After making an insurance claim and faxing the boatyard's estimate, I received a check less my deductable. The problem is the check is drafted to myself and my lender. My lender wants me to endorse the check and mail it to them to hold in escrow until the repairs are complete. At that time they will cut the boatyard a check. If the rapair cost are less than the estimate, they want to keep the money and apply it to my loan principle. Is this normal?
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Check your loan agreements
While I can understand the finance company wanting to be sure you have done the repairs, and then sending the repair $$ to the boatyard, if the cost of the boatyard repairs comes in less than the insurance check, the finance company shouldn't get the difference. If the boatyard mis-estimated the cost, and the insurance (after their "due diligence") paid them what they wanted, it's the boatyard's or insurance company's error, not the finance company's. There's no reason they should be able to apply it against the loan, unless the loan agreement says so. You paid for the insurance, and you are contracting with the boatyard for the repair, not the finance company.
While I can understand the finance company wanting to be sure you have done the repairs, and then sending the repair $$ to the boatyard, if the cost of the boatyard repairs comes in less than the insurance check, the finance company shouldn't get the difference. If the boatyard mis-estimated the cost, and the insurance (after their "due diligence") paid them what they wanted, it's the boatyard's or insurance company's error, not the finance company's. There's no reason they should be able to apply it against the loan, unless the loan agreement says so. You paid for the insurance, and you are contracting with the boatyard for the repair, not the finance company.
Ask the insurance company to cut the check in your name and the boatyard name. This assures the work will be done and that you are satisfied with the result. Let the boat yard hold the check and you endorse it after completion. An alternative plan might be to have the check named to the boatyard for 50% and the balance in both names upon completion and satisfaction.
And will the boatyard
agree to do the work if the check is sitting off in Kansas or NYC or somewhere? Not sure I would. And who is the final word that the finance company takes to release the funds? Yours, the boatyard's, are they gonna require a surveyor? Just think how long it's gonna take to get that check out of them. Never heard of this type of arrangement.
agree to do the work if the check is sitting off in Kansas or NYC or somewhere? Not sure I would. And who is the final word that the finance company takes to release the funds? Yours, the boatyard's, are they gonna require a surveyor? Just think how long it's gonna take to get that check out of them. Never heard of this type of arrangement.
A new one on me...
I must say I've never heard of an arrangement like this before. While I haven't had insurance work done on my boat (knock wood/teak) I have had insurance work done on my house and car. In both cases the check was cut to me and the company doing the work. The money is intended for work and materials to restore the damaged property to it's pre-damage condition. If any monies are spent on anything else then it's insurance fraud. The insurance is bought to recover from a financially devastating set back. Not to enrich the insured or any other institution at the expense of the insurance company. While it's true that the lender should have the collateral (boat in this case) restored to a condition to cover the balance of the loan in case of default on the borrowers part; the lender has no right to expect a profit from damage to the boat, car, house or whatever is insured. That check must be made out jointly to the owner and the company or contractor(s) doing the work. And when all parties are satisfied that the work is properly complete then all endorse the check and life goes on. MY TWO CENTS, Mike s/v Pitterpat
I must say I've never heard of an arrangement like this before. While I haven't had insurance work done on my boat (knock wood/teak) I have had insurance work done on my house and car. In both cases the check was cut to me and the company doing the work. The money is intended for work and materials to restore the damaged property to it's pre-damage condition. If any monies are spent on anything else then it's insurance fraud. The insurance is bought to recover from a financially devastating set back. Not to enrich the insured or any other institution at the expense of the insurance company. While it's true that the lender should have the collateral (boat in this case) restored to a condition to cover the balance of the loan in case of default on the borrowers part; the lender has no right to expect a profit from damage to the boat, car, house or whatever is insured. That check must be made out jointly to the owner and the company or contractor(s) doing the work. And when all parties are satisfied that the work is properly complete then all endorse the check and life goes on. MY TWO CENTS, Mike s/v Pitterpat
Same thing
happend to me with regards to my house. I had a flood claim, the mortgage company wanted to keep it until all repairs were complete. Since I didn't have $35k as pocket change, they did agree to pay it out in 1/3's as the work was done. On another occasion, the county flood control was taking some of my property to widen the bayou behind my house. We protested the amount, which the mortgage company said was too little to send their attorney down to help protest, and received 3 times what the county offered. The mortgage company, to protect their investment in my house, kept it all and reduced my mortgage. It seems that this type of a clause is written into many lien contracts.
happend to me with regards to my house. I had a flood claim, the mortgage company wanted to keep it until all repairs were complete. Since I didn't have $35k as pocket change, they did agree to pay it out in 1/3's as the work was done. On another occasion, the county flood control was taking some of my property to widen the bayou behind my house. We protested the amount, which the mortgage company said was too little to send their attorney down to help protest, and received 3 times what the county offered. The mortgage company, to protect their investment in my house, kept it all and reduced my mortgage. It seems that this type of a clause is written into many lien contracts.
Same thing happened to us
The insurance claim was swift, the surveyor inspected the damage, the boat yard gave his estimate and the check was cut and sent to us. When I opened the envelope and read the check it was written to us...and our bank. I called the bank, they said the same thing, But not to with hold and apply to the balance. Luckily the boat yard hates bank bureaucracy as much as we do. and We were able to get the Boat yard and the bank to talk. We had the yard do the work, he then called the bank and said the job was done. I also called and said the job was done. The bank released the check to the yard ONLY. The amount was for more than the work , so the yard applied the balance to our account as a credit.....what A Mess....I found latter that the insurance company will send you the check in your name only,,,if you have a letter in writing from your bank that they approve of that......After that big brother mess...we tried to switch banks , or pay off the loan,,,as anxious as other lenders are to make the deal...they all want the boat re surveyed....and that would mean a haul out and probably cost us another $1000.,,, so they have us by the B***s....Now I know and try to be nice...yes Mr. banker.....
The insurance claim was swift, the surveyor inspected the damage, the boat yard gave his estimate and the check was cut and sent to us. When I opened the envelope and read the check it was written to us...and our bank. I called the bank, they said the same thing, But not to with hold and apply to the balance. Luckily the boat yard hates bank bureaucracy as much as we do. and We were able to get the Boat yard and the bank to talk. We had the yard do the work, he then called the bank and said the job was done. I also called and said the job was done. The bank released the check to the yard ONLY. The amount was for more than the work , so the yard applied the balance to our account as a credit.....what A Mess....I found latter that the insurance company will send you the check in your name only,,,if you have a letter in writing from your bank that they approve of that......After that big brother mess...we tried to switch banks , or pay off the loan,,,as anxious as other lenders are to make the deal...they all want the boat re surveyed....and that would mean a haul out and probably cost us another $1000.,,, so they have us by the B***s....Now I know and try to be nice...yes Mr. banker.....
Loss Payee
I think you will see that the endorsement required by the lending institution as a condition of your having a loan has the lending institution as the one to receive payment in the event of a claim. Not you. I think as a practice, most insurers will make the payment to the lender and you, the insured. In smaller claim cases, they often will make the payment to the repairing firm and insured, especially if they are familiar with them and have some history. However, the insurance company does so at their own risk. In the fuzzy depths of my brain, I seem to recall a few cases in the last years where lenders went after insurers for failing to make loss payments to them when the loan payments were in arrears, and the customer pocketed the money or cut repair corners. The insurers had to pay again, sometimes way in excess of the original amount. Rick D.
I think you will see that the endorsement required by the lending institution as a condition of your having a loan has the lending institution as the one to receive payment in the event of a claim. Not you. I think as a practice, most insurers will make the payment to the lender and you, the insured. In smaller claim cases, they often will make the payment to the repairing firm and insured, especially if they are familiar with them and have some history. However, the insurance company does so at their own risk. In the fuzzy depths of my brain, I seem to recall a few cases in the last years where lenders went after insurers for failing to make loss payments to them when the loan payments were in arrears, and the customer pocketed the money or cut repair corners. The insurers had to pay again, sometimes way in excess of the original amount. Rick D.
It does get fuzzy
There were things in our claim that the insurance company was paying for that were on the boat yards estimate...example...we had smoke damage. caused by an engine fire...... The insurance covered the damage, mechanicals were taken care of by the yard. the yard had in their estimate to repaint the engine compartment and reline with sound proofing. Well I said I would reline with sound proofing. I thought was better than they had on their estimate and I can paint. These items were out of my pocket and provided a better job than the yard would have. So how is it that bank wont let me have the funds to cover these costs...even with recipts. They would only pay they yard. And then we made the adjustments. for the time and materials per the original estimate.
There were things in our claim that the insurance company was paying for that were on the boat yards estimate...example...we had smoke damage. caused by an engine fire...... The insurance covered the damage, mechanicals were taken care of by the yard. the yard had in their estimate to repaint the engine compartment and reline with sound proofing. Well I said I would reline with sound proofing. I thought was better than they had on their estimate and I can paint. These items were out of my pocket and provided a better job than the yard would have. So how is it that bank wont let me have the funds to cover these costs...even with recipts. They would only pay they yard. And then we made the adjustments. for the time and materials per the original estimate.
Actually what happened was
The insurance company wrote the check to us and the bank, the bank had us send the check to them for co sign but would not release the funds until the job was finished. We ended up having to purchase a new engine and place a deposit on labor using our credit card. After the engine was installed and the project completed. the bank talked with our marina and released the funds to them. Since we were going to pay our slip fee along with a number of other payments, we were able to swap out funds of debts vs credits. And then pay off the credit card with the money we had banked to pay the slip fee and other projects. What happens if A). one cant place that amount on a credit card or B). A marina will not work with you on funds??? And the boat owner cannot fix the boat without the funds written over by the insurance company? catch 22
The insurance company wrote the check to us and the bank, the bank had us send the check to them for co sign but would not release the funds until the job was finished. We ended up having to purchase a new engine and place a deposit on labor using our credit card. After the engine was installed and the project completed. the bank talked with our marina and released the funds to them. Since we were going to pay our slip fee along with a number of other payments, we were able to swap out funds of debts vs credits. And then pay off the credit card with the money we had banked to pay the slip fee and other projects. What happens if A). one cant place that amount on a credit card or B). A marina will not work with you on funds??? And the boat owner cannot fix the boat without the funds written over by the insurance company? catch 22
Rob: That's When You Punt...
...to an attorney if you can't appeal to reason with the bank. They will normally release funds as the repair progresses, but, there is always the exception. And, those sometimes result in new law if some dummy refuses to work it out. It is usually in their best interest to figure out how to make it come together.
...to an attorney if you can't appeal to reason with the bank. They will normally release funds as the repair progresses, but, there is always the exception. And, those sometimes result in new law if some dummy refuses to work it out. It is usually in their best interest to figure out how to make it come together.
Rick has it right!
Hey all Rick has it right (we 40.5 owners stick together). The bank is the loss payee on your insurance policy, and by contract, they must be kept whole in the process first. That is why their name is on the check. And they have the right to make sure repairs are made correctly. After all, your loan is secured with the boat that was damaged. This is why they would not pay for repairs done by the owner. As for the balance if there is money left over, THAT belongs to the insurance carrier. Just because they in good faith, overpaid a bill doesn't give the boat owner the right to keep the money. When you do, just keep in mind insurance fraud and the rising premiums that we pay. You just contributed to the problem.
Hey all Rick has it right (we 40.5 owners stick together). The bank is the loss payee on your insurance policy, and by contract, they must be kept whole in the process first. That is why their name is on the check. And they have the right to make sure repairs are made correctly. After all, your loan is secured with the boat that was damaged. This is why they would not pay for repairs done by the owner. As for the balance if there is money left over, THAT belongs to the insurance carrier. Just because they in good faith, overpaid a bill doesn't give the boat owner the right to keep the money. When you do, just keep in mind insurance fraud and the rising premiums that we pay. You just contributed to the problem.
hey Karl
thats a pretty cheap shot to take at someone on this site, when I suspect you dont know what their policy says. MANY marine policies are declaired value policies, this can apply to the hull value and damage coverage. I litigate with ins co.s virtually on a daily basis. they are generally not required to pay as you go. their obligation is to determine in good faith the value of repair or loss, thus ELIMINATING addl losses for the company, and close the claim. if the # is accepted by the insured then the company is no longer liable for addl costs or cost overruns, or as someone else mentioned herein incidental costs of interest charges on you c card, moorage fees etc. so the insured IS NOT the problem for accepting the check as final pay off, nor is there anything remotely illegal about doing so. once the claim is closed his obligation to the ins co is over. if there is any contribution to the systemic ins problem it is the companies failure allow periodic payments as work commences without insisting on closing the claim before paying!!!if they did only actually incurred damages would be paid for and all damage incurred would be covered, but that is not how the contracts are written.
thats a pretty cheap shot to take at someone on this site, when I suspect you dont know what their policy says. MANY marine policies are declaired value policies, this can apply to the hull value and damage coverage. I litigate with ins co.s virtually on a daily basis. they are generally not required to pay as you go. their obligation is to determine in good faith the value of repair or loss, thus ELIMINATING addl losses for the company, and close the claim. if the # is accepted by the insured then the company is no longer liable for addl costs or cost overruns, or as someone else mentioned herein incidental costs of interest charges on you c card, moorage fees etc. so the insured IS NOT the problem for accepting the check as final pay off, nor is there anything remotely illegal about doing so. once the claim is closed his obligation to the ins co is over. if there is any contribution to the systemic ins problem it is the companies failure allow periodic payments as work commences without insisting on closing the claim before paying!!!if they did only actually incurred damages would be paid for and all damage incurred would be covered, but that is not how the contracts are written.
Before We Panic Everyone...
..or just confuse them hopelessly, Insurers, Lenders and Counselors should go to their seperate corners and take a deep breath. After all, there are a zillion loans and claims that get handled just fine, and even disputes get worked out usually and if they don't, there are plenty of advocates ready to take on a client and represent them well. I don't think Karl was taking a shot at Rob, I just took it as noting that the measure of loss can vary a lot, and it isn't always the estimated amount as you also note, but a full discussion will cause eyes to glaze over... RD
..or just confuse them hopelessly, Insurers, Lenders and Counselors should go to their seperate corners and take a deep breath. After all, there are a zillion loans and claims that get handled just fine, and even disputes get worked out usually and if they don't, there are plenty of advocates ready to take on a client and represent them well. I don't think Karl was taking a shot at Rob, I just took it as noting that the measure of loss can vary a lot, and it isn't always the estimated amount as you also note, but a full discussion will cause eyes to glaze over... RD
There are Banks, and then there are Credit Unions
We all have had claims at one time or another. The thing is that you best know who you are dealing with at your Bank and at the Insurance Company. It is also very handy to have the telephone number of your States Insurance Commissioner, and don't be afraid to call him! Insurance companies bet that you will not have a claim! We bet against ourselves by assuming that we will have a claim. We loose no matter what! The Bank just sits back, and watches us eat up our money. The more we eat, the better they like it. Unfortunately, I had two claims on my boats. In the first one, my Venture 25 was crushed by a dock and some other boats that had drifted loose in a wind storm. It was a total loss so the insurance company paid off the loan and gave me the rest. The second was a theft and vandalism on my SunRunner 220. Two 16 year olds broke into my boat that is parked behind my house, took everithing that was not tied down. They were interrupted the first time, and left one battery, and two radios in the cockpit. I saw what had happened and called the police. I also took the radios in. When the two punks came back the next night, and could not find the radio, they trashed the boat, cutting cushions, breaking down two bulk-heads, and tearing up about anything they could. The damages cam to almost $6000.00. The insurance company made out a check to me and the Credit Union I belong to. I signed the check and sent it to the Credit Union with a note requesting the funds because I was going to d the repairs myself. Four days later, I got a check from the Credit Union for 1/2 the amount. I was told that when I sent them receipts for the stolen items, they would send me the balance. I also got a letter from the insurance company asking for photos of the finished work when the work was completed. About a month later I finshed replacing the bulkheads, the cushions, the hatches, took pictures and every one was happy, and I got to keep $1500 for my labor. Believe me, the boat is as good as new, if not better. I must tell you, however, that I sold it this spring. I had enough of power boats! By the way, on the second night, one of the bright ones left a thumb print on a highly varnished piece of the broken hatch. They got juvie time! Paul Fine As Frog's Hair
We all have had claims at one time or another. The thing is that you best know who you are dealing with at your Bank and at the Insurance Company. It is also very handy to have the telephone number of your States Insurance Commissioner, and don't be afraid to call him! Insurance companies bet that you will not have a claim! We bet against ourselves by assuming that we will have a claim. We loose no matter what! The Bank just sits back, and watches us eat up our money. The more we eat, the better they like it. Unfortunately, I had two claims on my boats. In the first one, my Venture 25 was crushed by a dock and some other boats that had drifted loose in a wind storm. It was a total loss so the insurance company paid off the loan and gave me the rest. The second was a theft and vandalism on my SunRunner 220. Two 16 year olds broke into my boat that is parked behind my house, took everithing that was not tied down. They were interrupted the first time, and left one battery, and two radios in the cockpit. I saw what had happened and called the police. I also took the radios in. When the two punks came back the next night, and could not find the radio, they trashed the boat, cutting cushions, breaking down two bulk-heads, and tearing up about anything they could. The damages cam to almost $6000.00. The insurance company made out a check to me and the Credit Union I belong to. I signed the check and sent it to the Credit Union with a note requesting the funds because I was going to d the repairs myself. Four days later, I got a check from the Credit Union for 1/2 the amount. I was told that when I sent them receipts for the stolen items, they would send me the balance. I also got a letter from the insurance company asking for photos of the finished work when the work was completed. About a month later I finshed replacing the bulkheads, the cushions, the hatches, took pictures and every one was happy, and I got to keep $1500 for my labor. Believe me, the boat is as good as new, if not better. I must tell you, however, that I sold it this spring. I had enough of power boats! By the way, on the second night, one of the bright ones left a thumb print on a highly varnished piece of the broken hatch. They got juvie time! Paul Fine As Frog's Hair
Insurance
Hey Monty, Sorry, I didn't intend it to be a cheap shot. And Robert, if your repairs come in less then the estimate, I need to use your yard. I've never had a repair come in for less then the estimate. But I do believe that as boat owners we have some responsibilities, and as Paul pointed out, insurance companies work on the Law of Large Numbers. As a group we pay for each other's losses. I work in the industry, and watch premiums going up every year. Some areas of loss are beyond our control (sorry Florida!), but others are not. Insurance companies are responsible to pay the lesser of 1)the actual loss, 2)the value of the boat, or 3)the agreed value of the boat that was placed on it when you signed up for coverage, less any deductible. They are not responsible to pay more then the loss in any case. Do they want the money back? Usually it is so small that it is not worth the effort, but they are entitled to it if they want. I give talks on the subject of insurance having experience in both commercial and personal lines. I am always amazed at how few people ever read their insurance contracts, or even know what they are buying or what their limits of coverages are. Maybe this will get people pulling out their policies and doing some reading. But do keep it in mind the next time you see a posting here that discusses the high cost of insurance coverage.
Hey Monty, Sorry, I didn't intend it to be a cheap shot. And Robert, if your repairs come in less then the estimate, I need to use your yard. I've never had a repair come in for less then the estimate. But I do believe that as boat owners we have some responsibilities, and as Paul pointed out, insurance companies work on the Law of Large Numbers. As a group we pay for each other's losses. I work in the industry, and watch premiums going up every year. Some areas of loss are beyond our control (sorry Florida!), but others are not. Insurance companies are responsible to pay the lesser of 1)the actual loss, 2)the value of the boat, or 3)the agreed value of the boat that was placed on it when you signed up for coverage, less any deductible. They are not responsible to pay more then the loss in any case. Do they want the money back? Usually it is so small that it is not worth the effort, but they are entitled to it if they want. I give talks on the subject of insurance having experience in both commercial and personal lines. I am always amazed at how few people ever read their insurance contracts, or even know what they are buying or what their limits of coverages are. Maybe this will get people pulling out their policies and doing some reading. But do keep it in mind the next time you see a posting here that discusses the high cost of insurance coverage.
read your policy
your comments about reading policies is very true, many people don't and doing so and getting an explanation of coverages ahead of time saves much worry and expense later.
your comments about reading policies is very true, many people don't and doing so and getting an explanation of coverages ahead of time saves much worry and expense later.
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