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Chris Richmond, CIC, AAI, CMIP

Chris Richmond, CIC, AAI, CMIP

By Chris Richmond for WorkBoat Magazine.

If you have a commercial hull policy you should expect a request for an updated survey from your underwriter every five years or so.  This is done to both confirm the vessel’s insured value as well as the current condition.  Depending on what this survey states you can expect to see changes in both your coverage limits as well vessel usage.

I always like to tell vessel owners that they know their boats better than anyone else, the good and the bad, so they should not expect any major surprises when they have a surveyor inspect their boat. When an underwriter requests a new survey it can be to your benefit to have a surveyor who has previously inspected your boat to do so again.  They are familiar with the boat, with your operations and with you.  You can also know what to expect from this surveyor and what sort of report to expect.

When you receive your report, the underwriter will want to know what your plan is with the survey recommendations.  Depending on the severity you may not be able to operate until they have been addressed.  Some recommendations can simply be noted that you will monitor the condition and take action in the future.  One thing to remember though is that if you falsely state that you have addressed a survey recommendation and then have a claim you can potentially have no coverage should it be determined that you falsely claimed to have corrected the survey recommendation.

The survey will also provide both a market value as well as cost to build new value.  The underwriter almost always goes with the market value.  This recently presented a problem to a client of ours who had a new survey done by a different surveyor.  His initial survey stated the value of the boat at $250,000.  A subsequent survey 10 years later (the underwriter missed the five-year request) done by a different surveyor showed the hull value at $650,000.  This proved to be a major increase in hull premium that the insured was not able to absorb.  Through some negotiations with the underwriter we were able to insure the boat to 80% of the new survey value.  This saved the insured some premium and also satisfied the underwriter’s need to insure the vessel to its close enough to its value.