Trouble in Paradise - It can and does happen!
by Neil Bailey, Bailey's Insurance 19 Sep 2018 10:35 UTC
19 September 2018
'Chaos Corner', Pak Sha Wan. Aftermath of Typhoon Mangkhut, 16 September 2018 © Guy Nowell
Your boat has been holed by an errant fellow yachtie on autopilot, You’re anchored off a tropical island and you’re planning a blue water voyage home in a month’s time. What do you do?
Immediate thoughts must turn to ensuring the safety of crew and vessel – but there are other factors that will cause subsequent problems. Who did it and will they admit responsibility? Who will fix it?, Whose insurance is paying? Do I have to pay any insurance excess? Who Did It?
If your boat is damaged when you're not on board, or you’ve been hit at night and they’ve done a runner without you being able to see them, that is a big problem. You’re basically on your own in terms of the repair cost and insurance excess.
However, if you or someone else has seen it happen first hand, the key here is to keep a clear head and get as much information out of them as you can. This can be difficult in a stressful and shocked situation, but will pay dividends later. The ideal is a written statement confirming they accept 100% responsibility for the incident. You also ideally want definite confirmation of their identity (e.g passport, drivers licence, boat licence if applicable), their contact details and their insurance policy details – if they have insurance! Photos are also great. A photo of the damage, photo of their boat, photo of them, photo of their passport etc etc… Once they’ve sailed off over the horizon you may never see them again, and their initial promise of “don’t worry, we’ll pay for everything” won’t be met. I can’t emphasize enough the importance of this first step.
Did you have your black ball displayed?
This was one of the first questions asked of our client by the Insurer of the “at fault” vessel in a recent incident in Fiji. The collision occurred during the day whilst our client was at anchor, and luckily the answer in this case was “YES”. What if the answer was NO?
Another critical thing to obtain, if possible, is an independent witness if someone else saw what happened. Again, difficult to think of and do in a time of stress, but this can prove invaluable later if responsibility is disputed. There is nothing like an independent witness to verify your position, rather than a “he said, she said” situation.
Who will fix it?
Are there any reliable repair facilities available nearby? Fiji, Vanuatu & Tahiti have all proved problematic in recent times. Getting repairs done properly and quickly in these locations is difficult. One recent incident involving repair facilities in Fiji resulted in a whole new repair required once the vessel returned to New Zealand. Thankfully the Insurer agreed to pay for the 2nd repair to fix up the original problems. Some Insurers wouldn’t be so agreeable. If using local facilities and repairers, make sure you keep close supervision (without being annoying!) and ensure all work is fully documented. One of the best options in my view, is to fly up recognised repairers from your own country, especially if they are familiar with your vessel and have done work on her before. The cost may be a little more to do this, but should prove less costly in the long run, plus you have the extra peace of mind with a job well done. This worked perfectly for another client of ours after a grounding in Fiji. The tricky lifting keel repair was all completed within 2 weeks, with their preferred repairer flown up from New Zealand. They were able to re-launch the vessel and continue their cruising including a return blue water voyage to New Zealand with confidence.
Whose Insurance Is Paying?
Someone else caused the damage, so you don’t want to be penalised with having to pay your excess or losing your no claims bonus. Assuming you have identified them and they’ve admitted liability, there are basically 3 different scenarios:
1. They are not insured;
2. They are insured, but have third party only cover;
3. They are insured, with comprehensive cover
They are not insured - hopefully you are insured, and you’d then lodge a claim with your Insurance Company, and hope that they could recover all costs from the other party, including your excess. This is where all the information obtained from the other party initially comes in to play. If you’re not insured yourself, then you’re totally on your own to arrange and pay for repairs, and then try and get some money out of the other party. Not an easy option. Hopefully you have an effective broker who is able to help you with all of this. It’s surprising how many vessels are out there with no insurance!
They are insured, but have third party only cover – you will have a couple of options here, and they are dependent on how your Insurer views things (if you have insurance), and what co-operation you are getting up front from the person causing the damage. First option is that you lodge a claim direct with your own Insurer, and then they handle recovery of costs via the other party’s Insurer, which will hopefully include your excess. This is common industry practice to handle it this way if you have your own insurance, and is common procedure for motor vehicle claims for example, where someone else is at fault. The problem here though is that often your Insurer won’t recover the full amount, and therefore there may be some debate as to whether your excess will be refunded, if your Insurer doesn’t make a full recovery.
The second option is to claim directly from the other party’s Insurer, so that the full repair cost is paid and your own excess is not a factor. This assumes the other Insurer is happy to do it this way, and they are agreeable to the repair costs involved. This is not common practice locally, although some of the UK based Insurers seem to be happy with this method. Ensure the chosen method is agreed early on, and confirmed in writing.
Another critical question is whether an excess (or deductible) applies on their policy? If it does, how will you get this money out of them? Their Insurer will be reimbursing the costs on their clients behalf, but less this amount, as an excess is the amount that the client agrees to contribute on the claim, so you or your Insurer will need to obtain the excess direct from them. Sometimes their client will send the excess in to their Insurer, and then all costs can be paid in full – but this doesn’t happen too often in my experience!
They are insured, with comprehensive cover - basically the same procedure as above, but in some cases there is no excess applicable to the “third party” section of a comprehensive insurance policy, so that can make life a little easier, as you won’t need to worry about recovering any excess amount from the other vessel owner.
Do I have to pay my Insurance Excess?
As explained earlier, hopefully your excess will be either waived or refunded if you are not at fault, AND the Insurer obtains a full recovery of costs. Some policies also say specifically that an excess won’t apply IF you have identified the third party and they are clearly at fault (goes back to the importance of that initial collection of information again); others may say that no excess will apply if the damage occurs in a marina berth.
There are even other situations where you can “buy out” the excess and have a NIL excess on your policy. This is obviously very handy in these situations, but that obviously has to be purchased at the time of taking out a policy, not at the time of a claim.
However, it must be understood that an “excess” or a “deductible” as it is often termed, is an agreed amount that you must contribute to a claim – full stop. It is payable regardless of fault. Then, if the Insurer is able to obtain a recovery of costs, they can often refund this to you. But the excess is ultimately payable by you under the terms of the policy, unless stated otherwise. Policy holders often get confused over this, and think “why should I pay my excess when it wasn’t my fault”?
The excess is payable, because that is part of the contract, and this is the amount you have agreed to contribute to any claim, and reflects also in the premium terms that have been set by your Insurer. So when you think of your policy excess, you need to think of it as something that you will be paying. If it can be recovered or waived, then that’s a bonus – but don’t count on it 100%.