Insurance refusal to pay out

[vyv_cox]

It is often said that insurers will seize upon any excuse not to pay out. This is surely an extreme example?

Out of date fire extinguishers at centre of boating legal battle - Marine Industry News

 

[RupertW]

It is often said that insurers will seize upon any excuse not to pay out. This is surely an extreme example?

Out of date fire extinguishers at centre of boating legal battle - Marine Industry News

European and therefore British ruling about 20 years ago declared that claim payouts can only be reduced by insurance companies by the estimated amount that any misdeclaratiom by the customer was to blame for the claim. The USA is different and worse as always.

 

[AntarcticPilot]

Also note that laws differ between states in the USA, and this is a case where the insurer is applying the state laws most beneficial to itself. It appears that the Supreme Court is looking into the legitimacy of the clause that allows that to happen.

 

[Kelpie]

It seems crazy but insurance contracts are not bound by normal rules. There is a duty of utmost good faith and a contract may be declared void if there is a material misrepresentation, even if this misrepresentation only comes to light when a claim is made and the claim has nothing to do with the misrepresentation.

 

[rogerthebodger]

Our Marine Safety authority by law must inspect out boats to issue a safety certificate. This includes the annual service of fire extinguish flares and other safety equipment.

This stationary survey we pay for as a service

My insurance is void if I do not have a safety certificate issued by the Marine Safety authority

This is why I onmy have third party covey as required by my yacht club marina

You guys are lucky you don't yet have annual safety surveys so you can uses yor boat legally

 

[RivalRedwing]

shhhhhhh

 

[Bouba]

It seems that using this method of jurisdiction shopping the German owners of the insurance company has saved a billion dollars in payouts...and thus remained competitive

 

[Tranona]

It seems crazy but insurance contracts are not bound by normal rules. There is a duty of utmost good faith and a contract may be declared void if there is a material misrepresentation, even if this misrepresentation only comes to light when a claim is made and the claim has nothing to do with the misrepresentation.

It is in the UK because we don't have the same regulatory requirements for pleasure boats as they do in the US nor the "choice of Law" which is actually the issue here - not whether the fire extinguishers were in date. The contract the insured agreed to had a "Choice of Law" clause - even if he probably did not know it, and the insurer has chosen to apply it. The Supreme Court is being asked to rules on whether such clauses are fair.

It is really important to understand that all risks insurance is under contract law, and with a UK insurer (and many non UK) are under UK law which is much fairer and predictable than contracts under most other law jurisdictions. That is why London is the biggest insurance market - they come here partly because the market is efficient but mainly because the law is "better". This does not mean there are no disputes and disputes on all risks policies are usually about whether the claim meets the requirements of the clause under which the claim is being made. Inevitably there are complex or novel situations where it is not easy and relies on judgement and interpretation (and some insurers may well prefer interpretations in their favour!)

 

[westernman]

It seems it that may be German insurance companies specialize in this kind of thing.

I heard of a case where the German resident and owner of a Porsche drove his car to Italy while on holiday.
It was fully comp insured.

One night he parked it on the street below his bedroom window in the hotel he was staying at.
It was stolen during the night.

His insurance company refused to pay up because they maintained it was grossly negligent to leave a Porsche unattended on the street in Italy.

All German insurance contracts have a gross negligence clause.

Not maintaining fire extinquishers in date is gross negligence.

 

[38mess]

Just had my extinguishers certified today.

 

[Bouba]

It’s interesting that they are accepting premiums from the insured, knowing that you are only ever going to return the premiums...I wonder is that itself is fraud ?...because you are preventing the consumer from seeking a better insurance company

 

[RupertW]

It seems crazy but insurance contracts are not bound by normal rules. There is a duty of utmost good faith and a contract may be declared void if there is a material misrepresentation, even if this misrepresentation only comes to light when a claim is made and the claim has nothing to do with the misrepresentation.

It seems it that may be German insurance companies specialize in this kind of thing.

I heard of a case where the German resident and owner of a Porsche drove his car to Italy while on holiday.
It was fully comp insured.

One night he parked it on the street below his bedroom window in the hotel he was staying at.
It was stolen during the night.

His insurance company refused to pay up because they maintained it was grossly negligent to leave a Porsche unattended on the street in Italy.

All German insurance contracts have a gross negligence clause.

Not maintaining fire extinquishers in date is gross negligence.

The German insurance company was only able to avoid the payout beucase the act of gross negligence was directly related to the claim. If the car had caught fire then they would have to pay out. It’s simply not true that a European or UK insurer could avoid a full payout because of an unrelated act of gross negligence like a claim for going aground when the negligence was extinguishers.

 

[RunAgroundHard]

A recent, temporary berth neighbour, had his insurance fail to pay out. He fouled his propellor and pulled the engine out of the bed, a lot of damage. His insurance company noted that the engine bearers were more than 5 years old and stated that they would not fully pay. I think they paid out for the lift out and storage while he replaced bearers and other works. I was surprised when he recalled his story, last month. Don't know the insurance company.

 

[Bouba]

A recent, temporary berth neighbour, had his insurance fail to pay out. He fouled his propellor and pulled the engine out of the bed, a lot of damage. His insurance company noted that the engine bearers were more than 5 years old and stated that they would not fully pay. I think they paid out for the lift out and storage while he replaced bearers and other works. I was surprised when he recalled his story, last month. Don't know the insurance company.

But every boat over five years old has five year old engine bearers…if that is not in the small print I don’t see how they could get away with it. Because if you had replaced them (for whatever reason) then they could have claimed that you modified the boat

 

[Tranona]

You need to know more details of the damage and the report on which the claim for engine mounts (?) was rejected was based plus the wording of the clause the claim was made under. Otherwise just guesswork.

 

[RunAgroundHard]

But every boat over five years old has five year old engine bearers…if that is not in the small print I don’t see how they could get away with it. Because if you had replaced them (for whatever reason) then they could have claimed that you modified the boat

Engine mounts, not bearers, my error using the incorrect word.

 

[Tranona]

They may well have a "betterment" clause" and the assessor found they were shot anyway> Just guessing, but could happen which is why you need to establish the basis for rejection.

 

[RunAgroundHard]

They may well have a "betterment" clause" and the assessor found they were shot anyway> Just guessing, but could happen which is why you need to establish the basis for rejection.

Yes, likely they were shot as the boat was older. In the discussion, I asked him if he had claimed on his insurance, which he had, but they did not pay for all the damage because the engine mounts were more than 5 years old. That is all I know and he has moved on, so I will probably never know. As a result of the discussion, I googled that, because my mounts were replaced 12 years ago with new ones. Google suggests that engine mounts last 5 to 7 years, for example: WHEN AND WHY SHOULD MARINE ENGINE MOUNTS BE REPLACED? – Ellebogen

Of course, this is not similar to the OP case being discussed. Unlike in the OP, my example is directly related to the failure mode, and I partially sympathise which the insurance company's position. Also, the mounts may have been totally shot and significantly older than 5 years. It stuck with me as I damaged a Sigma 33 engine when a line went round th propeller and stalled the engine which twisted the frame that the engine mounts are secured to. That boat was less than 5 years old.

 

[Bouba]

I can’t help thinking that breakaway engine mounts could save the hull from more serious damage

 

[Tranona]

Yes, likely they were shot as the boat was older. In the discussion, I asked him if he had claimed on his insurance, which he had, but they did not pay for all the damage because the engine mounts were more than 5 years old. That is all I know and he has moved on, so I will probably never know. As a result of the discussion, I googled that, because my mounts were replaced 12 years ago with new ones. Google suggests that engine mounts last 5 to 7 years, for example: WHEN AND WHY SHOULD MARINE ENGINE MOUNTS BE REPLACED? – Ellebogen

Of course, this is not similar to the OP case being discussed. Unlike in the OP, my example is directly related to the failure mode, and I partially sympathise which the insurance company's position. Also, the mounts may have been totally shot and significantly older than 5 years. It stuck with me as I damaged a Sigma 33 engine when a line went round th propeller and stalled the engine which twisted the frame that the engine mounts are secured to. That boat was less than 5 years old.

In another life I got to know about a number of incidents of damage from something caught round the prop. It is amazing how much damage it can do. Breaking the engine mount brackets (aluminium!) off Bukh engines, wrecking the internals of saildrives at £6k a pop, pulling two shafts together on a MOBO as examples. Generally speaking insurers are good about claims for this as it clearly falls in All Risks cover, but obviously loss adjusters will go through the claim carefully to mitigate the insurers loss. They can be a bit aggressive and may well make decisions that can be challenged. However, challenging such decisions means having strong professional type counters and one might make the decision to accept if most of the claim is paid.

I had similar with a recent claim for damage to my Morgan where it was clearly covered but they were not prepared to take responsibility for the repair using one of their nominated repairers and would only offer a settlement equal to my chosen repairer's quote less my excess. The basis was that it was a unique colour (on my Morgan) and the first repaint on a 20 year old car. I was happy because the repairer was OK with mixing the paint to match the car, not the colour code. Perfect match (so far!)