Insurance Surveys

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Insurance Surveys

Postby GeoffSchultz » Wed Dec 31, 2008 10:23 am

[Moderator: This was a reply to "Dwight is one heck of a nice guy", but due to the extreme possibility of this taking on a life of it's own and having little to do with Dwight, I split it off into a new topic.]

I assume that what you really want is an insurance survey and one for your private info. I can't imagine wanting the insurance company knowing every detail of things that need to be "fixed" whereas I would very much like that feedback.

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Re: Insurance Surveys

Postby THATBOATGUY » Wed Dec 31, 2008 11:02 am

Indeed I think there will be a report that satisfies the insurance company (if required) which lets them know the boat is not ready to sink or burn down. There will also be an oral exchange while the survey is taking place that could be very valuable to us. The one thing I know for sure in this business is that no one knows it all. A second set of eyes is a sound practice where safety is concerned and I can put my ego in the back seat for that. :)

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Insurance Surveys

Postby katorpus » Fri Jan 02, 2009 9:40 pm

Maybe I'm missing something here, but isn't this like getting an appraisal and expecting the appraiser to come up with the value that you want?

If the insurance company wants a survey, it seems to me that the survey should reflect the opinion of the surveyor on all issues which are addressed, and that the surveyor's competence, reputation, and integrity rest on this happening.

If an item is not included in the realm of the survey, then it generally is excluded in the surveyor's report with some type of exculpatory language. All of the other conditions (and particularly items with which the surveyor "takes exception") ought to be reported.

If the cabin sole varnish is worn through, all the varnish is peeling off of the brightwork, the gelcoat has chalked away completely or the awlgrip has blistered away, and someone has been playing darts against the main bulkhead, then these are all items "of interest" to the insurance company. They may not impact the survivability of the boat, or its usefulness, but they certainly factor into the value of what's insured. If the boat is gone, sunk in 600 fathoms, burned to the waterline, or stolen, it's pretty hard to make a case for its "pristine condition" and "bristol finish" without having something to back it up.

All insurance policies are either "agreed value" or some factor of (depreciated) coverage limit and/or replacement cost. All conditions affect all of these values. You can't just "overinsure" something that's worth $50,000 with an agreed value of $100,000 and expect them to pay off without some assurance that the item was (and continues to be) worthy of the coverage value.

The survey won't reflect that the captain's bunk was unmade, and that the galley sink was full of dirty dishes, but, if the engine sounds like a Messerschmidt in a power dive and the rats have gnawed all the wiring to the nav lights, then those things will be mentioned...and the insurance company is entitled to know them.

Get the survey with the idea that the deficiencies noted therein will be addressed before/immediately after it is submitted. Invoice copies may be requested by the insuror for needed-work noted in the survey.

When I was buying my boat, the Halon cylinder had been dismounted and put in a drawer by the PO. This is a self-contained item, held to a bulkhead in the engine compartment by a metal band clamp. The surveyor noted that it was "present, but not installed". The insurance company wanted the survey as a condition of coverage. I sent it. They bound the boat, I bought it, then they sent along a letter asking what I'd done about specifice deficiencies noted therein, and gave me a deadline for responding to them. The list was not all-inclusive, but the Halon cylinder was on it. They wanted "proof of the work". I sent a copy of the itemized yard bills which addressed some of the issues, and took a picture of the re-installed Halon cylinder (and the backup for it which I also obtained). They were happy.

If you need the survey for new insurance, just plan on doing what looks to be important and then proving it up.
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Re: Insurance Sureys

Postby GeoffSchultz » Sat Jan 03, 2009 9:16 am

I'm not suggesting that the surveyor come up with a fake value for the boat. I'm simply suggesting that there are 2-3 kinds of surveys that you want done.

  1. Purchase Survey: The survey that you have done when you buy the boat is probably the most intense survey that you want to pay for. If you cheap out or get a bad surveyor, you'll probably pay for it later. Anything major that you find here can be used to negotiate the price if you decide to buy the boat.
  2. An insurance survey: Every insurance survey that I've seen done is relatively quick and seems primarily designed to find major issues with the boat and to fix a replacement value. I personally find little use in them as most of the surveyors only do a cursory/surface job and are more interested in collecting their check and getting on to the next boat. Most owners don't want the insurance company knowing about every little detail that the surveyor thinks needs fixing. What is you, the owner, disagrees with something that the surveyor finds and then the insurance company makes you fix that "problem"? That could be very expensive/aggrivating.
  3. Intermediate Survey: I've never actually seen someone do this, which is basically an insurance survey with a summary report going to the insurance company and you getting a more detailed report. I wouldn't want to pay for a purchase survey again, as they tend to go into too much detail, but I'd like someone to spend some quality hours reviewing all of the systems and suggesting changes that may need to be made.

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Re: Insurance Surveys

Postby Robert » Sat Jan 03, 2009 10:54 am

I agree that being present and having a dialogue with the surveyor during a survey for whatever purpose is a must and the information that can be gleaned even down to how certain deficiencies in the survey can be remedied can save money and can allow the required work to be prioritized.

The pre-purchase survey of 'Magic' my Hoyt F32, it was a useful tool in the final negotiations also giving a financial value for the boat as seen at the time of survey, not however giving a value with all items addressed and in pristine condition. However a 'replacement value' was given, but I fail to see how that could help anyone as the insurance of a used boat usually only covers the actual purchase or agreed value.

The same survey was ultimately used for insurance purposes as in the summary of the noted deficiencies, certain items were asterisked and referred to in this particular paragraph

quote "With the above asterisk designated recommendations complied with, the undersigned surveyor considers the
vessel itself suitable to coastal, Bahamas and inland waters cruising, not to exceed VHF radio range and
considered to be worthy of insurance coverage, pending compliance and acceptability to the underwriters." end quote.

This was accepted by the insurance company after giving a personal statement that the 'asterisked' items were being addressed as a matter of priority, no further proof was requested but I am sure, had I not covered all points, then should I have made a claim and these survey recommendations had not been fulfilled as agreed, then this would give them a reason not to allow the claim.

I am also intrigued as to the surveyor making recommendations to the cruising limitations of a vessel. Has anyone else come across this?

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Re: Insurance Surveys

Postby katorpus » Sat Jan 03, 2009 11:15 am

Robert

It sounds like the cruising limitations were written with the knowledge of the intended use of the boat in order to avoid listing (the absence of) all the things that an insurance company might think that you OUGHT to have to go "way out on a big ocean"...things like approved/inspected life rafts, SSB radios, EPIRB's, radar transponders, extensive spares etc.

My policy is written for coastwise cruising between Key West & Brownsville, for instance, and I have none of those things.
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Re: Insurance Surveys

Postby dwight » Sun Jan 04, 2009 2:27 pm

The survey report should include all items that the surveyor feels are necessary to completely describe the condition of the vessel at the time of the inspection. These may be reported in many different ways such as recommendations, suggestions, comments, etc. The term “recommendation” should only be applied to those items that, in the opinion of the surveyor, need correction in order to make the vessel “suitable for it intended use.” Typically the insurance company will want to see all recommendations addressed prior to underwriting. Your surveyor should include a notation as to which items in the report should be addressed. Your surveyor should also be willing to discuss these items with you. He should explain what the issue is, why it is an issue and may be able to offer possible resolutions.

The language for an Insurance Condition and Valuation Survey may be less detailed than a Pre-Purchase Condition and Valuation Survey but the survey should not be any less thorough. If the vessel were damaged or sunk, the lawyers will be looking at the last survey report, to determine if the surveyor missed any problems that could have prevented the loss.

The limitation on the cruising range defined by the surveyor is based on the design and construction of the vessel, the equipment and in some cases the competency of the captain and crew. “Coastal waters, not to exceed 20 miles offshore” is the limitation typically placed on boats with only VHF communications capability. “With experienced crew and proper preparation this vessel is apparently capable of extended ocean passages between 45º N latitude and 45º S latitude", might be applied to a blue-water cruiser not intended for service in areas frequented by ice.

Separately, the insurance company may limit the covered area based on other factors. I know that some companies will not cover a boat outside US waters. Not exactly sure why, but its their liability so they get to set the limitations. Limiting the cruising area also helps them to identify folks who really cruise their boats. You must request extended coverage when traveling outside your “home” area, so they get to charge extended premiums.
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Re: Insurance Surveys

Postby fmolden » Sun Jan 04, 2009 5:39 pm

My policy is limited to the Chesapeake Bay, Norfolk to C and D canal. For an additional $150 I can get a rider extending to all coastal cruising.
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