Beware of BoatUS Insurance

[Corey16781]

Unfortunately our O'Day 25 broke loose from it's Mooring and sank. It was a Total Loss. I have been a BoatUS Member for 17 years and have had been very happy with them. The current company that they use for their Marine Insurance is another story however. Three months after the loss they offered 43% of the Actual Cash Value of the Boat. When asked to provide details on how they arrived at that number, they would not respond with any documentation. Now, four months after the loss, they have agreed to a settlement based on an average of (3) different valuations which I complied and sent to them. We are still arguing about whether they owe Sales Tax as per Connecticut State Law.

Thankfully, I have been in Insurance myself for over 36 years and used to work as an Adjuster. If not for that, I would have been at their mercy.

 

[tfox2069]

Can you educate us on how you went about getting the three different valuations? Sorry about losing the boat, and the insurance company adding insult to injury. Ouch.

 

[Corey16781]

Hi - (1) NADA - Available online (2) BUC Book - Also available online (3) Yachtworld.com Listing of 25" O'Day's that were of similar age & condition

 

[dlochner]

It is unfortunate that you had trouble with Geico, BoatUS's current insurer. If you had Actual Cash Value insurance then that is part of the issue. As you know from being in the insurance business, the value of boats is harder to establish because for any given model there just aren't enough made and sold as compared to cars and trucks where there are thousands of the same model out there.

To avoid this trap, it far better to get Agreed Hull Value insurance. It usually costs a bit more, however, the insurer and the insured determine the value of the boat when the policy is sold and it remains at that level. Insurance companies will adjust the value of the boat downward at renewal at periodic intervals as the boat ages. If the insured disagrees they can try to convince the company to maintain coverage, sometimes it works.

 

[ggrizzard]

As a long time Boat US/Geico customer I am concerned by your report.
But to clarify some details, I'd like to know if you had an "Agreed Value" clause in your policy. I have been told that, should my boat be a total loss, the "Agreed" amount would be paid.
If that was the situation that you faced, I am deeply troubled that I have been paying a higher premium for that provision rather than if I allowed a settlement to be based on "Actual Cash Value".
Can you comment?

EDIT: [I see Dlochner was typing faster than I did]

 

[Corey16781]

Hi Guys - I had an ACV Policy rather than Stated Amount. To get a Stated Amount policy on a 43 year old Boat would have required a Survey and the Insurance Premium would have more than doubled. Considering I bought the boat 17 years ago for $ 3,800.00 this would have been cost prohibitive. The only good thing was they agreed to pay the full Salvage/Recovery bill $ 11,000.00 without reducing the payout on the hull. They did this under the General Liability provisions of the policy as it was considered to be a "Hazard to Navigation"

 

[Corey16781]

Don't let the original purchase price of $ 3,800.00 fool you. This boat was immaculate with a 2016 Nissan 9.8 long shaft / electric start. (6) set of sails. - See photos for 2020 Spring Commissioning

 

[dlochner]

Hi Guys - I had an ACV Policy rather than Stated Amount. To get a Stated Amount policy on a 43 year old Boat would have required a Survey and the Insurance Premium would have more than doubled. Considering I bought the boat 17 years ago for $ 3,800.00 this would have been cost prohibitive. The only good thing was they agreed to pay the full Salvage/Recovery bill $ 11,000.00 without reducing the payout on the hull. They did this under the General Liability provisions of the policy as it was considered to be a "Hazard to Navigation"

I don't think GEICO acted any differently than any other insurance company in this situation with an ACV policy. Being able to document the condition of the boat and the selling prices of similar boats is important. To add to the arenas of resources, brokers who subscribe to the YachtWorld.com listing agreement have access to the actual selling price of boats listed on YachtWorld.

The real take home lesson here is don't sail without liability insurance. Without liability insurance you would have on the hook for salvage and probably would have paid more.

 

[Corey16781]

I think Dave is correct here.. The big take away is to have Liability Insurance. Over 17 years I paid $5,100.00 in Insurance Premiums, and just the Salvage Bill was $ 11,000.00 if I did not have this insurance.

 

[SFS]

If I read the OP correctly, Corey is not disputing the fact that his coverage was for ACV. His beef is that Geico only wanted to pay 43% of that number, and then made it difficult to communicate.

 

[dlochner]

If I read the OP correctly, Corey is not disputing the fact that his coverage was for ACV. His beef is that Geico only wanted to pay 43% of that number, and then made it difficult to communicate.

Yes that is correct. However, with boats and sailboats in particular it is very difficult to determine the ACV. There just isn't enough of any one model in any given year to determine a reasonable value. In the end, insurance companies are in business to make money, so if they can reduce the payout by undervaluing the boat, they will do that. Every insurance company, not just Geico will take the low value unless you can demonstrate that they are wrong. The OP did just that, he showed he insurance company that they had under valued his boat. And they decided it wasn't worth the hassle to save a few bucks, so they gave in.

 

[Rick Webb]

In addition to covering salvage make sure your policy covers Pollution Mitigation as well. Some of the companies that sell auto insurance do not include that in their boat policies or did not at one time anyway. I have talked to several people who were given checks for the boat that sank and were told it was their responsibility to move it from the bottom of the bay. Pollution mitigation is more of an issue for power boat that will have a hundred or more gallons of fuel and a few gallons of engine oil that seep out of a sunk or burned boat but can still be a big bill on a sailboat especially for a burned boat.

 

[Tally Ho]

I am kind of surprised that an Agreed Upon Value policy, particularly for and older, relatively inexpensive boat requires a survey. They know what they will pay on a total loss claim, and your history...so they could set the premium for the risk.... but I don’t know much about insurance.

I do have an Agreed Upon Value for my 1988 O’Day 322.

Hope I never need to use it.

I will check the policy for limits on salvage, etc.though.

Greg

 

[Blitz]

please be aware, this is nothing new. Insurance companies will also devalue anything on the boat they can on a partial loss as well. For instance, if your bow pulpit was destroyed and needed replacement they would give you necessarily the replacement value of the pulpit but a 30 year depreciated value of the pulpit on a 30 year old boat.

There have been many articles written on this in Practical Sailor as well as Boat US publications.

One of the key things if for you to document all repairs, surveys, upgrades, etc that you might do each yet that might set your boat as good as or better than they sell for.

It obviously gets harder if you have a boat that nobody really cares for but you, selling for a small fraction of what you think your boat is worth. If your boat is a small run, by a relatively unknown builder it will be an uphill battle if a partial or total loss occurs.

On the other hand it can work to your advantage of you have damage to your boat that you know is easily repairable with some hard work but your boat isn't worth a lot in the history of sales. the insurance company may offer you a total loss, pay out and offer for you to re buy the boat at a minimum of cost.

 

[Joe]

The survey I had years ago, was to establish that the boat existed and was located where I stated it was. The market value was never a factor. The premium is based on the dollar amount. It's like term insurance.

 

[Maine Sail]

Unfortunately our O'Day 25 broke loose from it's Mooring and sank. It was a Total Loss. I have been a BoatUS Member for 17 years and have had been very happy with them. The current company that they use for their Marine Insurance is another story however. Three months after the loss they offered 43% of the Actual Cash Value of the Boat. When asked to provide details on how they arrived at that number, they would not respond with any documentation. Now, four months after the loss, they have agreed to a settlement based on an average of (3) different valuations which I complied and sent to them. We are still arguing about whether they owe Sales Tax as per Connecticut State Law.

Thankfully, I have been in Insurance myself for over 36 years and used to work as an Adjuster. If not for that, I would have been at their mercy.

Situations such as this are why boat owners should purchase an agreed value policy, where the value of the boat warrants it.. Of course you will need a survey, to define the agreed value, but with an agreed value policy you are paid the agreed value in a total loss not the market value, minus this, minus that, etc.....

 

[sailme88]

We had a 1969 Opel GT. Stopped to let someone pull out. Got T-boned by an elderly driver. Car was totaled. Insurance company for the elder was only offering $600 for a 1969 car. Went to a conference. the " reluctantly " increased their offer to $800. Told them to keep their money. Really? Yes! Why? I want to to replace the car, I don't want the money. You find it but I have the right to decline.. OK...
It took 2 months. Closest decent condition was in California. Acquisition and transport costs brought a new offer of $5k.. I reluctantly accepted and kept the old car body that I parted out !

 

[jssailem]

When I acquired my policy from BoatUS /Geico, they asked for a survey. Boat is a 1974 Cal. 120 of them built. I offered them a copy of 2 yr old survey, they asked I submit an owner survey. It was a listing of boat condition and stated value. We agreed on the AVP amount, they established the premium. I paid the premium. So far all is good.

Our marina has just upped the minimum liability levels to keep a boat in the slip. I advise you check your liability policy coverage values as you renew this year.

 

[sesmith]

Sorry to hear of your boat loss. It sounds like they took care of you in the end, and you got your money's worth for your premium payments over the years. I recently looked at insurance options (I usually do this yearly) on our boats, house and cars. We also have Boat US (Geico) policies on the boats and agreed hull value coverage. I did have to provide them with a survey for our Catalina, as I wanted the coverage higher than my purchase price as the boat value was a higher than I paid, so I split the difference and insured it for that. Since I had a survey from purchase, at the time, no big deal. For the Seaward no survey was ever needed. The good thing about agreed value coverage is that you get the discussion of what the boat is worth at the start of the policy rather than at claim time, though the coverage costs more.

A point of comparison. I recently got quotes from Progressive. No line item for environmental cleanup / spills. When I asked, they said that was included in the liability limits. You'll notice on a Boat US policy, that item is a separate line with very high limits. That's one of the reasons I stick with Boat US and have also not found similar coverage from anyone else for the same price.

Concerning price. Our Catalina is worth 5 times what our Seaward is. The Catalina is up on the Great Lakes. The Seaward sits on its trailer at our home in SC. The Seaward policy is only $100 cheaper than the Catalina policy. Location, location, location. Paying for insurance is a losing game, at least until you have a claim.

 

[capta]

I believe it is near time for boat owners to form an owner's insurance program, as has been done before in the maritime industry. Half a dozen people to run the company, little overhead and a small profit margin would change the playing field considerably.
Instead of playing the numbers, whatever those robbers in that business call them, go with what's important like the experience of the operator, a really good comprehensive survey, and intelligent areas of operation. I would never buy insurance from a company that did not require a comprehensive survey, perhaps even one by a company approved surveyor.
Any owner that does not take significant precautions (on video or pics) before an impending storm, will lose coverage. No more, "Well, it's insured, so I need not bother to do anything...", bull excrement. This is for folks who take owning a boat seriously.
A full time liveaboard should pay way less than a boat sitting on a mooring or in a slip, unattended. I can't say how many times I've saved a boat I've been living aboard, just by being aboard when things went wrong.
And those stupid new mandatory minimum crew requirements should go right out the window, if an owner can show experience and competence. Nobody is ever going to force me to take more crew than I feel is necessary for a safe voyage, right Mark?