessel, so water from rain storms accumulated inside the boat. The constant drain of power from the bilge pump removing the water in the boat caused the boat batteries to fail. When the bilge pump stopped operating due to a lack of power, the boat filled with water and sank.

The insured brought a lawsuit against the maritime carrier for the full value of the policy in the amount of $125,000. The insurance carrier defended by contending that the loss was the result of “seasonable and foreseeable weather condition[s]”. The insurer argued both that the loss was not covered because it was not “accidental” and that the loss was the result of the insured’s failure to exercise due diligence.

With regard to the first defense regarding the loss not being accidental, the court observed that the policy contained specific exclusions for “losses due to wear and tear, gradual deterioration, lack of maintenance, inherent vice, weathering, insects, mold, animal and marine life”. While the court noted that the policy did not specifically define the term “accident”, the above quoted language was sufficient to exclude rain accumulation from failing to cover the boat.

The court noted that an accident means a fortuitous event, which the court further noted referred to unexpected, unforeseen, unavoidable, chance, and unintended events. However, the court also observed that a loss can be accidental even when the insured has been negligent. While the insured had checked the battery two days prior to the boat sinking, the court dismissed the sufficiency of the battery test because the insured merely started the engine. The court found that this was not an adequate way to determine that the battery had enough power to operate the bilge pump in tropical rains over a two day period. The court concluded that the “deterioration of the battery constitutes normal wear and tear and is not fortuitous”.

Water entering an uncovered boat during the rainy season in a tropical setting also was highly foreseeable according to the court. Based on this reasoning, the judge granted summary judgment for the maritime insurance company. The takeaway from this case is that boat owners need to take care of their boat or their maritime carrier may deny coverage based on inadequate maintenance, gradual degradation, or ordinary wear and tear.




https://www.jpgonzalez-sirgo.com/blo...boats-sink.cfm

[sailingharry]

Originally Posted by tsenator

While the insured had checked the battery two days prior to the boat sinking, the court dismissed the sufficiency of the battery test because the insured merely started the engine. The court found that this was not an adequate way to determine that the battery had enough power to operate the bilge pump in tropical rains over a two day period.

Interesting story, and yes you need to be attentive to your boat.


The story commented you can be "negligent" and still have an "accident" -- and indeed, I did. I failed to correctly line up my fuel system, and incurred a $30K accident as a result. I was 100% honest and upfront, and BoatUS paid promptly without question.


But the quote above is interesting. I'm not used to what appears to be incredible amounts of rain. The owner apparently visited his boat, and had enough battery power to start the engine. Two days later, the boat had sunk. That means in 48 hours, enough rain fell to overwhelm the bilge pump/battery (that had at least enough power to run the engine) and then fill enough water to sink the boat. I've seen many dinghies and small boats left alone for weeks/months, that are nearly awash but still floating. I guess if you get 12" of rain in 2 days, it could happen, but I suspect most boats would take 18-20" (or a lot more!) to sink. That's a LOT of rain!


Given that we are talking about incredible amounts of rain, and an owner who diligently (even if arguably inadequately) checked his boat 2 days before the sinking, it is in my mind REAL hard to call it "inexcusable neglect" (not really a quote, my own words).

[ausnp84]

Originally Posted by tsenator

Just a few examples of "How Maritime Insurance Companies Justify Denying Claims When Boats Sink"

A boat is a significant investment, so owners want to know that their vessel is protected in the event of an accident that results in damage to the hull, motor, cabin or other areas of a boat. While the greatest form of property damage that can be experienced by a boat owner involves a boat sinking, this type of claim is often denied under maritime insurance policies.

Insurance companies routinely assert that exclusions or limitations in coverage preclude payment of claims related to this penultimate type of disaster for boat owners. One of the most common rationales for denying such a claim involves the assertion that the policyholder’s boat was not subject to any “accidental physical loss”. The “fortuity rule” provides that maritime coverage requires proof of an “accident”. This principle of maritime insurance coverage is a longstanding and clearly established rule of federal maritime law.

A case decided by the Southern District of Florida, Great Lakes Reinsurance v. Soveral, provides an example of how this basic rule can impact coverage decisions. The policyholder’s boat was secured to a dock near the insured’s vacation home. The insured did not cover the vessel, so water from rain storms accumulated inside the boat. The constant drain of power from the bilge pump removing the water in the boat caused the boat batteries to fail. When the bilge pump stopped operating due to a lack of power, the boat filled with water and sank.

The insured brought a lawsuit against the maritime carrier for the full value of the policy in the amount of $125,000. The insurance carrier defended by contending that the loss was the result of “seasonable and foreseeable weather condition[s]”. The insurer argued both that the loss was not covered because it was not “accidental” and that the loss was the result of the insured’s failure to exercise due diligence.

With regard to the first defense regarding the loss not being accidental, the court observed that the policy contained specific exclusions for “losses due to wear and tear, gradual deterioration, lack of maintenance, inherent vice, weathering, insects, mold, animal and marine life”. While the court noted that the policy did not specifically define the term “accident”, the above quoted language was sufficient to exclude rain accumulation from failing to cover the boat.

The court noted that an accident means a fortuitous event, which the court further noted referred to unexpected, unforeseen, unavoidable, chance, and unintended events. However, the court also observed that a loss can be accidental even when the insured has been negligent. While the insured had checked the battery two days prior to the boat sinking, the court dismissed the sufficiency of the battery test because the insured merely started the engine. The court found that this was not an adequate way to determine that the battery had enough power to operate the bilge pump in tropical rains over a two day period. The court concluded that the “deterioration of the battery constitutes normal wear and tear and is not fortuitous”.

Water entering an uncovered boat during the rainy season in a tropical setting also was highly foreseeable according to the court. Based on this reasoning, the judge granted summary judgment for the maritime insurance company. The takeaway from this case is that boat owners need to take care of their boat or their maritime carrier may deny coverage based on inadequate maintenance, gradual degradation, or ordinary wear and tear.




https://www.jpgonzalez-sirgo.com/blo...boats-sink.cfm

To me, this is common sense and absolutely fair of the insurer to not pay the claim.

The claimaint failed to properly cover their boat in a rainy area during then rainy season. The boat then sank.

Tough sh*t frankly. This is no different to me leaving my car unlocked in a dodgy neighborhood and then getting all uppity when it gets broken into.

JFC folks. Read your policy docs when taking out a policy, rather than just paying the cheapest premium possible.

N

[tsenator]

Originally Posted by ausnp84

This is no different to me leaving my car unlocked in a dodgy neighborhood and then getting all uppity when it gets broken into.

But if you left your car unlocked in a dodgy neighborhood and it was stolen, insurance would pay for it.

[Thomas1985]

Insurance is a scam.

If any policy is good for the consumer they raise the premium until it isn’t, or cancel it.

[s/v Jedi]

Originally Posted by tsenator

But if you left your car unlocked in a dodgy neighborhood and it was stolen, insurance would pay for it.

Not only that, when unlocked, it doesn’t require breaking into it…