Insurance settlement and discharge.

[Rum_Pirate]

Figures are rounded for this discussion

Vessel bought for 10K.
New owners put 11K in to make it sailable. New standing rigging, new mainsail (had none), new running rigging etc.
So total input is 21K plus minor incidentals.

Insured for 25k

Dismasted.
Requires (Boat Yard Estimate):

New Mast (cannot be spliced) 1​

New mainsail (existing is less than 6 months old)​

New standing rigging​

New roller furling​

New jib​

Repairs to coach roof and hulls, new chainplate etc​

Total 48K (i.e. more than insured value.
The Insurance's Marine surveyor indicates 35K.

Insurance usually pay out on the insured value less the residual value as they don't want to have a 'wreck' on their hands and have to dispose of it e.g. sell or dump.

Insurance Co are offering 12.5K.

Sounds like it was calculated by sticking a finger in the air and it was determined "Offer them half" of insured value.

How do you respond given that it would cost at lease 25.5 for Boatyard to repair?

Secondly can one withdraw a claim and re submit e.g.

New Mast (cannot be spliced) 14K​

New mainsail - repair half a dozen tears and live with repaired reduced life sail 1K​

New standing rigging 1.25K​

New roller furling 2.75K​

New jib (I have a brand new unused one) 0K​

Repairs to coach roof and hulls, new chainplate etc 2K​

Total 21K (i.e. Claim would be LESS than insured value) with me doing the labour.

Would they pay out then?

Polite suggestions on how to proceed?

 

[KevinV]

Ask them what they're basing the residual value on. Your repair/replace costs are affected up by your location, the residual is almost certainly affected down by it. They may not have taken that into account.

Certainly don't revise your claim down, or accept their first offer.

 

[Tranona]

Depends entirely on the wording of the insurance contract. An "agreed value" policy will pay up to exactly that - your 25k. However read what it actually says as it is probably worded o say they have the choice to pay "market value" or "residual" value. If this is the case you have fight them over what that value might be.

Post the wording that covers what they will pay out in the event of a total loss and might be able to give better comments.

 

[Rum_Pirate]

Ask them what they're basing the residual value on. Your repair/replace costs are affected up by your location, the residual is almost certainly affected down by it. They may not have taken that into account.

Certainly don't revise your claim down, or accept their first offer.

UPDATE They are now trying 'Law of Average'. ???? I can't find that term in the policy.

However in policy (section reproduced here) I spotted this (My font colouring) :

AMOUNT WE WILL PAY​

​

We will pay for a total loss of your vessel and other covered​

property only if the vessel is completely lost or destroyed. We​

will also pay for a constructive total loss if the cost of recovering​

and repairing the vessel is greater than the amount of insurance​

shown for your vessel on the Schedule. If we pay you for a total​

loss or constructive total loss, you agree that we are entitled to​

salvage proceeds or recovery there from, if any.​

BTW The cost of repairing the vessel is greater than the amount of insurance shown for the vessel on the Schedule.

I also appreciate the last line in the clause quoted above which refers to salvage proceeds i.e. residual value.

 

[B27]

You need to find some similar vessels to indicate that the market value is much more than what they are offering.
As Tranona says, they will work on market value, not what you paid or the sum of the parts.

Also what is the ture residual value?
If they are offering to leave you with a whole pile of valuable stuff like an engine, and the costt of disposing of the weck is not too high, there could be a reasonable offset?

You bought the boat with a mast for less than the new price of a mast.
That's a boat that's going to be written off easily unfortunately.

Is the 'not spliceable' nature of the mast at all related to the age of it?

Was the boat raced at all?

Personally I would also be wondering whether the boat will ever be the same again after being repaired.
And the time commitment of getting it sorted.
I might be looking at other boats and thinking of moving on.

Between multiple owners, being a few k out of pocket after a shipwreck is not the end of the world, we all (mostly) lose money on our boats.

How did the dismasting happen? If the chainplate failed, was there a latent defect which won't be covered by insurance?

It's not a huge claim, the insurers will want to settle and move on, so if you can give them a fair-sounding claim backed up by research, they will probably compromise.
But Market Value is the starting point.

 

[luke collins]

Seems a pretty poor offer. I would be challenging their offer.

 

[Rum_Pirate]

You need to find some similar vessels to indicate that the market value is much more than what they are offering.
As Tranona says, they will work on market value, not what you paid or the sum of the parts.

Also what is the ture residual value?
If they are offering to leave you with a whole pile of valuable stuff like an engine, and the costt of disposing of the weck is not too high, there could be a reasonable offset?

You bought the boat with a mast for less than the new price of a mast.
That's a boat that's going to be written off easily unfortunately.

Is the 'not spliceable' nature of the mast at all related to the age of it?

Was the boat raced at all?

Personally I would also be wondering whether the boat will ever be the same again after being repaired.
And the time commitment of getting it sorted.
I might be looking at other boats and thinking of moving on.

Between multiple owners, being a few k out of pocket after a shipwreck is not the end of the world, we all (mostly) lose money on our boats.

How did the dismasting happen? If the chainplate failed, was there a latent defect which won't be covered by insurance?

It's not a huge claim, the insurers will want to settle and move on, so if you can give them a fair-sounding claim backed up by research, they will probably compromise.
But Market Value is the starting point.

Appreciate your points on residual value.

True residual value (by independent boatyard) is under $4k. (no engine and no trailer)

New mast is circa $8.5K BUT the crating is circa $2.5K and the freight etc to here is circa $3K.

Mast not spliceable in 'my' view as the (complete) break in the mast is i) at the very point that the spreaders are let into the mast and ii) where the inner shrouds attached to the mast.

The boat was not raced.

As to chainplate failure, policy reads :

“Hidden Defect” means a hidden flaw in the construction or​

material of the vessel or part of the vessel which is not​

discoverable by using reasonable care.​

We did have a pre-insurance survey done by a boatyard.

and

We also cover physical damage that is caused directly by any​

hidden defect in your vessel. ​

However, we do not cover the cost of repairing or replacing any ​

defective part or of making good a defect in design or construction.​

 

[B27]

If the damage to the mast is a short section close to the spreaders, it may well be fixable,
The parts to do that would be easier to fedex.
It may depend on whether the section is current or obsolete.

Or maybe there's a project boat around to donate a mast?

 

[Rum_Pirate]

If the damage to the mast is a short section close to the spreaders, it may well be fixable,
The parts to do that would be easier to fedex.
It may depend on whether the section is current or obsolete.

Or maybe there's a project boat around to donate a mast?

Boat is a 1991

There are very few (probably none) masts of a 1991 F-27 or sections available.

 

[Rum_Pirate]

If the damage to the mast is a short section close to the spreaders, it may well be fixable,
The parts to do that would be easier to fedex.
It may depend on whether the section is current or obsolete.

Or maybe there's a project boat around to donate a mast?

Boat is a 1991.

Picture shows point of break in mast.

 

[Rum_Pirate]

Updates will continue.

 

[ylop]

Seems a pretty poor offer. I would be challenging their offer.

They’ve worked out you want to keep it and are playing a game accordingly. You need to play the same in return. “OK we agree it’s a constructive loss, lease pay accordingly, by the way the yard is asking who they should send the invoice to for the storage fees”. If you say you don’t want it they have ongoing costs and hassle until they can get someone to remove it and scrap it - that is their worst case scenario! Cost and admin effort for someone sitting in an office. It may get you a better offer to “repair” or get you an offer for the write off and the yard or someone else can buy it for buttons and sell it back to you.

 

[Rum_Pirate]

Actually my co-owner and I would be quite happy to settle financially and not have the boat.

 

[Tranona]

OK the clause says they will pay the insured value and keep the remains. If you want to keep it they will pay you less.

Seems you don't want the remains so they will have to pay the sum assured - the full 25k. The 12.5k settlement take into account their valuation of the remains if you want to keep it.

Your response is that you accept their offer of the insured value as laid out in the policy as you don't want to keep the boat.

That is my reading.

 

[Stemar]

Many years ago, my Dad had an accident and, as it was an old car, the cost of repair was well in excess of the value, he was offered the write-off value for the car We wrote back and suggested that we'd accept a slightly smaller amount as an agreed value for the repairs, which avoided writing the car off, They accepted.

 

[Rum_Pirate]

I suspect that final issue will come down to the determination of the 'salvage' value of the hulls.

 

[ylop]

I suspect that final issue will come down to the determination of the 'salvage' value of the hulls.

I don’t know why that is relevant given:

Actually my co-owner and I would be quite happy to settle financially and not have the boat.

 

[Rum_Pirate]

I don’t know why that is relevant given:

The insurance company does not want the vessel or have to deal with selling or disposing of the vessel.
It wants me to have that problem.

However it wants the ‘salvage’ value of the hulls obviously to minimize the loss paid out where there isn’t a total loss and the vessel does have some residual value. EG as in this case the hulls will have ‘some’ value.

 

[ylop]

The insurance company does not want the vessel or have to deal with selling or disposing of the vessel.
It wants me to have that problem.

However it wants the ‘salvage’ value of the hulls obviously to minimize the loss paid out where there isn’t a total loss and the vessel does have some residual value. EG as in this case the hulls will have ‘some’ value.

I don’t think it’s their choice to make. A constructive total loss means (to my understanding) that it’s your choice to say “no, just pay the full claim and then realise the value of salvage yourselves”.

 

[Tranona]

That would be my understanding also. The contract says they will pay the insured value but retain the right to keep the remains. Their choice.