Total Loss Options

[larman]

While underway from NY to FL we hit a submerged jetty in Delaware City. We were able to get the boat into the marina and had it hauled out. Extensive damage to running gear. Bottom line I have an agreed value of 40k and the repair bill is 35k with a 5k deductible. I submitted this claim on Saturday so I have not heard from the insurance company. I have a bad feeling they are going to total the bill boat. If they do I don’t know how much I will get. The boat yard who has already ordered all the repair parts is going to get a huge chunk if I decide to walk away. I guess another option is to take the settlement buyback boat from insurance company and fix the boat. Not sure which way to proceed?

 

[DavidM]

Since you have already committed to purchase the parts, the boat will be fixed one way or the other. So the only thing to do is take the insurance settlement and either keep the boat or sell it after it is fixed.

So the only question is, do you want the boat?

David

 

[ksanders]

While underway from NY to FL we hit a submerged jetty in Delaware City. We were able to get the boat into the marina and had it hauled out. Extensive damage to running gear. Bottom line I have an agreed value of 40k and the repair bill is 35k with a 5k deductible. I submitted this claim on Saturday so I have not heard from the insurance company. I have a bad feeling they are going to total the bill boat. If they do I don’t know how much I will get. The boat yard who has already ordered all the repair parts is going to get a huge chunk if I decide to walk away. I guess another option is to take the settlement buyback boat from insurance company and fix the boat. Not sure which way to proceed?

The first thing I would do is cancel any parts ordered.

Your insurance, if and it probably will declare your boat a constructive loss will pay you according to your policy, and I am pretty sure pay the boat yard the haul out, and any other fees associated with keeping your boat from sinking as well as the costs to estimate the damages separately as liabilities.

You could choose to take the payout and buy the boat back, which might be a good deal for you depending on the amount they want for the boat.

 

[larman]

Since you have already committed to purchase the parts, the boat will be fixed one way or the other. So the only thing to do is take the insurance settlement and either keep the boat or sell it after it is fixed.

So the only question is, do you want the boat?

David

Hi David, this is the boat Livin The Dream you helped me move from Baltimore to Long Island in 2019. Yes we want to keep her. We would like to continue our journey south. Here’s hoping to a favorable experience with our insurance company.

 

[DavidM]

That boat is worth more than $40k for sure. Fix it and keep it along with increasing your agreed value to something more realistic.

David

 

[O C Diver]

That boat is worth more than $40k for sure. Fix it and keep it along with increasing your agreed value to something more realistic.

David

If the insurance pays off the boat, declares it a loss, and lets the owner buy it back, it will probably be uninsureable as he will only get a salvage title. Hard to know how much they will pay as a simple claim.

Ted

 

[Pau Hana]

While underway from NY to FL we hit a submerged jetty in Delaware City. We were able to get the boat into the marina and had it hauled out. Extensive damage to running gear. Bottom line I have an agreed value of 40k and the repair bill is 35k with a 5k deductible. I submitted this claim on Saturday so I have not heard from the insurance company. I have a bad feeling they are going to total the bill boat. If they do I don’t know how much I will get. The boat yard who has already ordered all the repair parts is going to get a huge chunk if I decide to walk away. I guess another option is to take the settlement buyback boat from insurance company and fix the boat. Not sure which way to proceed?

Questions:

• Who is your carrier?
• Why were parts ordered prior to any contact with your insurer?

If your policy is Agreed Value coverage, your settlement will be the value shown on your declarations page. If Actual Cash Value, you’ll negotiate the value at time of loss.

The best option is to slow your roll and see what the claims team has to say.

 

[SIBERNUT]

There is one other possibility. In this situation, as a ins co rep I have negotiated a "contract" with the repairer to fix the whatever for $xxx with no supplements. The owner may have to agree to pick up any additional, but meanwhile the boat is not"totalled" . I once had a Ferrari in a similar situation and did so. Owner begged me not to TL, because Ferrari will never sell another part for that car once TL.

 

[Brooksie]

If your boat is worth "way more" as stated above, usually claims will be prorated using the ratio what it is insured for vs: what it should have been insured for formula.
Think of an extreme example. You have a 50K boat insured for 25K, you can't expect full compensation when you have paid only 1/2 the premium.



Basically insurance companies only want to take in money and have many many ways on not paying out.


I don't know if there are such things in the marine world but I have used public adjusters on land based claims. They get you what you are entitled to and keep a % of what extra they get as their payment.

 

[Pau Hana]

If your boat is worth "way more" as stated above, usually claims will be prorated using the ratio what it is insured for vs: what it should have been insured for formula.
Think of an extreme example. You have a 50K boat insured for 25K, you can't expect full compensation when you have paid only 1/2 the premium.



Basically insurance companies only want to take in money and have many many ways on not paying out.


I don't know if there are such things in the marine world but I have used public adjusters on land based claims. They get you what you are entitled to and keep a % of what extra they get as their payment.

I respectfully disagree on your premise regarding insurance (see above in red).

The insurance contract will settle the total loss claim per the contract as I noted above (Agreed Value vs Actual Cash Value). It's really that simple.

No insuring company looks for ways to not pay a claim- that is business suicide. The insurer will look to confirm that the claim meets the policy language- and this is key. If you opt for a lower priced policy, understand you are also opting for (potentially) much less coverage overall. Conversely, a higher priced policy from a reputable company will have less exclusions and therefore more coverage.

People are conditioned to opt for the lowest price as a prime consideration of value, where the prime consideration should be coverage first, then price.

So- it is is truly a case of caveat emptor.

 

[Circumnavigator]

If the insurance pays off the boat, declares it a loss, and lets the owner buy it back, it will probably be uninsureable as he will only get a salvage title. Hard to know how much they will pay as a simple claim.

Ted

I am not an insurance expert, but I doubt this is correct. If the boat is documented, then there is no such thing as a "salvage title" and I doubt that the boat will change owners on paper.



If it is state registered, I also doubt that it will change owners on paper.


Jim

 

[keith c]

In my humble yet accurate opinion, coming from a35 year retired claims adjuster/manager. The/A/Any insurance company will move heaven and earth to reduce/delay/deny claims. Check any policy. The coverage section is small.
The exclusion section covers many pages.

 

[O C Diver]

I am not an insurance expert, but I doubt this is correct. If the boat is documented, then there is no such thing as a "salvage title" and I doubt that the boat will change owners on paper.



If it is state registered, I also doubt that it will change owners on paper.


Jim

It might be that there isn't a salvage title, but when a perspective insurance company or a lending institution runs the hull ID number, it will show it having been totaled, damaged beyond repair, sold for scrap, or whatever term the insurance industry uses.

Ted

 

[twistedtree]

It might be that there isn't a salvage title, but when a perspective insurance company or a lending institution runs the hull ID number, it will show it having been totaled, damaged beyond repair, sold for scrap, or whatever term the insurance industry uses.

Ted

I too wonder if this is a real thing with boats. How does the title get changed or flagged?

 

[Pau Hana]

In my humble yet accurate opinion, coming from a35 year retired claims adjuster/manager. The/A/Any insurance company will move heaven and earth to reduce/delay/deny claims. Check any policy. The coverage section is small.
The exclusion section covers many pages.

In what discipline were you a claims professional?

In the marine world I play in, the All Risk/Agreed Value policy has few exclusions and plenty of wording on inclusionary coverage.

 

[O C Diver]

I too wonder if this is a real thing with boats. How does the title get changed or flagged?

You don't think vessel ID numbers are flagged when a vessel is stolen or sunk and the insurance pays off?

Ted

 

[Delta Riverat]

I would think that a Title Co would find this also.

 

[twistedtree]

You don't think vessel ID numbers are flagged when a vessel is stolen or sunk and the insurance pays off?

Ted

I just don't know, hence the question. I could see it being true, but don't know if the boating world of insurance is organized enough across companies to actually do it, unlike in automotive. If I were thinking of buying back a totaled boat like the OP is, I would certainly want to know conclusively.

 

[danderer]

People are conditioned to opt for the lowest price as a prime consideration of value, where the prime consideration should be coverage first, then price.

Strongly agree.

 

[rgano]

I had a friend who bought a boat from Progressive Insurance after they totaled it in 2018. He got a clean Florida state title and was surprised and pleased.

That is my total knowledge on the issue.

 

[guy with a boat]

I respectfully disagree on your premise regarding insurance (see above in red).

The insurance contract will settle the total loss claim per the contract as I noted above (Agreed Value vs Actual Cash Value). It's really that simple.

No insuring company looks for ways to not pay a claim- that is business suicide. The insurer will look to confirm that the claim meets the policy language- and this is key. If you opt for a lower priced policy, understand you are also opting for (potentially) much less coverage overall. Conversely, a higher priced policy from a reputable company will have less exclusions and therefore more coverage.

People are conditioned to opt for the lowest price as a prime consideration of value, where the prime consideration should be coverage first, then price.

So- it is is truly a case of caveat emptor.

I completely agree. I see people make statements about insurers dodging claims and I wonder if they are discount carriers or otherwise second-rate insurance companies.

I've had several claims over the decades (never with a boat) and have only had professional, reasonable actions from the insurers. They don't overpay the claim and don't cover policy exclusions, but they have paid all that they rightfully owe without resistance. To do anything else would be, as Peter says, professional suicide. What agent would place even one more client with a carrier that didn't stand behind their policies?

Read the policy terms before you select a carrier and you won't be disappointed with the results if you ever need to make a claim. Better yet, get the help of someone like Peter/Pau Hana and you will have guidance in finding the coverage that is the most cost-effective and not just the cheapest.

 

[ksanders]

I am not an insurance expert, but I doubt this is correct. If the boat is documented, then there is no such thing as a "salvage title" and I doubt that the boat will change owners on paper.



If it is state registered, I also doubt that it will change owners on paper.


Jim

My son just went through this on a USCG documented boat

He made an offer on a boat, and the marine escrow company pulled an abstract of title with the USCG National Vessel Documentation Center. It showed a chain of ownership including an insurance company and a salvage company.

The marine lender promptly declined accepting the boat as collateral for any loan.

 

[STB]

If the insurance pays off the boat, declares it a loss, and lets the owner buy it back, it will probably be uninsureable as he will only get a salvage title. Hard to know how much they will pay as a simple claim.

Ted

Where does this stuff come from?

There is no such status on a federal document. And federally documented vessels have no other title.

There is no such status in Florida. There is a very limited designation for hull damage, which has nothing to do with the cost of repair, just hull integrity:

 “Hull damaged” means compromised with respect to the integrity of a vessel’s hull by a collision, allision, lightning strike, fire, explosion, running aground, or similar occurrence, or the sinking of a vessel in a manner that creates a significant risk to the integrity of the vessel’s hull."

-- Statutes & Constitution :View Statutes : Online Sunshine


My boat took on water at the slip 2 owners ago. The boat next to me nearly sunk at the slip -- twice. The boat across from me suffered a major fire. All were bought by insurance and resold (onnone case back to the original owner). None have any type of branded title or document. None of any trouble with insurance.

If you look at the abstract of title you can see a prior owner was an auction company or an insurance company, which gives a hint as to the history, but none of them have been branded or limited, and continue to be insured. Just surveys were required.

The range of time is from 2014 (my boat) to 2023 (the boat next to me).

I don't know NY law, if the vessel is state titled there. Or what other jurisdiction might be involved if somewhere else.

But, I wouldn't bet on there being any problem until I checked with wherever it is state titled, if state titled.

I've just never actually heard of this being a problem.

But I sure do see a bunch of people on the Internet suggesting it could be. And maybe it could be somewhere.

But given the hurricanes and storms in Florida....a huge part of the fleet would likely be branded. That isn't the case.

 

[rslifkin]

My son just went through this on a USCG documented boat

He made an offer on a boat, and the marine escrow company pulled an abstract of title with the USCG National Vessel Documentation Center. It showed a chain of ownership including an insurance company and a salvage company.

The marine lender promptly declined accepting the boat as collateral for any loan.

That seems a little crazy to me. I could see them requiring a survey before they'd accept it as collateral, but to just say "we don't care how well it was fixed, we know it was damaged before so it's now worthless junk" seems crazy.

 

[SteveK]

That seems a little crazy to me. I could see them requiring a survey before they'd accept it as collateral, but to just say "we don't care how well it was fixed, we know it was damaged before so it's now worthless junk" seems crazy.

You beat me to it. Perhaps Pau Hana has a comment on this as I also am baffled why a salvaged boat put back into operation cannot be insured.

I have only had agreed value somewhere below percieved value and fully expect the agreed value to be paid out upon a total loss without sketchy details.

 

[O C Diver]

That seems a little crazy to me. I could see them requiring a survey before they'd accept it as collateral, but to just say "we don't care how well it was fixed, we know it was damaged before so it's now worthless junk" seems crazy.

A survey? The average surveyor isn't well regarded here.

If the boat was sunk, how do you know ALL the electrical wiring was replaced?
How do you know the engines and generator were replaced or completely rebuilt?
Think of all the potential problems a sunk boat could have. Then ask yourself why an insurance company would want to insure that potential nightmare. Why would a bank want that potential nightmare as collateral.

Ted

 

[ksanders]

guys regarding the bank, not accepting a boat that had once been salvaged as collateral is their absolute decision.

remember when you were asking to borrow money and offering some thing as collateral the lender has a choice to accept that item as collateral for the loan or not.

My son was going through a very well regarded yacht finance specialist with multiple avenues for lending, and they could not find a lender that would accept the boat as collateral after it had been salvaged.

The insurance is another story that I am not sure how would've eventually resolved.

My kids just chose a different boat and they are going to survey today, but they made for darn sure to ask before they flew all the way from Alaska to Florida whether the boat had ever been storm damaged to the point that it had been purchased by the insurance company.

 

[SteveK]

If the boat was sunk, how do you know ALL the electrical wiring was replaced?

On a boat that sunk inside boathouse the adjuster for insurance madated that all wires be cut 18 inches and new wire spliced in. Having the ability we replaced all wiring using the insurance allowance.

 

[twistedtree]

Either way, it does seem important to not end up with a tainted title. Perhaps the key is to negotiate a settlement with the insurance company that doesn’t involve them ever taking title to the boat. I think I’d also ask explicitly whether they in anyway flag the boat as having been declared a constructive loss, and ideally write a prohibition on that into the settlement.

 

[O C Diver]

On a boat that sunk inside boathouse the adjuster for insurance madated that all wires be cut 18 inches and new wire spliced in.

I'm assuming this was for a boat that only got water in the bilge? Can't imagine doing every electrical outlet and every recessed light fixture in the ceiling.

Ted