Can you post the relevant policy wording? So few people go through the tedious reading of the Policy, it might be helpful. Why did the insurer change position in the face of litigation, is the policy open to argument?
Bruce, here is the exact wording that has been referred to (PREMIER MARINE MARINER’S CHOICE POLICY
Form MCF (Rev. April 8, 2014):
(download here:
Policy Form - Mariners Choice - Premier Marine (USA) )
PROPERTY INSURANCE
Insured Perils
A.
You are insured against All Risks of accidental and direct physical tangible loss of or damage to the Insured
Property from any external cause but subject to the terms and conditions of the policy and endorsements, and
excluding the following:
- 1. Wear and tear, gradual deterioration, faulty repair or faulty workmanship, marring, scratching, chipping,
denting, corrosion, mold, rot, osmosis, blistering, delamination, electrolysis, galvanic action, or any inherent
vice; however we will cover consequential property damage resulting from any fire, sinking, submersion,
demasting, collision or stranding;
- 2. Unexplained disappearance of Insured Property from the vessel unless there are visible marks of forcible
entry or exit;
- 3. Insured Property lost overboard unless caused by stranding, burning, sinking or collision of the Insured
Vessel;
- 4. Defect in manufacture or construction, nor will we pay for the cost of repairing or replacing any part which fails
as a result of a defect in manufacture or construction, however, we will cover consequential physical damage
that results from a part that fails as a result of a defect in manufacture or construction, if not otherwise
excluded;
- 5. Any increased cost resulting from or in consequence of obsolescence; and
- 6. Loss or damage caused intentionally by, with the knowledge and consent of, or resulting from criminal wrongdoing
by, an Insured Person.
Basis of Claims Settlement
A. Total Loss:
- 1. In the event of a total loss, we agree to pay you the limit for the Insured Vessel as shown on the Declarations Page.
- 2. There shall be no recovery for a total loss unless all said property is lost absolutely.
- 3. In the event of a total loss this policy will automatically terminate immediately thereafter, the premium will
be fully earned and no refund will be available.
B. Constructive Total Loss:
- 1. We reserve the sole and exclusive right to determine when and if the Insured Vessel is a Constructive
Total Loss.
- 2. If we declare that the Insured Vessel is a Constructive Total Loss, we will pay you the amount of
insurance stated on the Declarations Page and, thereupon, you will transfer ownership of the Insured
Vessel to us or to our designee.
- 3. We reserve the right to repair the Insured Vessel as much as it can be repaired up to but not exceeding
the amount of insurance stated on the Declarations Page for the Insured Vessel rather than declare a
Constructive Total Loss.
- 4. Under no circumstances will our liability exceed the amount of insurance stated on the Declarations Page
for the Insured Vessel.
- 5. In the event we declare and pay a Constructive Total Loss, this policy will automatically terminate
immediately thereafter, the premium will be fully earned and no refund will be available.
C. Partial Loss:
- 1. In the event of a partial loss, we will pay the reasonable cost of repairs or replacement.
- 2. We have the option
a) to make repairs or replacements ourselves, or
b) to reimburse you for repairs or replacements paid for by you, or
c) to pay you directly based on the lowest repair estimate received from a reputable repair facility.
- 3. We reserve the right to repair or replace the Insured Property.
- 4. Under no circumstances will our liability to repair a partial loss exceed the amount of insurance stated on the
- Declarations Page for the Insured Vessel.
- 5. Our liability for the following items shall not exceed their Actual Cash Value:
a) sails, canvas, protective covers and fabric older than 4 years of age;
b) batteries;
c) outboard motors and outdrive units older than 6 years of age; and
- Age, as used in this section, is calculated by subtracting the model year from the calendar year, and adding one (1) to
the result.
Translations:
"Insured Perils" paragraph bolded in red above (1st red bolded area):
This wording is unique to Premier in that the word "external" is a condition of loss. If your vessel strikes another vessel, or if your boat ingests plastic into the raw water strainer, blocking cooling water and leading to an engine overheating condition, there is no question that the cause of loss is of an external nature. However, Rob's example of a engine failure due to a failed fuel pump is an excellent example of a loss not being by Premier because the cause of loss is not external of the vessel in nature. Of course, each claim will stand on its own merits, but this unique wording strengthens the policy in favor of Premier having the ability to deny a claim.
Paragraph A3 regarding property lost overboard (2nd red bolded area above):
Again, strong wording in favor of Premier. If a dinghy engine or kicker engine, stored on a transom bracket, is lost overboard during a rough passage, there is no coverage unless the rest of the conditions in the paragraph are met. Not as big nor likely a problem as the "external" wording, but something to consider.
Paragraph C2 regarding Partial Loss (3rd red bolded area above):
Premier reserves the right to repair the vessel themselves, pay you, or to select the lowest repair estimate. Note that is does not say "lowest repair estimate procured by you". Premier is telling the insured that they are in control of the repair process, and you (as the insured) have a minimal part in the process. If you have a great relationship with your mechanic, and his estimate is higher than the one sourced by Premier, Premier has the right (per the policy wording) to select the cheapest price regardless of your objections.
IMO, this takes the objectivity out of any argument that Premier may have- per their policy, they are in the repair business as well as the insurance business.
Boy did I open a can of worms!!! I went with Premire for a number of reasons. #1 I had to start somewhere. #2 The agent is a 15 minute drive from my house. #3 I was going to take possession of the boat within a week and of course it had to be insured before I could moore it at it's new home.
Pierce, no worries! IMO this type of discussion can be an eye opener for those who elect to read the info presented objectively to learn how their policy may or may not cover them.
Rob, I hope England is nice, we had snow there visiting last May. You might think the spring breaking was the "accident", but that probably depends how the policy defines "accident".
My policy gives my insurer, the biggest marine insurer in Australia, the right to require me to dismantle so they can take a look, I`m guessing if they say "no" they don`t "remantle" either.
Insurance works best with goodwill both sides, if not, it`s a minefield. Reputation in business is everything, insurers should recognize that.
Well stated.
(On the "remantle"- you are probably correct. The policy would give further guidance on the issue.)
LOL
