Insurance Claim, Due Diligence & A Boating Cockup

[Babylon]

My insurer is trying to avoid paying my claim by saying there has been 'want of due diligence' on my behalf. What exactly does this mean, and are they using it as a 'catch-all'? I had previously understood that assured/owner/skipper negligence was covered.

The circumstances were that, when I installed a new engine a year ago, I made the mistake of connecting the seacock and hull-anode bonding wire to the starter-motor positive, rather than the engine earth. The consequence of this silly mistake was that 16amps were sent to the seacocks whenever the engine-battery circuit was on, rapidly eating away the bronze. Immediately upon realising the problem (the engine start battery had been losing charge very fast), I first dried the boat out on the nearest wall to have a proper look. Several seacocks were on the point of catastrophic failure and all needed replacing, so I had her lifted out as soon as it was daylight. I was extremely lucky not to have the boat take on water at sea, or sink on her mooring unattended.

I am not a professional marine electrician or engineer. I'd just employed both these professions to check and renew the old wiring, and to do the main engine installation, alignment etc. All I did was the donkey-work, eg repainting the engine bay, installing sound insulation, repositioning the primary fuel filter, etc. The bonding of the seacocks (which I subsequently discovered is no longer received wisdom!) was one of my last jobs before relauch: I was tired, it was getting dark, and I attached the wire to a convenient fixing which I assumed to be the negative.

So, where does 'due diligence' come in?

 

[Talulah]

What are you claiming for?

 

[AntarcticPilot]

What are you claiming for?

Exactly. As presented, there is no loss, and the sea-cocks have been replaced as a maintenance job. If the boat HAD sunk or suffered water ingress, then there might have been a claim for that. But as it is, equipment that was incorrectly installed has worn out more rapidly than expected and you have replaced the equipment prior to catastrophic failure. You aren't protected from incorrect installation by insurance; you are protected from consequences of that incorrect installation.

I suspect that even if the insurance had paid out for damage from flooding or sinking, they wouldn't have paid for the sea-cocks (but that would have been the least of your problems!)

Look at it this way - if the job had been done by a paid engineer, you'd have claimed on the warranty; he'd have paid up from his professional indemnity insurance (or equivalent). And no doubt, the insurance company would have chased the engineer for anything they paid out in the event of a sinking or flooding. You did the job, so the only warranty is from yourself; the bit about negligence in your insurance says they won't try and get into a tail-chasing situation of trying to recover money paid to you from you! The valves themselves have performed as expected, so no claim on the manufacturer.

I sympathize with the situation, but in your position I'd be relieved I'd caught it in time, and put it down to experience.

 

[Babylon]

Exactly. As presented, there is no loss, and the sea-cocks have been replaced as a maintenance job. If the boat HAD sunk or suffered water ingress, then there might have been a claim for that. But as it is, equipment that was incorrectly installed has worn out more rapidly than expected and you have replaced the equipment prior to catastrophic failure. You aren't protected from incorrect installation by insurance; you are protected from consequences of that incorrect installation.

...

I sympathize with the situation, but in your position I'd be relieved I'd caught it in time, and put it down to experience.

Thanks for helping to clarify things for me. Relief and a lesson-learnt were indeed my primary emotions. (I was claiming for the costs of lift-out and relaunch and the labour and parts to replace 3 bronze seacocks and the exterior parts of two Blakes seacocks, plus one degraded engine start battery - all in came to quite a lot of money.)

Although I was upset at my stupidity and the cost of rectifying its consequences, I hadn't thought of an insurance claim until someone in this parish originally suggested it. When I then spoke to my broker, he advised putting in a claim, based on 'owner negligence' but the insurers declined it. I was able to eliminate the first two exclusions they cited as not-applicable (eg there was no contractor involved in the seacock bonding cockup), but wondered where 'due diligence' on behalf of the assured or owner or skipper came in.

I've never put in a claim for anything that wasn't completely clear-cut, and I'm happy to let this one drop.

 

[Talulah]

Understood. So back to the original question.
"So, where does 'due diligence' come in?"
I've no experience but hopefully some insurance expert will be along to explain what this translates to or is it a get out of jail card for insurance companies?

 

[Babylon]

Understood. So back to the original question.
"So, where does 'due diligence' come in?"
I've no experience but hopefully some insurance expert will be along to explain what this translates to or is it a get out of jail card for insurance companies?

Yes, that was my concern.

I googled 'due diligence' and came back with a load of returns about financial instruments, real estate law, etc.

I think its one of those concepts that emerged in the last decade or two that sounds useful, and the insurance company or companies are now trying it on.

 

[Tranona]

Yes, that was my concern.

I googled 'due diligence' and came back with a load of returns about financial instruments, real estate law, etc.

I think its one of those concepts that emerged in the last decade or two that sounds useful, and the insurance company or companies are now trying it on.

It is just a posh way of saying you c****d up - so you only have yourself to blame. As said if somebody claiming to be a professional had made the same mistake you could sue him, and he would be covered by his professional indemnity insurance.

The term, like many has also acquired specific meanings, for example used as a shorthand for crawling all over the accounts of a potential takeover to find any nasties, or closer to (boating) home the process of checking out all the documentation on a boat purchase to confirm the boat is "clean".

 

[Blue5]

Yes, that was my concern.

I googled 'due diligence' and came back with a load of returns about financial instruments, real estate law, etc.

I think its one of those concepts that emerged in the last decade or two that sounds useful, and the insurance company or companies are now trying it on.

I take it to mean in this instance that it has been carried out to best practice (or not) but then again I am not an insurance expert.

 

[prv]

It is just a posh way of saying you c****d up - so you only have yourself to blame.

Agree that's what they mean. But what's more interesting is whether they ought to cover the owner cocking it up. After all, if you never made a mistake you wouldn't need insurance - any accident you did have would be someone else's fault by definition[1] so you could claim from them. Insurance is there precisely to cover the situations when you do make a mistake, like cocking up mooring and taking a chunk out of the boat next door. Is picking the wrong stud on the engine such a different class of mistake that it's obviously not covered? I don't think it's that clear-cut.

Pete

[1] Bad weather etc - if you were perfect you wouldn't have been out in it. Equipment failure - if you were perfect you would have maintained it better, etc etc

 

[davidej]

" due dilligence" is used a lot in the legal and financial sector and means that you have done the dilligence (ie investigation and research) due (ie neeeded) for the task in hand.

Sorry to be blunt but you hadn't

Can't see you can possibly make a claim - if the boat had sunk the insurer would have probably repudiated it -after all you were obviously well out of your depth (sorry for the pun)

 

[prv]

" due dilligence" is used a lot in the legal and financial sector and means that you have done the dilligence (ie investigation and research) due (ie neeeded) for the task in hand.

Sorry to be blunt but you hadn't

Can't see you can possibly make a claim

So if someone fails to "investigate" the tide in an unfamiliar harbour, and in consequence their boat is set sideways onto the pierhead as they try to enter, their insurance company will say "sorry, your fault, not paying out"?

The situation here wasn't someone so incompetent that he thought wiring his seacocks up to +12v was a fine and dandy idea. Instead he was trying to connect them to the anode via the engine block (ok, not current practice any more, but not wrong as such) and mistakenly picked the wrong stud on the engine to connect to, possibly out of sight and working by feel (I can't see the starter motor on my engine). It's a mistake, but is it really a worse mistake than, say, putting the downwind shore line on first, to the wrong cleat, gunning the engine in desperation as it all goes wrong, and sideswiping the Hallberg-Rassy in the next berth? Insurance companies pay out for mooring cockups, don't they?

Pete

 

[davidej]

So if someone fails to "investigate" the tide in an unfamiliar harbour, and in consequence their boat is set sideways onto the pierhead as they try to enter, their insurance company will say "sorry, your fault, not paying out"?

The situation here wasn't someone so incompetent that he thought wiring his seacocks up to +12v was a fine and dandy idea. Instead he was trying to connect them to the anode via the engine block (ok, not current practice any more, but not wrong as such) and mistakenly picked the wrong stud on the engine to connect to, possibly out of sight and working by feel (I can't see the starter motor on my engine). It's a mistake, but is it really a worse mistake than, say, putting the downwind shore line on first, to the wrong cleat, gunning the engine in desperation as it all goes wrong, and sideswiping the Hallberg-Rassy in the next berth? Insurance companies pay out for mooring cockups, don't they?

Pete

I am no insurance expert and don't want to comment on your scenario.

IMHO however to mistake the +ve post on a starter motor for a suitable earthing point is fairly basic and suggests (to me, at least) that he was out of his comfort zone.

Luckily all fairly acedemic as the boat didn't sink.

 

[Tranona]

So if someone fails to "investigate" the tide in an unfamiliar harbour, and in consequence their boat is set sideways onto the pierhead as they try to enter, their insurance company will say "sorry, your fault, not paying out"?

The situation here wasn't someone so incompetent that he thought wiring his seacocks up to +12v was a fine and dandy idea. Instead he was trying to connect them to the anode via the engine block (ok, not current practice any more, but not wrong as such) and mistakenly picked the wrong stud on the engine to connect to, possibly out of sight and working by feel (I can't see the starter motor on my engine). It's a mistake, but is it really a worse mistake than, say, putting the downwind shore line on first, to the wrong cleat, gunning the engine in desperation as it all goes wrong, and sideswiping the Hallberg-Rassy in the next berth? Insurance companies pay out for mooring cockups, don't they?

Pete

You are making it all too complicated. Insurance covers you for accidental damage or loss to both your boat (if you have covered that) and third parties. You are not insuring against your mistakes other than the consequences of errors in using your boat as you have described.

As it happens most policies (such as mine with AXA) exclude any loss caused by "corrosion, rust, electrolytic or galvanic corrosion, or wasting" so the claim would have failed anyway.

 

[daveyw]

I think I would have been too embarrassed to put a claim in!

 

[Babylon]

I think I would have been too embarrassed to put a claim in!

If you've got the time on your hands, you'll soon discover that, not only did I fess up on here, the story then got picked up by YM as part of their seacock campaign and I was more than happy for it to be published over two pages in the magazine - not so that I could be pilloried or glorified, but so that others could learn from my own error.

I've also now learnt a lot about insurance, so its all good stuff.

 

[Burnham Bob]

Due diligence in it simplest form means having a good look and reassuring yourself everything is okay. So, if you've done something, due diligence is a quick check that you've done it right - ie got all the connections right in this case. Failing to do that is a lack of due diligence.

So, eating away your own seacocks through not checking you'd wired it correctly is a result of the lack of due diligence.

Negligence is not doing something you are supposed to. So is not carrying out due diligence negligence?

Well, not really. Due diligence applies when you've done something - you need to check that it's right. Negligence is the absence of proper action. Assuming you had not wired the sea cocks incorrectly and everything was okay, not servicing them over a period of years and then seeing them fail due to lack of maintenance - that would be negligence and you could claim.

Sometimes legal jargon is just careful use of english to be precise in your meaning. Anyway, pedantry over back to the real world.

 

[savageseadog]

You've had a lucky escape and suggest you would have been better off troubling the insurance company for something more significant as and when it happens.

The terms I've come across in relation to marine insurance is negligence and gross negligence which are fairly self explanatory. My policy covers negligence but not gross negligence. I think yours incident could be classed as negligence, but the seacocks themselves would not be covered. Mistakes like yours are not confined to DIY jobs, I've seen some awful "professional" work

 

[Momac]

Insurance is for accidents and third party liability.
Not for wear and tear , corrosion or mechanical/electrical faults , or breakdown and not for anything else that might be excluded in a particular insrance policy wording.

 

[Babylon]

You've had a lucky escape and suggest you would have been better off troubling the insurance company for something more significant as and when it happens.

Interestingly, I wasn't even going to consider a claim until someone from this parish suggested I might be covered.

So I called my broker. He said he thought I was covered under 'owner negligence' and advised me to put in a claim.

When my claim was refused, with the insurers quoting their clauses and exclusions at me, I was happy to leave it.

Fast forward a few months, and my broker contacted me again: they wanted to know if I 'had any thoughts' on the reasons the claim was refused.

So I looked at it all again carefully - after which I came on here to canvass for advice.

Personally, I'd rather keep my powder dry for any future situation where - heaven forfend - I do suffer claimable damage or loss.

 

[Babylon]

Due diligence in it simplest form means having a good look and reassuring yourself everything is okay. So, if you've done something, due diligence is a quick check that you've done it right - ie got all the connections right in this case. Failing to do that is a lack of due diligence.

So, eating away your own seacocks through not checking you'd wired it correctly is a result of the lack of due diligence.

Negligence is not doing something you are supposed to. So is not carrying out due diligence negligence?

Well, not really. Due diligence applies when you've done something - you need to check that it's right. Negligence is the absence of proper action. Assuming you had not wired the sea cocks incorrectly and everything was okay, not servicing them over a period of years and then seeing them fail due to lack of maintenance - that would be negligence and you could claim.

Sometimes legal jargon is just careful use of english to be precise in your meaning. Anyway, pedantry over back to the real world.

Thanks Bob,

A lucid explanation