Moraira in June 2006
Pleasure boat owners debarred from the European Alternative Dispute Resolution System.
Some Insurance Companies in Spain, and maybe also in other European countries, debar their boat-owning clients from the Alternative Dispute Resolution (ADR) scheme that have been developed across Europe for the protection of the Consumers.
This is done by taking advantage of an article that can be found in the Insurance Laws in many countries and which classifies pleasure-boat insurance as a “high risk”.
THE ADR SYSTEM DOES NOT INCLUDE “HIGH RISK”. (Spanish Law 50/1980, Art.107.2.There are similar rules in other countries.)
THESE INSURANCE COMPANIES ARE IN THE HABIT OF REFUSING TO TAKE PART IN DISPUTE RESOLUTIONS OUT-OF-COURT (ADR).
That leaves no other alternative to the discontented client with a damaged boat, but to take legal proceedings against the insurance company.
This procedure is often very costly, lengthy and tiring.
Most people give in and pocket their pride.
Only a scarce 6,3% of the Spanish Insurance Companies are coherent with the ADR-System.
Pleasure-boat owners, with their boats insured in these companies, are not aware of their weak position – PREDESTINATED TO LOSE - until they have a disagreement with the company.
Then they discover they do not even have a right to “legal aid” included in their boat-insurance.
“Legal aid” usually is included in a common “Consumer Insurance” (car- house- property-or travel-insurance, etc.)
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 contract says nothing of these conditions.
The issue of insurance-disputes hereby seems to be assigned to the Maritime Laws, which are certainly not as consumer-friendly as the European or Spanish Consumer Laws.
Many of the Rules in the Maritime Laws have their origin in the circumstances prevailing in the 19th century, when it was a trend amongst unscrupulous shipowners to cheat their insurance companies by overvalue their cargoes and overloading their ships, which finally resulted in the famous “Plimsoll-Rules”.
Now it appears as if unscrúpulous insurance companies adopt a trend of cheating small pleasure-boat owners, by the use of paragraphs referring to these Maritime Laws.
Pleasure boat owners in general believe that their pleasure boat-insurance is as Consumer Insurance in the sense of the Consumer Laws and not as Maritime Insurance in the sense of the Maritime Laws.
That’s why the pleasure-boat owners are easy targets for these companies.
And also why these companies top the insurance companies´ “League of Reclamations.”
The following narrated story is a true example of this modern form of piracy.
A small Swedish pleasure-boat got stranded on a beach on Ibiza in a sudden storm.
The Insurance Company, which under the veil of discretion will be named MALFÉ in this true story but can be any company adopting these rules, was contacted immediately and promised prompt salvage actions.
Salvage was then delayed six (6) days, during which the boat bumped against the rocks by every wave and received more damage! The boat was then salvaged and transported in a very unprofessional manner to a boat-yard chosen by MALFÉ and received still more damage!
MALFÉ could now be sure that the repair costs would exceed ¾ of the insured value and thus be considered as “total constructive loss”.
In addition MALFÉ suddenly considered the boat underrated. In spite of MALFÉ´s own valuation of the 30 year old boat a few years earlier.
When the tender for the repairs finally arrived from the MALFÉ-picked boat-yard, it was impudently high priced.
A comparison with a well-reputed boat-yard on the Spanish mainland showed that the repairs could be done on the Mainland for less than half the price, and for well under ¾ of the insured value.
The boat-owner felt as caught in a trap.
The MALFÉ-picked boat-yard demanded an absurd sum for releasing the boat from the boat-yard.
The transport from Ibiza to the boat-yard on the Mainland would be very expensive.
So MALFÉ´s offer of indemnity for “total constructive loss” was reluctantly accepted.
MALFÉ then made huge deductions for insured but undamaged equipment (rafts, autohelm, VHF etc.) and told the boat-owner that he was still owner of the boat and responsible for all pending and future costs from the MALFÉ-picked boat-yard.
The indemnity was appealed against to MALFÉ two times. Also appealed to the Spanish consumer organization OMIC and to Dirección General de Seguros (DGS). All in vain.
A few weeks later the boat-owner visited Ibiza by car to pick up the insured but undamaged equipment (raft, autohelm, VHF etc.), which MALFÉ had deducted from the indemnity. When he came to the boat-yard, the MALFÉ-picked boat-yard owner prevented him from picking up his belongings from the boat!
Enlightened by these experiences the boat owner now donated the boat to a Navigation School on the Mainland in exchange for the pending and rising demands from the MALFÉ-picked boat-yard.
Besides these demands and after being repaired, the boat received a total renovation, an osmosis-treatment, a full painting job, and a complete official survey for a Sea-Worthiness-Certificate and a Spanish Matriculation.
From a reliable source, the total expenses for all these jobs, including the surveys, did by far not come up to the total costs demanded from the Swedish boat owner - for the repairs alone.
Boat owners and others ought to be able to draw their own conclusions from this true story and may receive more details from the editor of this publication.
Every year about 1500 pleasure boats meet with such grave accidents in Spanish waters that they have to be rescued by the Spanish Lifeboat Service, Salvamento Marítimo. Many more have grave accidents (with estimated repair costs near ¾ of insured value), in harbours and ashore without appearing in the statistics of Salvamento Marítimo.
The motive of this article is to warn pleasure-boat owners of the perils in their boat insurance, if the insurance company considers the insurance as a “high risk” and does not dare to face an ADR-court and, hopefully, also to initiate a debate on the subject
What more can this boat owner do?
Ake Gustavson, alias Don Quijote del Mar (76)
These thieves are in the business of NOT paying by any means possible. They have no sense of right and wrong. They employ "adjusters" to see how they can weasel out of paying. This is true across the insurance industry, from homeowner's, to medical, to boats. Insurance companies are in cahoots with lawmakers, through their use of lobbyists and political pressure, to pass laws ALLOWING them to screw you. Nothing new here. The solution: own an old boat so that if you wreck it, you can walk away without losing your shirt (this is supposed to be fun), don't sign anything a so-called "rescuer" hands you in a stressful situation, don't pay for insurance other than liability through your homeowner's policy. In the US, don't call the Coast Guard because they no longer offer assistance like they once did but call towing outfits who are, by the way, also in the business of screwing the general boating public if you do not subscribe to their service. On the other side of the coin, if it were not for scams, overuse, circling attorneys looking to make a quick buck, and outright insurance fraud by owners of insured things, maybe insurance companies would not need to cheat the honest people buying their product.
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