What is your responsibillites and what are the next steps?
OUR ROLE IN YOUR INSURANCE CLAIM
Submitting an insurance claim can be a stressful experience. Our goal is to help you to understand the claim process as well as the role of the insurer, the marine surveyor, and you, the insured. Once you have submitted a claim to your insurer, the claim process may follow one of several paths. Depending upon the type of claim, and the coverage, the underwriter may handle your claim in-house, may appoint an adjusting firm or may enlist the services of an independent marine surveyor.
You, the boat owner has an important role in the claims process. First, it will be very helpful for you to spend some time familiarizing yourself with the terms and conditions of your insurance policy to understand why your claim may be fully covered, partially covered, or may be denied. Your policy will contain specific information regarding what is typically covered and what is typically excluded. We say ‘typically’ because if corrosion was a contributing factor in your claim and your policy states “we do not cover corrosion”, then your claim might be denied. However, if you had done everything possible as a ‘prudent’ boat owner, including regular maintenance and upkeep, and the corroded part could not be identified by way of a reasonable inspection, then your claim may be covered. For your claim, the cost of the corroded part would probably be excluded but the subsequent damage may well be considered. Each circumstance is different and your service and repair record keeping should be well documented. Your role as a boat owner also includes trying to limit any further damage to your vessel, this is called mitigating the loss.
Your insurance company may decide to appoint a marine surveyor as part of the claims process. Woods Marine Consultants have been providing marine insurance claims services to boaters for over 30 years and are proud of our reputation for honest, reliable, trustworthy service. We understand that you will have questions and possibly some concerns and we will do our best to help you through the claims process.
Our first contact with you will occur a few hours after being appointed by the insurance company. We will phone you simply to say “Hello, we have been appointed by your insurer, we are here to help”. We will take a few details including your email address and we will send you a copy of the “Vessel Accident Report” for you to complete and return. This will be your statement and should include as much detailed information about your claim as possible. This form can be downloaded from our website “Vessel Accident Report”.
YOUR INSURANCE CLAIM
From this point on, we will be in regular contact with your insurer in relation to your claim. It is important for you to understand that this is not like the ICBC claims process. The process with marine insurance is quite different, you will not be dropping your boat off at an Approved Marine Claims Facility. Actually, there is no such designation in the marine repair industry. If you have a repair facility that you use on a regular basis or a marine repair company that has good reviews, you may ask them to provide an estimate for repairs. If you are having difficulty finding a reputable repairer to provide an estimate, we can certainly help by providing contact information for reputable repairers in your area. It is not unusual to have several repair companies involved in your claim. For example, in the case of a grounding, a fiberglass repair shop may sublet a portion of the estimate and subsequent repair work to a propeller repair facility, a propeller shaft fabricator and/or a marine mechanic in order to address all the areas of damages involved.
Once the repairer has reviewed the damage, they will submit an estimate of the extent and cost of the damage for our office to review. Estimates may not have exact cost figures at this point as some exploratory work could be necessary to determine the true extent of the damage. Once we have the estimate, we work with you, your insurance company and the various repairers to progress your claim.
Depending upon the circumstances, we may think that it would be a good idea to obtain competitive quotes from other repairers. We will also make a visit to your boat to inspect the damage and will then submit a preliminary report to the insurance company, including the estimate(s), so that they can ‘set a reserve’. A reserve is the amount that the insurance underwriter is required to put aside to ensure that funds will be available to settle the approved repair cost. We can revise the reserve amount at any time and therefore it is imperative that the repairer advise us if they discover additional damage that will affect the final repair cost.
IS YOUR CLAIM COVERED?
Claims are assessed by the insurance company on a case-by-case basis as the circumstances of each individual claim as well as the specific coverage as outlined in the insurance policy may differ considerably. We will be in ongoing contact with your insurance company regarding which aspects of your claim may, or may not, be covered and why. Ultimately, it is your insurer who decides what is covered under the terms and conditions of your policy. We will also be in ongoing contact with you, the boat owner, to explain the progress of your claim, to explain why certain repair costs may be allowed, or not allowed, and to answer any questions that you might have throughout the claims process.
One very important consideration is that repairs must only be undertaken AFTER they have been authorized by the insurance company. Otherwise the repair costs may not be covered and you, the boat owner, may have to pay for the repairs out of your own pocket.
WHEN REPAIRS ARE UNDERWAY
As part of the claims process, we will monitor the progress of the repairs and attend as required during various stages of the repair. If your vessel is hauled out as part of the repair, you may want to take the opportunity to carry out routine maintenance, such as bottom painting, topside wax & polish, as long as it falls within the time frame of the repair. However, any additional work, or costs beyond the authorized repair cost will be your responsibility as the boat owner.
Boat owners may want to upgrade their boat’s machinery or equipment while the boat is undergoing repairs. For example, you may have submitted a mechanical claim for your boat’s engine, which has been approved. The insurance company has authorized a reasonable cost of repair of $16,000.00, however you would prefer to have a brand new engine, costing $20,000.00. At that point, you have the option of having your engine repaired for $16,000.00, less your deductible cost, or if you decide instead to purchase a brand new engine, you may be able to apply the approved repair cost toward that purchase. You, the boat owner, would pay the difference between the cost that the insurance company has authorized and the purchase and installation cost of the brand new engine. The policy for upgrades can differ between insurance companies so approval should always be obtained prior to any upgrades.
Once the repairs are completed the repairers’ invoices will need to be paid in full. There are several ways that this can happen so it is a good idea to discuss beforehand with your repairer and insurance company how payment will be made to avoid any misunderstanding and potential delays. The most common process is that you, the boat owner, pay the repair invoices and then submit the invoices to our office. We will review the invoices and approve each item that was agreed to in the initial estimate of repair. Items that are not considered claim related will be submitted to your account, along with the deductible. It is important that you understand which items will be covered and which items will probably be denied under the terms and conditions of your policy. We will work with you, the repairer(s) and your insurance company to ensure that you understand the process for payment of the repairs to your boat.
A good example of an item that would not be covered is that, if the damage to your hull required one liter of anti-fouling paint, the cost would be covered. However, if you took the opportunity to paint the whole bottom and used 5 liters of paint, then the insurance company would only pay for one liter and you would pay the additional cost of the extra 4 liters, including any additional labour costs.
When repairs are completed, and we have calculated the total approved repair cost (less deductible), we will provide you with a Claim Settlement Agreement (CSA). This agreement identifies the amount that your insurance company will pay. A sample CSA can be seen by clicking HERE. (insert hyperlink). Once you have reviewed your CSA, you need to sign it with a witness present, and return it to our office. Then we prepare a final report and submit our report, the invoices and associated documents and your CSA to your insurer, who will issue any necessary payments as instructed in our final report.
WHAT IF I AM NOT IN A POSITION TO PAY THE REPAIRER?
It is not uncommon to ask the insurance company to settle the approved cost of repair directly with the repairer. To do this the line of communication needs to be open from the start and not when the boat is about to get launched. The repairer must be in agreement with this payment plan and we will need all of the associated invoices in order to determine the amount to be paid. You will also need to sign a “Direction to Pay” which confirms that you are satisfied with the repair. This authorizes the insurance company to pay the repairer’s invoices on your behalf. Due to the paperwork involved, it can take a bit longer for the repairer to receive payment, which is why the payment plan needs to be discussed in advance.
We hope that this information has been helpful for you in understanding the marine insurance claims process.
If you have any questions or need further information, please contact our office directly