NAVIGATING INSURANCE

NAVIGATING INSURANCE IN THE SECOND PART OF A SERIES, COLIN DAWSON, MANAGING DIRECTOR OF THE GEORGE GROUP, OFFERS HIS ADVICE ON THE MOST COMMON MARITIME INSURANCE CLAIMS AND HOW TO DEAL WITH THEM

In the first part of this article, that appeared in the last edition of SeaBreeze, I discussed what responsibilities lie with whom in a claim situation and how to obtain the best results from insurers should an accident occur.

In this second part I look at some of the more common claims we see and how these should be reacted to. I n Asia by far the most common claim we see is lightning strikes. Affecting motor yachts as well as sailing yachts, lightning is a strange phenomenon. Damage can range from virtually nothing to blowing a hole in the side of a yacht.

The accepted rule of thumb after a strike is that while visible damage can be repaired, all electrical equipment will need to be replaced, even if it appears to be working.

If your yacht is struck it is important that any parts removed are kept for inspection by a surveyor. As with all repair cases it should be remembered that insurers are liable for the reasonable costs of repair. This means that, while ensuring the same quality, insurers are only liable for options that cost the least amount of money, and sometimes this may involve using suppliers outside of the home country of the yacht.

In Asia we see many companies act as agents for larger firms who are very willing to provide parts but often don’t know how or have no interest in handling repairs as this takes time and does not carry high margins.

In some countries prices are so high (and service levels so low) it can be better and cheaper to go to another country to source products. While a good surveyor will act as part of the team to resolve a problem it should always be remembered that the surveyor acts in the best interests of the underwriters. If an owner genuinely acts ‘as a prudent uninsured’ the thinking is likely to be similar between both parties. However, if an owner has the idea of ‘oh it doesn’t matter, insurance is paying’ thoughts are likely to differ! A lightning strike is likely to cost insurers about 20 years’ premium and is considered a fairly major claim.

102 ON THE ROCKS Next on the list of favourites are “new rocks”. It’s amazing how many new rocks sprout up in the region, although on further investigation it turns out that most of them have been around for quite some time!

Hitting a rock can cause very extensive damage and can even mean the yacht being a Total / Constructive Total Loss. As always, look carefully at the cover you are being offered because some policies do not cover underwater equipment on a yacht and, while they may appear cheaper to start with, it can cost you a lot more than if you bought a better policy to begin with.

As always, look carefully at the cover you are being offered because some policies do not cover underwater equipment on a yacht and, while they may appear cheaper to start with, it can cost you a lot more than if you bought a better policy to begin with.

It’s advisable to obtain the most up-to-date charts before heading off, and don’t rely totally on electronic charts as these have been found in the past to leave vital information off, such as sand banks and rocky outcrops.

Insurers are usually keen to obtain at least two repair quotes. That may sound reasonable, but in this region it can sometimes be hard, meaning claims can be drawn out for quite a long time. Often it’s eventually accepted that there is only one good quality option available, but this can take time.

One of the main problems we see with sailing yachts is the frame being jolted from the hull. Often inspections show the frame has not been bonded properly, raising questions about the build quality that could lead to complications in the event of a claim.

“In Asia we see many companies act as agents for larger firms who are very willing to provide parts but often don’t know how or have no interest in handling repairs as this takes time and does not carry high margins.” – Colin Dawson

NEW PAINT We see quite a number of paint damage claims, typically from quite minor collisions. Remember that insurers are only liable to repair the damage, not repaint the entire yacht. Because matching paint is hard insurers will often agree to paint one entire side, but often owners insist on having the entire boat repainted. Remember that insurers are showing great flexibility (and incurring extra cost) in agreeing to pay for one side and if pushed too hard may stick to their guns and only pay for the damaged area.

The other thing to bear in mind is that insurers are not liable to pay for improvements to your yacht and if betterment is seen they can deduct a fair amount for this. Better quality insurers tend to be flexible here unless it is very obvious that a significant improvement will be gained. DEALING WITH COLLISIONS Collisions happen all over the world and range from very minor to those resulting in serious injury. You should make sure you know the regulations (which often change without notice) in any country you visit. Remember also that it’s the responsibility of all parties to try to avoid a collision, no matter who is at fault.

Liability claims are rare but can be costly. It’s important that you inform your insurer as soon as possible and do not admit any liability unless they tell you to do so.

Lastly, remember the role your broker plays in this. He or she should offer advice and can typically help avoid the need for lawyers. Many yacht owners have inhouse lawyers, but remember that these are typically not marine lawyers, so listen to your broker. If all else fails, ask your broker’s advice on a maritime legal firm.

COLIN DAWSON Colin Dawson is Managing Director of The George Group, which operates Expat Marine, a specialist yacht (and related industry) broker. Colin has specialised in marine insurance since 1990 and been based in Hong Kong since 1994. Colin is also Chairman of the Asia-Pacific Superyacht Association.

Tel: +852 2530-2331 Mob: +852 9424-5222 colindawson@tgg.com.hk www.expathk.com

Note: Part One was published in a previous issue of Seabreeze. To read, please visit: https://simpsonmarine.box.com/insurance