What to do if Your Boat Is Hurricane Damaged

Following a major hurricane like Ivan, most boat owners have their hands full with homes, family and business so that the prospect of having to deal with the boat also is a daunting and unwelcome task. However, your insurance policy obligates you to take all reasonable actions to preserve it from further loss and damage.

Getting things done after a major storm usually becomes extremely difficult, if not impossible, because of the enormous demand on limited services, loss of power, roads, bridges and so on. You only need to do what you can reasonably be expected to accomplish under the conditions. If circumstances prevent you from doing anything, be sure to advise the insurer of this fact at the time you report the loss.

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Before You Do Anything

Keep in mind that even if your boat seems to be undamaged, wind driven water, including salt spray, has likely gotten to electrical apparatus and wiring. Do not fire up the engines or turn on the electrical system before checking over all systems for water intrusion.

Boat Is Sunk

If your boat is sunk there isn’t much you can do. Report the claim and wait for the surveyor to contact you for advice. Most insurers will make salvage arrangements for you.

Submerged Engines

Outboard engines need to be torn down after submersion. This is because there is likely electrolysis damage inside due to being connected to the batteries. Do not attempt to dry out and restart an outboard. An outboard that has been submerged for several days is junk and cannot be reliably repaired.

Gas engines if carbureted can be flushed, dried out and restarted, preferably by a pro. If underwater for more than 24 hours it needs to be torn down and inspected internally. Fuel injected engines can’t be restarted without replacing the injection system.

The same applies to diesel engines, even if it has been flushed and restarted. Every single moving part needs to be inspected and proved that it does not have corrosion damage.

Even if a generator engine can be started, the electrical end is damaged beyond repair. At the least, it should be replaced with a rebuilt generator end.

Boat Is Blown Ashore

In this case the greatest risk is looting, particularly of things on the exterior like anchors, electronics, outriggers and other loose equipment. Try to remove these thing and take home. Take pictures of the boat all around.

Paying for Help

Though most insurance policies are silent on this subject, paying someone to assist you with securing and preserving the boat will be reimbursed by most insurers if you keep the cost reasonable.

Higher than normal labor costs are not gouging but part of the cost of doing business under very difficult conditions. It is not unreasonable to pay double normal wages for common labor.

Settlement Options – Total Loss

For obvious reasons, when a boat has sustained serious damage, most boat owners would prefer that it be “totaled out”. This is by far the biggest bone of contention between owners and insurers. Keep in mind that large numbers of people with boats that are not totaled argue for total losses. The insurance companies will resist these claims.

On the other hand, due to extremely large numbers of claims, insurers may end up hiring less than fully competent surveyors, a situation that often leads to conflicts. Amongst surveyors, there are only a relative handful who are truly competent at estimating repair costs. If you seriously disagree with the surveyor you have the option of either hiring your own surveyor or try to get independent estimates (difficult) from repairers.

Some policies define what a total loss is while others do not. One insurer, for example, defines a “constructive total” as repair costs equaling 80% of the insured value. So what do you do if the estimate comes to 75 or 79%?

Technically, a constructive total loss occurs only when the repair cost equals or exceeds the insured value.

Another solution to this question is the formula that when repair cost plus estimated salvage value equals or exceeds the insured value, you can accept a cash settlement and sell the boat for salvage and the policy is cancelled. This is not a stipulation of any insurance policy and is something that you must negotiate with the insurer. Obviously, this formula can be carried to extremes, as when the damage cost is only half the value. In such cases you are simply accepting a cash settlement and selling the boat; the insurer will not assist you with a salvage sale.

Assessing the Damage

One of the biggest headaches in the claim process is assessing the damage. You do not have to rely on the insurer do this and can hire your own expert. This is part of the cost of assessing the damage and should be recoverable as a legitimate expense. Another big problem is that there are too many boats that need repair and local yards may also be damaged and out of business.

If the extent of damage is questionable as whether it is repairable or not, it is best to first get the insurers opinion. Many, if not most, insurance surveyors are adept at estimating repair costs. Be sure to ask the surveyor if he will be making an estimate, or whether he has an opinion.

Because so many boats are damaged, it becomes extremely difficult to get repairers to give free estimates. Here again, if you are in disagreement with your insurer, you may pay for an estimate and include the cost as part of your claim. The cost of determining the extent and cost of repairs is recoverable.

About Wiring

It is not true that any wire that goes underwater must be replaced. Unless it is very poor quality, water does not migrate into the insulation beyond the terminal ends. It is perfectly acceptable to cut off the damaged ends and install new terminals. An exception is large battery cables and shore power cables which should be replaced entirely.

Sunk or Partially Sunk Boats

Most sunk boats will be a constructive total loss since they are so very costly to repair. Partially sunk boats usually are not, even though most owners want them totaled. The reality is that when repaired, a partially sunk boat ends up in much better condition than before IF the work is done by a highly competent yard or marina. Keep this in mind if you want to argue for a total. The only other condition is that every trace of immersion must be removed. No rusty door hinges, fixtures, draw slides or rusty screw heads must remain.

Disputes

Pay particular attention to that part of your policy that covers how losses are paid. Many policies have arbitration clauses that require each party to hire an appraiser at their own expense. In turn, these appraisers are to agree upon selecting a single “umpire” who will decide the matter based on the two appraisals. This is a very problematical situation because very few truly competent surveyors want to get involved with such disputes. Absent an arbitration clause, you can still hire your own appraiser (surveyor) to assess the damage on your behalf. Try to hire the most competent surveyor you can find, preferably one with claims experience.

Detailed Estimates

Making a detailed estimate is a laborious process at a time when yard managers and other contractors already have their hands full, so expect to pay a healthy price. For a high dollar loss, several thousand dollars is not excessive.

There is also the option of hiring a surveyor. Try to find a surveyor who has claims experience. For example, a recent estimate that I prepared over a dispute on a sixty footer took over 40 hours to complete. This estimate detailed everything right down to dimensions such as board feet of teak for decking), numbers of items and hours to complete individual tasks and was a dozen pages long. This level of detail leaves little or no room for dispute about how much something will cost. Decide on the level of detail that you think you need and question the surveyor about his ability to provide that before you hire him. To do so, he has to have access to materials costs.

Hull Damage and Refinishing

Some policies spell out how they handle the matter of partial damage to exterior surfaces while others do not. The basic rule for boats remains much the same as for cars; they will pay the cost of refinishing only the effected area, even if that leaves a “spot” on the hull side. If that’s what the policy says, you are stuck with that.

If not you can argue the point. Certainly it is not reasonable to demand that a hull be completely refinished for small damages or scratches. Should there be a larger area, such as a long scrape, you may demand that the hull be repainted. Urethane painting is a very good solution even for a fairly new hull since urethane paint is arguably even better than gel coat and will last longer. If the damage is only on one side, they may only pay for painting one side, leaving you to foot the cost of the other. This will likely cause you to decide for only a small gel coat repair.
If the hull is scratched and battered on both sides, you have every right to a complete paint job and will generally be better off than before. Be happy for this!

Things You Didn’t Think Of

Hurricanes can easily push water up the engine exhaust pipes and into the engines so this needs to be checked out promptly. For gas engines, disconnect the ignition source so that the engine doesn’t fire and carefully turn the engines over. If the cranking stops – stop cranking, there may be water in a cylinder. Have it checked out ASAP.

For turbo diesels, the exhaust elbow to the turbo should be removed and inspected for signs of water. The exhaust inlet side will show water or rust if water has backed up. There is no other easy way. If you fire it off and there is water in a cylinder, severe engine damage will occur. This is usually easier than pulling the injectors to check.

Water driven in 100 mph + winds will find its way into many electronics, even those that appear to be water tight. Rather than trying to turn anything on (and frying it in the process) remove all electronics and take them to your local dealer for inspection.

Aluminum towers should be inspected for bending and cracking. You’d be surprised at how many towers get twisted. To inspect, sight along the length of the legs and check that everything is parallel.

Leaks. Boats will develop leaks in places you never imagined. Water may have driven in around windows and doors and may also be salty, particularly if your near the beach or large body of water. All electricals in the engine room should be checked for water damage. Look for rust and water stains that weren’t there before.

Check the interior starting with the carpet throughout. Any wet spots are a clue to where a leak may be. Check in cabinets, under seating and any place where water is likely to puddle. For example, an inner liner under a vee berth fills with water. If you have wooden paneling and decking, check this carefully for if it is under any kind of covering it may result in a long term rot and mildew problem, plus a bad smell. If the carpet is wet it should be removed immediately.

If the boat is generally damp on the interior – as many times I find the interior filled with salt spray – this salt residue will cause serious damage. The interior will be need to be wiped down with soft, wet rags to remove the salt. At the least, severe mildewing will occur.

If the interior is damp with salt spray, ALL interior fabrics and upholstery will need to be washed and cleaned. Remember, salt is hygroscopic, meaning that it will condense water out of the atmosphere and thus cause damage that will only show up over time. A good way to check for salt is to look at a television screen which will easily show it up. Or, rub a clean finger over a surface and then taste it.

Check also: rope locker, lazarette compartments, flying bridge compartments, under seating etcetera.

Note that the cost of all this checking and restoration is recoverable under your insurance, so if you want to pay someone to do it, be sure to keep that person’s hours, pay, etc. and get an invoice even if only hand written.

Exterior Helm Stations

Wind driven water can play havoc with helm stations, causing water to get into gauges, switches, control cables and wire connections. This results in damage that doesn’t show up until later. Check the underside of the panel which is usually within a cabinet. Is it wet with water condensing? If so, you’ll likely be facing a series of electrical failures in the future.

How To Get Repairs

Getting repairs done in a timely manner is nearly impossible. This is especially a problem on the Gulf coast where there is a dearth of good yards. One possible option is one I used following Andrew. For large dollar damages, say over $50K, I arranged to ship a number of boats to good yards out of the area. In some cases they went on their own bottoms and in other overland by truck.

It is unreasonable for an insured to have to wait six months to a year to get repairs done. Thus, if it costs $8,000 to ship a boat elsewhere to get competent repairs, this is not at all unreasonable. I shipped one boat all the way from South Florida to South Carolina and back.

Quality of Repairs

If you have a nearly new or very late model yacht that has serious damage but is not a total loss, you are entitled to a quality of repair that will not affect the value of the vessel. The insurance law in Florida is that you are entitled to be made “whole.” If you end up with an obviously repaired boat, clearly you are not whole, but will be faced with selling “damaged goods” at the time you want to sell it. Thus, it behooves to select a repairer that can make repairs that are not detectable.

With fiberglass boats, this is entirely possible, but requires skill and care. Note here that a damaged boat that is properly repaired is no longer a damaged boat, but if the repairs are obvious, those damage repairs will be discovered by the buyer’s surveyor which could kill the sale. Thus, evidence of repairs should be concealed.

If you’re faced with serious damage, you want to be sure that the competence of the repairer is beyond question. If the boat has to be shipped elsewhere, then do that. Note that any hull repairs that will be visible from the interior should be refinished on the inside so that the repairs are not obvious. This may include painting or gel coating the inner surfaces, but be sure that it gets done and is part of the repair contract.

A properly repaired boat should be as good as new; when done by a real professional, it actually ends up even better because so much has been renewed.

Posted September 27, 2004

Related Reading:

• Your Legal Obligation during a Storm
• Storm Damaged Boats

 

David Pascoe - Biography