Recreational boating and yachting: managing third-party liability cases can be complicated

As in many industrial domains, the volume of third-party liability cases in the marine sector has been increasing. In a context where spoken agreements with “trust between sailors” have prevailed for years, contractual relationships are sometimes still vague. The requirements for professionals are also constantly increasing: the development of standards makes using products more complicated (paints, mastics, resins, etc.), a scarcity of qualified labour, high quality requirements, the ageing of boats that sometimes causes damage that owners do not understand, etc. These particularities create a fertile ground for claims and disputes.

 

There are an increasing number of claims filed against professionals

At GM Consultant, we have noted that there are an increasingly large number of claims filed against professionals in the maritime sector, and shipyards in particular. In the first quarter of 2019, this led to a 34 percent increase in the number of Maritime third-party liability cases. Professionals working in the sector are not necessarily prepared and can find themselves in a difficult position. We are often confronted by the following kinds of situations:

  • Contractual relationships are not always sufficiently formalised;
  • Professionals are always very exposed when dealing with private individuals. The law tends to protect consumers, who are considered to be ill informed;
  • For environmental reasons, paints and mastics have changed. These products have become far more delicate to use and they are not as durable as before. The risk of disputes at this level has greatly increased over the last ten years;
  • The period of activity for ships that are used commercially (rental or chartering) is short. If they have to be immobilised for renovation work for example, the operational losses can escalate very quickly.

 

The most frequent claims in third-party liability cases

The sale of a boat exposes the seller to a warranty for hidden defects. Second-hand boats give rise to many disputes and legal proceedings frequently occur. We recommend for example that a pre-sale appraisal is always carried out. The appraisal report would then be a great help in defending the seller’s interests.

There are also a great number of risks for shipyards:

  • Damage during lifting or dry docking;
  • Theft or fire during winterising. There is then a need to analyse who was the custodian at the time, which can on occasion be rather delicate;
  • The last one to work on an engine is generally the company that carried out the maintenance in spring. Their liability is always sought if damage occurs during the season. We recommend that companies are very rigorous with the traceability of their work and always carry out oil analyses. These analyses can help to foresee damage and to prove what condition the engine was in during maintenance.
  • Renovation works are complex and owners have very high expectations, both in terms of quality and lead-times.

 

Unjustified claims are also not unheard of.

We find that analysing these claims requires a broad range of technical expertise in the maritime sector: mechanical, electrical, paints, etc. Good knowledge of pleasure boating and yachting is also essential.

When managing complex cases, our loss adjusters are regularly faced with blockages or difficult situations. In the firm, we can then easily talk with loss adjusters from other specialities. For example, in the case of an engine breakdown, the expertise of automotive loss adjusters could prove to be highly relevant in determining the cause of the issue.

For a fault regarding a boat’s deck made from teak (mould for example), our loss adjusters could call on our in-house laboratory and quickly get microscopic images. In the same manner, if a fire occurs at a shipyard, the fire causes and circumstances loss adjuster from the firm could assist the loss adjuster assigned to the case to determine the origin of the occurrence.

And as a final example of “co-working”, the expertise of the financial department is often helpful for assessing indirect losses for example, in cases where the financial aspects are important.

Their outside opinion and their own experience are often the little extra that is needed to best defend the interests of professionals and their insurers.

 

Laurent Lluch – Loss Adjuster & Pierre-Etienne Souyris – Marine Loss Adjuster

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