By John K. Fulweiler, Esq.
The boat show was a hoot. I drank some beer, strolled the docks with the best looking woman in the show, and feigned interest in boats so expensive it made my eyelids hurt. It’s not that I don’t like goals, but to steal a Chris Hitchens sort of analysis – there’s probably a special place in the afterlife for anyone who pays somewhere near a million for a plastic boat with four engines hanging off the transom! And ‘lo, you sailboat builders are just as bad. I got quoted “high-four hundreds” for twenty’ish feet of varnish and a barn door rudder – okay that included delivery, but still! Call me, if you’re ever so tempted to close a deal like this…we’ll get you sorted and into something that doesn’t leave you with the stain of original sin. You know what I mean; there are better places for that kind of spend than on fiberglass.
But there’s an issue that the boat show highlights: namely, with that kind of pricing, you’d better have some great marine insurance in place. While an auto policy has the protective lacquer of a million prior claims and state regulation, marine insurance doesn’t. Marine insurance is hardly regulated and the wording of many of the policies varies greatly, leaving the unwitting insured wrestling with language ranging from the absurd to the complicated. The takeaway is that marine insurance can be a fair weather friend flitting off to other parts when you most need the policy.
What I’ve seen over the years is that some companies sail into the marine insurance waters, write a lot of coverage, get burned with claims and quickly leave port. My point is that I’d avoid buying marine insurance based on the premium price. A new marine insurance player in town may have great rates, but I suspect the bet is hedged in the policy wording meaning that there’s some risk that the insurer has eliminated or corralled in order to offer a low premium price.
What would give me agita as the owner of a boat show yacht is receiving a declination letter from my marine insurer after a loss. A marine insurance policy is a contract between the boat owner and the insurer in which for the exchange of money (the premium), the insurer covers the risk of loss – well, sort of. The warranties in the policy as to the boat’s seaworthy condition and the policy’s exclusions (meaning those spelled-out losses the policy doesn’t cover) give a marine insurer a lot of sea room in which to avoid paying claims.
After a marine loss, the marine insurer gives a hard look at all the circumstances to see if it has to cover the loss. If your loss doesn’t fit the terms of the contract (read, the insurance policy) then you’ll get a declination letter explaining why the insurer isn’t paying your claim. When that happens, the smart money calls an admiralty attorney. (For sweet’s sake, avoid penning the multi-page email to the insurer in response, as it never serves to help the vessel owner. Instead, go radio silent and promptly take the declination letter to your maritime lawyer and let her pick the best path forward.)
My recommendations in selecting a marine insurance policy begin with location. Me personally, I would never leave the domestic market to procure marine insurance overseas for reasons I’d be happy to share if you buy me a beer. Domestically, I would try and get a ‘select’ insurance product geared to the high net worth individual. These policies exist and I sense the claims handling might be different and more favorable. I would also buy the policy through an agent and not direct from the insurer. It’s crazy thinking, but if I get a declination letter from a policy I bought through an agent, I might at least have the agent to blame and his company’s “errors and omissions” policy to cover my loss as a backstop. When I got an insurance survey, I’d have the surveyor return and confirm I’d corrected any recommendations he made in his original report. I’d pay my premium in full. I’d pay a maritime lawyer for an hour or two to write me a letter summarizing the kind and quality of insurance I’d bought. If my boat show splendor was crewed, I’d keep a policy aboard and expect the crew to know the basics – like where the boat is allowed to go, how many crew are required to be aboard and whether the boat can tow a tender, etc. Finally, I’d maintain a relationship with a maritime attorney with experience throwing down to fight marine insurers who try to decline coverage on legitimate claims.
Marine insurance is dry and boring until it isn’t, making these issues worthwhile chewing. Separately, a shout out to Elayna (of s/v La Vagabonde YouTube fame) for her graciousness. My Opti-racing daughter hunted her up at the boat show and texted me a picture of the two of them. Good stuff.
This article is provided for your general information, is not legal opinion and should not be relied upon. Always seek legal counsel to understand your rights and remedies.
Underway and making way.
John K. Fulweiler, Esq. is a Proctor-in-Admiralty representing individuals and small businesses in maritime matters including personal injury claims throughout the East and Gulf Coasts and with his office in Newport, Rhode Island. He can be reached at 1-800-383-MAYDAY (6293) or firstname.lastname@example.org, or visit his website at saltwaterlaw.com.