Part 4: It MUST be in Writing!
by Ken Levitt
If you have read prior parts of this article, you already know how complex insurance issues can be. Unfortunately, you now also know more about boat insurance than most of the sales people you will be talking to about purchasing insurance or about your existing policy. The days of sales people being extremely knowledgeable about the products they are selling are long gone, and this has never been more true than in the insurance industry. Recently a boat owner talked to three different sales reps at one insurance company, getting three conflicting sets of information. When he finally got the written quote, the information didn't match up with any of the three.
There are people at insurance companies who understand the policies. The are called "underwriters". It is the underwriter's job to assess the risks, interpret the policy, and, if necessary, make changes to the policy. Some companies will allow you to talk directly with an underwriter on a complex issue; others will have the sales rep act as a go between with you and the underwriter (often losing something in the translation). Still others will just insist that they know what they are talking about and theirs is the final word. If you are talking directly to an underwriter, you have about a 98% chance of getting correct information. However, you can still get misinformation if they don't fully understand your question or your circumstances.
The bottom line is that anything anyone ever told you is meaningless unless it is backed up in writing in a policy, rider, or official written communication. The customer service reps you talk to do NOT have the authority to alter the terms of the policy. The only exception might be in a case where you question the meaning of a policy section, and you have a written response (from the insurance company, not from an independent agent) that attempts to clarify what the policy is saying. Such a document could be used as evidence should a dispute arise at a later time. The underwriters at a company do have the authority to change the conditions of the policy, but any real change will always be backed up with a formal letter or document.
By this point in your reading, you may be thinking that Ken is just paranoid and that thousands of people buy marine insurance and never have any problems. While true that problems are extremely rare, are you willing to risk being the one person in ten thousand who has their life ruined by an insurance problem. Think it can't happen to you? Think again after reading about my friend George (not his real name).
George bought a large cabin cruiser and called an insurance agent the next day to get insurance coverage. They discussed the options and agreed on what coverage he was getting. The agent said he would immediately write a binder so that coverage would begin right away and that George would receive the full policy by mail in about a week.
A day or two later, George and his fiancee went out in the boat. The boat sank. His fiancee died, and George spent hours in the water, but made it out alive. After getting out of the hospital, George called the insurance agent about filing a claim on his policy for the loss of his boat. The agent told him there was no policy, that although he and George had discussed a policy, George had never said he wanted a binder written so there was no binder. George had nothing in writing to support his claim that the agent had told him he was covered.
George's life was ruined. Not only was his fiancee dead, but he faced years of loan payments on a boat that no longer existed. And just when he thought his life had gone as low as anyone's possibly could, it got much worse. He was now being sued for damages by his fiancee's parents for causing her death.
George was never the same. The court cases dragged on for six years during which his life was on hold, and every penny he made went to pay the boat loan and lawyer's fees. In the end, he lost his court cases, and was forced to declare personal bankruptcy. George died of natural causes at an early age. I felt that he just lost the will to live.
Having taken the time to get a written copy of the binder would not have prevented the loss of his fiancee, but would have prevented the agonizing six years that followed.
In conclusion, it is important to assure that your insurance coverages are documented in writing. If you think you are too busy (or are too anxious to get out there on the water), remember my friend George. Bad things can happen.