Yacht Insurance Claims Advice
Depending on your insurer the process of making a claim and getting it paid may be easy or difficult. This is why in the first instance it is best to choose an insurer which has a good reputation for claims handling and paying claims.
Good claims handling will greatly facilitate the process especially if the incident occurred in a foreign country. Bad claims handling can extend the process over many months and lead to a very unpleasant experience. In the end you may have to take the insurers to court to get the claim paid.
It is also important to select an insurer which offers a policy that covers all the claims you might have. Policies can differ and the differences could mean that you are not covered for a risk that may occur.
The maximum amounts covered are also relevant. The insurer will not pay out more than the amounts specified. It may be wise to renegotiate the value of the boat with the insurer periodically at renewal as the yacht sales market improves or after you have added value to the yacht with a refit.
It is very wise to read the policy carefully and ensure that you follow it to the letter. There might be a clause that you have violated at time of incident and this will mean you are not covered and are on your own.
The insurer is legally liable to pay out according to the policy and this is to your benefit but on the other hand it is too late to renegotiate insurance terms after the incident has already occurred.
The insurer would like to avoid paying your claim if it is possible legally to do so.
The following information about insurance claims may be found useful.
Insurance policies will generally require the insurance company to be notified of a claim as soon as possible. Notification at a later date is likely to violate a clause of the policy.
Evidence at Time of Incident
Should an incident occur it would be prudent to collect evidence at time of incident. The most useful evidence is photographs but any other information thought useful can also be collected. This is because the insurance company surveyor may take time to arrive at the scene.
Demonstrating your Loss
It is your responsibility to demonstrate your loss to the insurance company and their surveyor. It is your responsibility to claim for all amounts that are claimable according to the policy. The insurance company will not encourage you in this. The insurance company could avoid paying the claim if the loss was not demonstrated to their surveyor.
The Role of the Surveyor
If a surveyor is appointed by the insurance company he is an independent party reporting to the insurance company. It is his job to collect evidence and to determine the cause and extent of damage and determine the reasonable value of the loss. It is not the responsibility of the surveyor to advise on insurance policy related matters and ensure the claim is paid out. It is likely he will not have seen the insurance policy anyway and insurers discourage surveyors to advise on policy related matters. Neither can he advise on legal matters, as only a lawyer can advise on those. He also cannot commit the insurers to anything. They will always have the final say.
The insurance company must be allowed reasonable time to arrange for their surveyor to inspect the damage. Starting repairs before the surveyor has had time to attend will affect your ability to demonstrate your loss.
Preventing Further Loss
It is not possible to claim for further loss after the incident that resulted from deterioration to the yacht if you could have taken action to prevent the further deterioration. This may include temporary repairs. If the temporary repairs will be of significant cost it is likely the insurers would like their permission to be granted on the cost/extent of temporary repairs before the repairs proceed.
You should encourage the insurance companyâ€™s surveyor to attend at times that will further assist you in demonstrating your loss. For instance he may wish to attend when the boat is hauled, during significant stages of the repairs and when the repairs are complete. Invitations should be issued in writing then if he is instructed not to attend you have proof that he was invited and the insurers cannot say later otherwise that you did not demonstrate your loss or the repairs necessary.
Making Claimable Expenses
Some policies will include the insurers right to select salvors or repair yard. It would be wise anyway to involve insurers in these decisions as much as you wish. Insurers may require to provide their permission according to the policy or may not be interested until final invoices are issued. This depends on the insurer. Some may require their surveyor to be fully involved and to actually arrrange and supervise the works. Again this depends on insurer.
You may prefer certain companies but it is necessary to obtain quotations from several companies not just one. The company winning the bid cannot be the most expensive one. Competitive Quotations are a vital evidence to support your claim and should always be obtained.
Insurers will consider if there was a cheaper alternative available. Such as the towing of the yacht to a more suitable yard. If it could be proven that this would have resulted in lower repair costs (including the towage costs) then they could avoid to pay out the more expensive repair costs from a yard local to the incident. Alternatives should always be considered to ensure that the claim is reasonable because the insurers will not pay more than the reasonable costs.
The claimant should not however accept any proposal for “bodged repairs” or any repairs that will be cost effective but will result in unsatisfactory finish. If the policy covers the risk which occurred then the claimant is entitled to be as reasonably possible restored to the position before the incident occurred. The lowest repair quote would not be appropriate to be chosen if the repairs were not appropriate quality.
Betterment and Owners Work
Should the yacht proceed to repairs of claimable damage the owner may wish to make repairs that restore the yacht to a better condition than before the incident or which change the original design. This is called betterment. The owner may also wish to perform unrelated works since the yacht is at a repair yard. There is no problem for this to happen as long as the following is taken into consideration.
The claimable repairs are those related to the incident and the additional cost for betterment cannot be claimed for. Also if this would result in additional time at the yard incurring additional storage fees etc then these charges cannot be claimed for. The same goes for owners work unrelated to the incident. These charges must be split from the claim account and it is good practice to show in your claim documents that they were.
However if the betterment was inevitable due to the damage repairs required then there is no additional cost to delete from the claim.
Supporting your Claim
Your claim must be supported by documents. Repair specifications, quotations and other documents. Photographs are again useful and whilst repairs are proceeding it may be useful to make your own photo account and record of progress.
Courts do not appreciate fraudulent claims. It is highly likely that even if only part of the claim is fraudulent this will result in the entire claim being thrown out of court and not being paid.
Use of the boat in an unlawful way will invalidate the insurance. This could be simply chartering the yacht without proper certification or charter license. Of course this could also fall under the policy being issued for a private yacht not a charter yacht. So called â€œprivate charteringâ€ where money still changes hands is still chartering.
You must report any theft to the police (or in some jurisdictions the coastguard). It will be necessary to have a copy of their record of the theft to support your claim. Going back to the issue of fraud, it is a crime to report any theft to the police that did not occur.
Types of Loss
As a result of an incident you will have sustained a loss. Considering Yacht Hull Insurance claims these will be as follows :
Partial Loss : This is when the yacht is partially damaged and repairs do not exceed the value of the yacht.
Total Loss : This is when the yacht is sunk or so damaged that it ceases to be a yacht.
Constructive Total Loss : This is when the reasonable cost of repairs exceed the insured value of the yacht. Insurers will not pay out more than that for repairs.
In the case of a constructive total loss the insured will abandon the yacht to the insurers and they will dispose of it to their benefit. It is generally not possible to claim a constructive total loss and still retain the yacht.
Recovery from Other Parties
The insurer may pay out for repairs to a damage that was caused by another party. You cannot take the money from insurers and then sue the other party for the damages thereby getting paid twice. The insurer has the right to pay your claim and sue the other party for the damages.
Proceed as if Going to Court
It is always good to proceed as if you were eventually going to court against the insurers to get the claim paid. This means keeping good records, obtaining documents and photographic evidence. Verbal agreements are difficult to prove in court whilst written communications are much more convincing. So ensure that communications and agreements are in writing. If there were telephone calls then follow them up with a written communication that states what was discussed and what was agreed. You may wish to seek legal advice or retain your own surveyor as owners consultant for large claims.
Yacht Surveyor – Athens, Greece