The ugly truth about yacht insurance

Max Hardberger - 

Mr. Soledano (not his real name), the owner of a Hatteras cabin cruiser in Miami, stared at me in horror.

“What ?” he demanded. “It’s going to cost $75,000 to fix my engines, and you’re going to pay me $10,000? Why the hell is that ?”

I chose my words carefully. We were at a boatyard on the Miami River, and he was a big, dark man with a three o’clock shadow and a gold anchor-chain around his neck.

He looked like a Colombian drug dealer, and the Miami River is a place where an insurance adjuster can end up in little pieces if he doesn’t watch out. “I’m very sorry, sir,” I said, “but I have to go by your policy. You did read your policy, didn’t you ?” This was my standard ploy, and, as usual, it worked.

He may have sent scores of co-conspirators to sleep with the fishes, but now his heavy face sagged in dismay. “No,” he muttered, “I’ve never seen it. The broker. . .”

Of course the broker hadn’t showed him the policy. Of the hundreds of assureds whose hearts I’ve broken, not a single one had ever read his policy. “Your engines are fully depreciated,” I told him sadly.

“We only have to pay 20% of the cost of repair.” If Mr. Soledano had been a really smart crook, he would’ve forsaken the drug trade and gone into yacht insurance.

That way, he could’ve collect money as regularly as a Brooklyn hood taking vig from a candy store, and used the terms of the policies to pay pennies on claims. And since we’re free in this country to make any kind of bad bargain we want, there’s nothing illegal about it.

All yacht policies contain depreciation clauses. Most provide for a minimum depreciation of 10% per year up to 80% of the total claim, and for some items, such as engines, deck hardware and rigging, the depreciation is 20% per year.

And it doesn’t matter if you bought the boat last year. . .the depreciation runs from the date of manufacture or the date of the item’s last replacement.

The actual condition of the item doesn’t matter, even if it’s like brand new.

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