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Old 06-06-2014, 07:32 AM   #1
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Exposing the business of marine towing

I think it would serve us all well to shine a light on the business or marine towing. Although tow guys get paid hourly rates for some work, I expect the real $$, and frankly the reason they all exist, is for salvage claims. Under the right circumstances, as soon as they toss you a line, they are entitled to a % of the value of your boat. That can be 10's of thousands of dollars. We have a recent post of a guy who was taking on water, and a hoard of tow companies showed up within minutes. I'm sure it wasn't to loan him a pump.

So, let's have at it. How does this business work, what are the motivations and incentives, and how do we boat owners keep from getting hosed.
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Old 06-06-2014, 07:54 AM   #2
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No matter what...there has to be several factors in a salvage that have to be present to get really outrageous money or percentage of boat worth.

Few maritime courts have awarded anything more than standard rates for salvage that was done under normal day to day conditions that weren't in storms or severe situations.

I have been involved with hundreds of salvages over the last several years including boats in the surf in pretty extreme peril and have never seen a "percentage" bill written.

Only some have had a "bad weather/extreme situation fee" of sometimes as little as $50 to $150.

The point is to get salvage jobs and that means working with insurance companies and their adjusters. get a reputation for outrageous pricing and you price yourself out of the lucrative day to day "sunk at the dock" stuff.

The extremely rare "go get'm" salvages where you actually save a boat in real peril....even that vast majority of those are billed out at an hourly rate/flat rate.

Just remember that most salvage is understood as "no cure/no pay"...so if that boat winds up sinking or incurring damage (not the salvor fault type damage)...then all the work was for free...how many contractors do you know that work like that?

There's a common misunderstanding of hull insurance versus tow insurance...it behooves every boater to go to the assistance towing web sites to read the difference. I really don't think the salvage business is trying to hide in the dark...it has been around forever and the assistance towers got really going almost 30 years ago.

The USCG turned over non-emergency assistance to the private sector that has now grown to the point where assistance towers often beat the USCG to scene because they are out there active on the water every day. On the last two underway sinkers Irespnded to...it was me who got a pump or several on board and running long before the USCG got theirs running.

The last boat fire nearby, I was pumping water on it for almost an hour before the local fire boat was pumping water on it and I had to send them home for foam to get it put out.

Many , certainly not all, assistance tower have business models to provide trained experienced pros on the water and to provide a service that the market will bear.

No assistance towing captain I know is making even a decent living. The franchise owners are somewhere's between struggling small business men to doing pretty well. Much like any business. They make their killings on the big stuff...and that's usually oil spills or big contracts for urgent government or infrastructure jobs.

The bread and butter salvage we bill out is not outrageous...but enough to cover expenses for keeping men and equipment ready for almost any situation, 24x7x365.

And keeping equipment and people around the marine environment where I am is expensive as heck.
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Old 06-06-2014, 07:57 AM   #3
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I am sure scott will chime in but I have never heard of a story where a company was stretching to call it a savage. If it is not a true salvage operation they don't call it as such. I would think that any company would be short lived in business.

So can anyone tell me a first hand story of a company calling somethign that was iffy a salvage?
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Old 06-06-2014, 07:58 AM   #4
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Dang scott you are quick.
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Old 06-06-2014, 08:08 AM   #5
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The number one key is to have a strong insurance policy that includes towing coverage.
Number two is to get your boat fixed up and running properly.
Number three is to stay on top of your maintenance.
Number four is to chart your courses carefully.

I am not going to blame the towing companies. They are not "hosing" people, they are providing a service. Every USCG call for help I have heard in the last 12 months started with a captain who had made a mistake. One guy struck a charted rock formation running at low tide close to shore in a large often-used channel.

My favorite, a guy calls for help, adrift near the shipping lanes in the Puget Sound in an old runabout he had gotten for free. For his first use he trailers it and drops it into the salt water and is completely unprepared when the engine dies an hour later. No anchor, no lines long enough for towing, no insurance, no PFDs, no money to pay for a tow. Just a cell phone.

I heard the USCG request for a Good Samaritan and I called this guy. I told him I had to pull two crab pots then motor over to get to him, call it an hour before I get there. He told me to hurry up! When I got to where he was supposed to be, no boat. I called the USCG on VHF and another boater radios that he had flagged them down and they towed him in. The guy didn't even have the decency to call me back and tell me he didn't need my help. Bad karma.
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Old 06-06-2014, 08:39 AM   #6
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Actually it's the insurance towing riders on your boat policy that is part of the real problem.

They can bury that cost (but believe me it's still there) that a small assistance tower can't...the towers need that membership money to exist....

So the assistance towers are partially driven to keep raising billing rates where policy holders are forced to pay out of pocket, or insurance companies have to pay so much....boaters are nudged in the direction of membership....not something they want to do but business is business...not just greed.

There are horror stories out of insurance companies and how they deal with towing. Many just treat it as a nuisance and don't really care...but some hold it as a regular claim and drop their policy holders after a tow or two and now it's harder for the boater to get insurance due to being dropped. Not many of those stories...but we may see more in the near future.

Most of the boaters around where I am have assistance towing insurance...of course I'm in an area of fairly abundant wealth...but even the blue collar guy knows and repeatedly tells me what a good thing assistance towing insurance is and for the annual cost that's less than the average weekend fuel bill, silly not to have it.

Many loopers and long distance cruisers actually have both. The cost compared to waiting out a tide in some situations just makes it worth it to them.
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Old 06-06-2014, 09:36 AM   #7
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I am sure scott will chime in but I have never heard of a story where a company was stretching to call it a savage. If it is not a true salvage operation they don't call it as such. I would think that any company would be short lived in business.

So can anyone tell me a first hand story of a company calling somethign that was iffy a salvage?
I owned an Assistance towing company for 7 years in the mid 80's-early 90's.
We responded to a stranding (outside of Boston Hbr) by an experienced yacht broker (John Alden agency) who ran his s/v up on Hardings ledge. This is an exposed location a mile off shore. The s/v was rising and striking the rocks with every small swell. The owner/capt did not think the boat could be saved. We offered to use our best endeavors to save it and WOULD be making a claim IF WE WERE SUCCESSFUL. Capt was offered a salvage aggreement which said SALVAGE AGREEMENT across the top in bold letters. He signed, we salved , insurance company tried to screw us. The agrrement provided for 3rd party arbitration if we couldn't come to a resolution on compensation.
Ocean underwriters of Cocoa Beach was the insurer and said it absolutely was towage and not salvage. Our original claim was for 13k. After much back and forth with the insurer (very nasty), we had a federal judge arbitrate the case. We documented our case and they did the same. In the end we were almost $41,000, not because the job was worth that, but because the insurance company did everything underhanded to get out of paying a valid salvage claim. The owner came down with short term memory loss as well. When we had his boat in the travel lift after the fact, he forgot about the risk to my 2 boats and the peril he was in for several hours. Total damage to his vsl, stretched keel bolts, fiberglass abrasion on one one side of the hull. IIRC it was about 8k in damage.
Salvage awards have to be high enough to encourage salvors to own and risk equipment, but not high enough to discourage owners from seeking help from salvors.
Side note that the insurers won't tell you. The premise of marine salvage is that the owners must do everything in their power to save their equipment AS IF IT IS UNINSURED. In other words , if we were standing by this casualty and the owner didn't accept salvage services, the underwriter would have grounds NOT to pay the claim.
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Old 06-06-2014, 09:55 AM   #8
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I owned an Assistance towing company for 7 years in the mid 80's-early 90's. .................................................. ........................................

Side note that the insurers won't tell you. The premise of marine salvage is that the owners must do everything in their power to save their equipment AS IF IT IS UNINSURED. In other words , if we were standing by this casualty and the owner didn't accept salvage services, the underwriter would have grounds NOT to pay the claim.
Thanks...not quite sure why this business is under the microscope....it's mostly out in the open just like some public businesses with spectators and videos...unlike most businesses...

as far as high billing...wow...haven't seen a lot of my bills lately!!!!!!

..especially by people who don't risk life and limb sometimes...or work in the gnats or freezing water, etc..etc...

it's amazing....many think sailors are cheap because they think wind is free why not everything...yet too many other boaters think because the marine industry is so much fun we should all work for minimum wage.
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Old 06-06-2014, 10:00 AM   #9
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Psneeld, you lost me. I think you're making a distinction between "assistance towing insurance" (TowBoat US or SeaTow) vs. insurance towing riders on your existing boat or yacht policy.

I have both. The assistance insurance is pretty cheap, and over the past 20 years I've used it a couple of times. Very convenient, no paperwork, no claims. They just show up and tow you in. So I guess I'm a happy customer.

A $500 towing rider is included (no deductible) in my regular policy. I didn't ask for it, but I didn't question it, either. It may turn out that my assistance tower isn't available, or I'm not covered for some oddball reason, or maybe I'll forget to pay them some day. I assume that $500 rider doesn't add much to my regular policy, so why not?

But maybe I'm missing something.
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Old 06-06-2014, 10:08 AM   #10
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Psneeld, you lost me. I think you're making a distinction between "assistance towing insurance" (TowBoat US or SeaTow) vs. insurance towing riders on your existing boat or yacht policy.

I have both. The assistance insurance is pretty cheap, and over the past 20 years I've used it a couple of times. Very convenient, no paperwork, no claims. They just show up and tow you in. So I guess I'm a happy customer.

A $500 towing rider is included (no deductible) in my regular policy. I didn't ask for it, but I didn't question it, either. It may turn out that my assistance tower isn't available, or I'm not covered for some oddball reason, or maybe I'll forget to pay them some day. I assume that $500 rider doesn't add much to my regular policy, so why not?

But maybe I'm missing something.
Sure it's a hidden cost that makes them more appealing. There are very few assistance towers and the rates have always been easy for insurance companies to pay....but the more insurance companies use it a "extra bennie" the more it costs the whole industry. Just ultimately supply and demand.

Because assistance towers depend on memberships to sustain them...insurance companies are forcing higher towing rates which cost them more in the long run.

$500 will cover only the most basic tows now...it's all business profit margin creep and not becoming a member of an assistance towing company (at least until you insurance company funds a towing company..not likely...not enough profit) continues to drive prices up.

It's getting to the point where you may see changes in the near future...on one or both sides.
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Old 06-06-2014, 10:13 AM   #11
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in this case he accepted a salvage contract, before any work started, i see no leg for him to stand on.

A legal definition or not but IMHO if a boat is stranded at high tide that is a salvage.

In your case, just curious, who had possession of the boat during the litigation? Seems to me that the salvors should retain possession and, within a reasonable time, ownership rights if a bill isn't paid. I am not a maritime lawyer but to me, that sounds reasonable.
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Old 06-06-2014, 03:28 PM   #12
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I'm posting just to keep up on this interesting thread - Carry On!
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Old 06-06-2014, 04:03 PM   #13
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" In your case, just curious, who had possession of the boat during the litigation? Seems to me that the salvors should retain possession and, within a reasonable time, ownership rights if a bill isn't paid. I am not a maritime lawyer but to me, that sounds reasonable."
I didn't "arrest" the boat, although I could have. As a small business owner, I didn't have the money to do this- just as the insurance company hoped. By the terms of the contract, security should have been posted in the amount of the claim, of which the award could have been taken out of. What people need to understand in this situation was that the mediater (Federal judge) slapped the peepe of the insurance company. They would not negotiate or play fair on any level.
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Old 06-06-2014, 04:36 PM   #14
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Psneeld, you lost me. I think you're making a distinction between "assistance towing insurance" (TowBoat US or SeaTow) vs. insurance towing riders on your existing boat or yacht policy.
Can someone explain the difference between the three?
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Old 06-06-2014, 04:39 PM   #15
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Sure it's a hidden cost that makes them more appealing. There are very few assistance towers and the rates have always been easy for insurance companies to pay....but the more insurance companies use it a "extra bennie" the more it costs the whole industry. Just ultimately supply and demand.

Because assistance towers depend on memberships to sustain them...insurance companies are forcing higher towing rates which cost them more in the long run.

$500 will cover only the most basic tows now...it's all business profit margin creep and not becoming a member of an assistance towing company (at least until you insurance company funds a towing company..not likely...not enough profit) continues to drive prices up.

It's getting to the point where you may see changes in the near future...on one or both sides.

Sorry, you've lost me here. I'd love to understand how this works and what the dynamics are. Maybe start with what "assistance towing" is, and how it relates to insurance companies? It's probably just a terminology thing.
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Old 06-06-2014, 04:42 PM   #16
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BoatUS - Boat Towing Services - Here for You 24/7

https://www.seatow.com/actnow?utm_so...mpaign=MSN-CPC

and the third is whatever your insurance policy says...
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Old 06-06-2014, 05:29 PM   #17
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Can someone explain the difference between the three?
We have (had) BoatsUS unlimited, which has a $3K coverage limit outside their service area. Our boat insurance had $2.5K for emergency towing and assist. I put the question to our insurance company on who pays first. Their response, in writing, was that BoatUS was primary.
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Old 06-06-2014, 08:54 PM   #18
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The largest problem is boaters not being fully educated about this issue. The towboat companies and their assistance policies I think are great. They do exactly what the agreement says. As to salvage beyond that, it's your responsibility or your insurers. Too many people are buying insurance based on price and invariably it short cuts areas like salvage and environmental, sets major exclusions for things it can try to trace back to manufacturing, and has various other exclusions. Be careful. Use a broker who will fully cover all the details of the various available policies. Also, research the reputations of insurers to find those who readily pay claims they should as opposed to those who dance and delay and try to avoid.

I've yet to ever need a tow, but sure glad those companies exist and I have contracts with both since we cruise many different areas. I haven't yet needed a tow but they sure have been helpful with local knowledge on inlets and shoals and marina entrances.

With insurance, be sure you know the covered areas, what the policy says on named storms, any clauses on operators and all the exclusions. The biggest single areas of exposure you have are environmental and loss of life. Make sure the environmental and salvage coverage are sizable. They can require many times the cost of your boat. As to the catastrophic accident where a fire on your boat wipes out a marina or where an accident leads to loss of life, you need to investigate seriously having some form of umbrella coverage to cover you above the limits of the policy. It's not as expensive as you might think, you'll probably never need it, but it might keep you from losing all you have.
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Old 06-06-2014, 08:56 PM   #19
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We have (had) BoatsUS unlimited, which has a $3K coverage limit outside their service area. Our boat insurance had $2.5K for emergency towing and assist. I put the question to our insurance company on who pays first. Their response, in writing, was that BoatUS was primary.
What does your boat insurance cover on salvage and environmental?

Also how far off shore do you go or where do you travel? $5500 sounds like a lot for a tow, but in some circumstances it can be low. In Florida, the biggest tow charges come in the Bahamas and the Caribbean.
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