| Following
a major hurricane like Ivan, most boat owners have their hands full
with homes, family and business so that the prospect of having to
deal with the boat also is a daunting and unwelcome task. However,
your insurance policy obligates you to take all reasonable
actions to preserve it from further loss and damage.
Getting things
done after a major storm usually becomes extremely difficult, if
not impossible, because of the enormous demand on limited services,
loss of power, roads, bridges and so on. You only need to do what
you can reasonably be expected to accomplish under the conditions.
If circumstances prevent you from doing anything, be sure to advise
the insurer of this fact at the time you report the loss.
Before
You Do Anything
Keep in mind that even if your boat seems to be undamaged, wind
driven water, including salt spray, has likely gotten to electrical
apparatus and wiring. Do not fire up the engines or turn on the
electrical system before checking over all systems for water intrusion.
Boat
Is Sunk
If your boat is sunk there isn’t much you can do. Report the
claim and wait for the surveyor to contact you for advice. Most
insurers will make salvage arrangements for you.
Submerged
Engines
Outboard engines need to be torn down after submersion. This is
because there is likely electrolysis damage inside due to being
connected to the batteries. Do not attempt to dry out and restart
an outboard. An outboard that has been submerged for several days
is junk and cannot be reliably repaired.
Gas engines
if carbureted can be flushed, dried out and restarted, preferably
by a pro. If underwater for more than 24 hours it needs to be torn
down and inspected internally. Fuel injected engines can’t
be restarted without replacing the injection system.
The same applies
to diesel engines, even if it has been flushed and restarted. Every
single moving part needs to be inspected and proved that it does
not have corrosion damage.
Even if a
generator engine can be started, the electrical end is damaged beyond
repair. At the least, it should be replaced with a rebuilt generator
end.
Boat
Is Blown Ashore
In this case the greatest risk is looting, particularly of things
on the exterior like anchors, electronics, outriggers and other
loose equipment. Try to remove these thing and take home. Take pictures
of the boat all around.
Paying
for Help
Though most insurance policies are silent on this subject, paying
someone to assist you with securing and preserving the boat will
be reimbursed by most insurers if you keep the cost reasonable.
Higher than
normal labor costs are not gouging but part of the cost of doing
business under very difficult conditions. It is not unreasonable
to pay double normal wages for common labor.
Settlement
Options – Total Loss
For
obvious reasons, when a boat has sustained serious damage, most
boat owners would prefer that it be “totaled out”. This
is by far the biggest bone of contention between owners and insurers.
Keep in mind that large numbers of people with boats that are not
totaled argue for total losses. The insurance companies will resist
these claims.
On the other
hand, due to extremely large numbers of claims, insurers may end
up hiring less than fully competent surveyors, a situation that
often leads to conflicts. Amongst surveyors, there are only a relative
handful who are truly competent at estimating repair costs. If you
seriously disagree with the surveyor you have the option of either
hiring your own surveyor or try to get independent estimates (difficult)
from repairers.
Some policies
define what a total loss is while others do not. One insurer, for
example, defines a “constructive total” as repair costs
equaling 80% of the insured value. So what do you do if the estimate
comes to 75 or 79%?
Technically,
a constructive total loss occurs only when the repair cost equals
or exceeds the insured value.
Another solution
to this question is the formula that when repair cost plus estimated
salvage value equals or exceeds the insured value, you can accept
a cash settlement and sell the boat for salvage and the policy is
cancelled. This is not a stipulation of any insurance policy and
is something that you must negotiate with the insurer. Obviously,
this formula can be carried to extremes, as when the damage cost
is only half the value. In such cases you are simply accepting a
cash settlement and selling the boat; the insurer will not assist
you with a salvage sale.
Assessing
the Damage
One of the biggest headaches in the claim process is assessing the
damage. You do not have to rely on the insurer do this and can hire
your own expert. This is part of the cost of assessing the damage
and should be recoverable as a legitimate expense. Another big problem
is that there are too many boats that need repair and local yards
may also be damaged and out of business.
If the extent
of damage is questionable as whether it is repairable or not, it
is best to first get the insurers opinion. Many, if not most, insurance
surveyors are adept at estimating repair costs. Be sure to ask the
surveyor if he will be making an estimate, or whether he has an
opinion.
Because so
many boats are damaged, it becomes extremely difficult to get repairers
to give free estimates. Here again, if you are in disagreement with
your insurer, you may pay for an estimate and include the cost as
part of your claim. The cost of determining the extent and cost
of repairs is recoverable.
About
Wiring
It is not true that any wire that goes underwater must be replaced.
Unless it is very poor quality, water does not migrate into the
insulation beyond the terminal ends. It is perfectly acceptable
to cut off the damaged ends and install new terminals. An exception
is large battery cables and shore power cables which should be replaced
entirely.
Sunk
or Partially Sunk Boats
Most sunk boats will be a constructive total loss since they are
so very costly to repair. Partially sunk boats usually are not,
even though most owners want them totaled. The reality is that when
repaired, a partially sunk boat ends up in much better condition
than before IF the work is done by a highly competent yard or marina.
Keep this in mind if you want to argue for a total. The only other
condition is that every trace of immersion must be removed. No rusty
door hinges, fixtures, draw slides or rusty screw heads must remain.
Disputes
Pay particular attention to that part of your policy that covers
how losses are paid. Many policies have arbitration clauses that
require each party to hire an appraiser at their own expense. In
turn, these appraisers are to agree upon selecting a single “umpire”
who will decide the matter based on the two appraisals. This is
a very problematical situation because very few truly competent
surveyors want to get involved with such disputes. Absent an arbitration
clause, you can still hire your own appraiser (surveyor) to assess
the damage on your behalf. Try to hire the most competent surveyor
you can find, preferably one with claims experience.
Detailed
Estimates
Making a detailed estimate is a laborious process at a time when
yard managers and other contractors already have their hands full,
so expect to pay a healthy price. For a high dollar loss, several
thousand dollars is not excessive.
There is also
the option of hiring a surveyor. Try to find a surveyor who has
claims experience. For example, a recent estimate that I prepared
over a dispute on a sixty footer took over 40 hours to complete.
This estimate detailed everything right down to dimensions such
as board feet of teak for decking), numbers of items and hours to
complete individual tasks and was a dozen pages long. This level
of detail leaves little or no room for dispute about how much something
will cost. Decide on the level of detail that you think you need
and question the surveyor about his ability to provide that before
you hire him. To do so, he has to have access to materials costs.
Hull
Damage and Refinishing
Some policies spell out how they handle the matter of partial damage
to exterior surfaces while others do not. The basic rule for boats
remains much the same as for cars; they will pay the cost of refinishing
only the effected area, even if that leaves a “spot”
on the hull side. If that’s what the policy says, you are
stuck with that.
If not you
can argue the point. Certainly it is not reasonable to demand that
a hull be completely refinished for small damages or scratches.
Should there be a larger area, such as a long scrape, you may demand
that the hull be repainted. Urethane painting is a very good solution
even for a fairly new hull since urethane paint is arguably even
better than gel coat and will last longer. If the damage is only
on one side, they may only pay for painting one side, leaving you
to foot the cost of the other. This will likely cause you to decide
for only a small gel coat repair.
If the hull is scratched and battered on both sides, you have every
right to a complete paint job and will generally be better off than
before. Be happy for this!
Things
You Didn’t Think Of
Hurricanes can easily push water up the engine exhaust pipes and
into the engines so this needs to be checked out promptly. For gas
engines, disconnect the ignition source so that the engine doesn’t
fire and carefully turn the engines over. If the cranking stops
– stop cranking, there may be water in a cylinder. Have it
checked out ASAP.
For turbo
diesels, the exhaust elbow to the turbo should be removed and inspected
for signs of water. The exhaust inlet side will show water or rust
if water has backed up. There is no other easy way. If you fire
it off and there is water in a cylinder, severe engine damage will
occur. This is usually easier than pulling the injectors to check.
Water driven
in 100 mph + winds will find its way into many electronics, even
those that appear to be water tight. Rather than trying to turn
anything on (and frying it in the process) remove all electronics
and take them to your local dealer for inspection.
Aluminum towers
should be inspected for bending and cracking. You’d be surprised
at how many towers get twisted. To inspect, sight along the length
of the legs and check that everything is parallel.
Leaks. Boats
will develop leaks in places you never imagined. Water may have
driven in around windows and doors and may also be salty, particularly
if your near the beach or large body of water. All electricals in
the engine room should be checked for water damage. Look for rust
and water stains that weren’t there before.
Check the
interior starting with the carpet throughout. Any wet spots are
a clue to where a leak may be. Check in cabinets, under seating
and any place where water is likely to puddle. For example, an inner
liner under a vee berth fills with water. If you have wooden paneling
and decking, check this carefully for if it is under any kind of
covering it may result in a long term rot and mildew problem, plus
a bad smell. If the carpet is wet it should be removed immediately.
If the boat
is generally damp on the interior – as many times I find the
interior filled with salt spray – this salt residue will cause
serious damage. The interior will be need to be wiped down with
soft, wet rags to remove the salt. At the least, severe mildewing
will occur.
If the interior
is damp with salt spray, ALL interior fabrics and upholstery will
need to be washed and cleaned. Remember, salt is hygroscopic, meaning
that it will condense water out of the atmosphere and thus cause
damage that will only show up over time. A good way to check for
salt is to look at a television screen which will easily show it
up. Or, rub a clean finger over a surface and then taste it.
Check also:
rope locker, lazarette compartments, flying bridge compartments,
under seating etcetera.
Note that
the cost of all this checking and restoration is recoverable under
your insurance, so if you want to pay someone to do it, be sure
to keep that person’s hours, pay, etc. and get an invoice
even if only hand written.
Exterior
Helm Stations
Wind driven water can play havoc with helm stations, causing water
to get into gauges, switches, control cables and wire connections.
This results in damage that doesn’t show up until later. Check
the underside of the panel which is usually within a cabinet. Is
it wet with water condensing? If so, you’ll likely be facing
a series of electrical failures in the future.
How
To Get Repairs
Getting repairs done in a timely manner is nearly impossible. This
is especially a problem on the Gulf coast where there is a dearth
of good yards. One possible option is one I used following Andrew.
For large dollar damages, say over $50K, I arranged to ship a number
of boats to good yards out of the area. In some cases they went
on their own bottoms and in other overland by truck.
It is unreasonable
for an insured to have to wait six months to a year to get repairs
done. Thus, if it costs $8,000 to ship a boat elsewhere to get competent
repairs, this is not at all unreasonable. I shipped one boat all
the way from South Florida to South Carolina and back.
Quality
of Repairs
If you have a nearly new or very late model yacht that has serious
damage but is not a total loss, you are entitled to a quality of
repair that will not affect the value of the vessel. The insurance
law in Florida is that you are entitled to be made “whole.”
If you end up with an obviously repaired boat, clearly you are not
whole, but will be faced with selling “damaged goods”
at the time you want to sell it. Thus, it behooves to select a repairer
that can make repairs that are not detectable.
With fiberglass
boats, this is entirely possible, but requires skill and care. Note
here that a damaged boat that is properly repaired is no longer
a damaged boat, but if the repairs are obvious, those damage repairs
will be discovered by the buyer’s surveyor which could kill
the sale. Thus, evidence of repairs should be concealed.
If you’re
faced with serious damage, you want to be sure that the competence
of the repairer is beyond question. If the boat has to be shipped
elsewhere, then do that. Note that any hull repairs that will be
visible from the interior should be refinished on the inside so
that the repairs are not obvious. This may include painting or gel
coating the inner surfaces, but be sure that it gets done and is
part of the repair contract.
A properly
repaired boat should be as good as new; when done by a real professional,
it actually ends up even better because so much has been renewed.
Posted September
27, 2004
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