Perils of a Pleasure Boat Insurance in Spain
How many pleasure boat owners know that many Insurance Companies in Spain refuse to face an Alternative Dispute Resolution (ADR) in case of a conflict? The boat-owners are hereby losing all help and benefits from the EU and Spanish Consumer Protection Laws.
The ADR Scheme is a fast, efficient and cheap arbitration system created for all EU-citizens (except pleasure boat owners) for Consumer Protection. The system also includes translation services at very low costs. It´s called Sistema Arbitral de Consumo in Spanish and is unfortunately voluntary for the Insurance Companies.
This exclusion of boat owners from the Consumer Protection Laws is done by taking advantage of articles in the Insurance Laws, which classifies pleasure boat insurance as a “High Risk”. (Spanish Law 50/1980, Art.107.2 y Art.44.)
These companies neglect the distinction between “el pater familias”, who only uses his boat a few summer months for his personal and private recreation and leisure, and the “ordenado comerciante” who uses his boat to earn money.
THE ADR SYSTEM DOES NOT INCLUDE “HIGH RISK”.
Most people associate the insurance-related expression “High Risk” to risks that always involves millions of Euros in Insurance Indemnity Claims, as in case of an airline-crash or a passenger ship disaster. Not the small indemnity claim for the loss of a pleasure boat at the value of a Caravan car or a bungalow on Costa Blanca.
In addition, the Insurance Companies get the benefit of “libertad de pactos” which implies the right to choose applicable Laws by means of which the boat owner might find himself in a situation of inferiority and defencelessness in Court. It´s not surprising that Insurance Companies, adopting this moral code, are in the habit of refusing to take part in dispute resolutions Out-of Court through the ADR-System.
A clause in the Insurance contract might promise that conflicts could be solved by arbitration, but that does not mean arbitration through the gratuitous ADR-system, but a considerably more expensive arbitration and not including translation service. (Only a scarce 6,3% of the Spanish Insurance Companies are coherent with the ADR-System.)
That leaves no other alternative to the discontented client with a damaged boat, but to take legal actions against the insurance company. This procedure is often very costly, lengthy and tiring.
Most people give in and pocket their pride.
(Every year about 1500 pleasure boats suffer such grave accidents in Spanish waters, that rescue actions by the Spanish Salvamento Marítimo are necessary. More accidents happen in marinas and boat yards, not accounted for in the statistics.)
Pleasure-boat owners, who only use their boats for private recreation, are not aware of their weak position - until they have a disagreement with the company.
Then they discover they do not even have the right to an independent “legal aid” included in their boat-insurance. “Legal aid” usually is included in a common “Consumer Insurance” (car- house- property-or travel-insurance, etc.) Neither do they have the help of a “P&I Club” as the merchant ship owners have.
EU has excluded the right to have a “Legal Expense Insurance” included in a common Pleasure Boat Insurance in respect of disputes or risks arising out of the use of sea-going vessels. (Directive 87/344/CEE.)
The issue of insurance-disputes hereby seems to be assigned to Rules with roots in typically mercantile Maritime Insurance Laws and Commercial Codes, which are certainly not as consumer-friendly as the European and Spanish “Laws for the Protection of the Consumers and Users”.
Many of the Rules concerning Maritime Insurance and Commercial Codes have their origin in the circumstances prevailing in the 19th century, when it was a trend amongst unscrupulous ship owners to cheat their insurance companies by overvalue their cargoes and overloading their ships, and which finally resulted in the famous “Plimsoll-Rules”. Now it appears as if some insurance companies adopt a moral code of cheating small pleasure-boat owners, by the hidden use of paragraphs referring to these archaic Rules.
Pleasure boat owners, who only use their boats for their own leisure and recreation, in general believe that their pleasure boat-insurance is “Consumer Insurance” in the intents of the “Laws for the Protection of the Consumers and Users”, as in other European countries, and not “Maritime Insurance” in the sense of “High Risk” and Commercial Codes.
That’s why the pleasure-boat owners are easy prey for these companies.
And also why these companies top the insurance companies´ “League of Reclamations.”
The European Consumer´s Centre is aware that here does exist a flaw in the legislature and considers it a duty for the Spanish and European Authorities to take the matter up. ￼
The motive to publish these lines is to provoke a change in the legislature that will distinguish clearly between the Laws concerning pleasure boats exclusively for private use, and the Laws concerning pleasure boats engaged in commercial activities (charter, transport, competition, tutorage etc. Spain has a special Register for commercially engaged pleasure boats. (A-6)) , besides to influence the Insurance Companies to adhere to the ADR-System and introduce fairer terms in the contracts.
The motive is also to launch a debate and spread knowledge about the exposed position, in what owners of pleasure boats find themselves, in case of conflict with some of the insurance companies.
This ought also to be a task for Nautical Clubs, Consumer Associations and Yachting Magazines and others to encourage.
I apreciate comments and opinions on this topic.
Don Quijote del Mar