The accident
In December 2014, while motoring back from a day out fishing, Josh accidentally motored through a large kelp bed near the shore. A minute or two later, he noticed the boat’s temperature gauge was about as high as it could go. Josh stopped the boat, raised up the motor and found a large piece of kelp around the leg, blocking the water intake. Josh removed the kelp and then a few minutes later, he started the motor and water started to flow through it.
Josh made his way slowly back to shore, and the temperature gauge came down slightly. Josh then took his boat to his local marine mechanic, Tom, who serviced the leg and replaced the damaged impeller.
The impeller
The impeller is part of a boat motor which pumps water through the system. It has blades which move in a circular fashion and is made out of rubber. The impeller requires water to be running past it, both to lubricate and turn it. If water does not run past the impeller, it can be damaged, usually by melting. It also means that water does not then get into the motor, which can cause damage. Tom said the impeller from Josh’s boat had melted blades.
The claim
Josh made a claim to his insurer, Sail Away, to cover the costs of repairing / replacing his motor. Josh said there was cover under his insurance policy because motoring through the kelp was accidental, and the cause of the motor overheating was the blockage by the kelp which restricted the water flow.
Sail Away’s view
Sail Away declined Josh’s claim. Sail Away said the motor overheated because of a defective thermostat, that was unable to correctly gauge the amount of water needed to keep the motor at the correct temperature. Sail Away said that in reviewing the evidence from the expert claims assessor, there was a large build up of salt on the thermostats and corrosion, which allowed the thermostat to seize and/or partially seize. This amounted to wear and tear and was not covered under the policy.
In addition, Sail Away said that the impeller inspected by the claims assessor was not damaged, giving more weight to the defective thermostat as the reason for the damage, not the kelp. If the kelp caused the issue, Sail Away would have expected the impeller to be damaged because of a complete blockage of the water intake by the kelp.
Josh’s view
Josh said that the impeller the claims assessor had looked at was the brand new impeller replaced by Tom; the original impeller had never been inspected and certainly was damaged. Josh also said that the thermostats in his boat were working perfectly well and that he had information from Tom to prove this. Josh also said that it was definitely the kelp which caused the problem because there had been no issues with the boat, until after he accidently went through the kelp bed.
Josh also said that when he removed the kelp on the day of the accident, water started to move through it as normal, which indicated that it was definitely the kelp that had restricted the water flow. In addition, Tom advised that Josh’s boat actually had two thermostats, and that it would be very unlikely for both thermostats to fail at the same time.
FSCL begins the investigation
After reviewing all of the information, the complaint came down to an assessment of whether:
a) the collision with the kelp solely caused the damage to the motor, or
b) a problem with the thermostat solely caused damage to the motor (wear and tear), or
c) a combination of both.
There was conflicting evidence from the claims assessor and Tom about what caused the damage.
What would it cost to replace the motor?
Rather than repairing the motor, Josh purchased a second hand motor for $11,500.
Independent assessor
We asked an independent marine claims assessor, Bruce, for his opinion about what was likely to have caused the damage to Josh’s boat.
Bruce said that in order to come to a conclusive decision he would need to carry out further enquiries. These included sending his own technical expert to speak with Josh and Tom, seeking clarification of the original claims assessor’s opinions, and he required access to the two impellers. The total amount this was going to cost was around $2,500. Bruce advised that the cost to replace the motor on Josh’s boat would be about $8,000 to $10,000.
FSCL sees whether it can negotiate a resolution between the parties
We contacted Sail Away and said that to issue a formal decision on the complaint would mean Sail Away incurring a $2,500 fee for Bruce’s opinion. We told Sail Away that based on all the information received so far, and the fact that Bruce could not reach a definitive view on the cause of the damage without further investigation, it appeared that the accidental collision with the kelp at least contributed to the damage caused. This was because it appeared to be highly coincidental that the problem arose when Josh’s boat collided with the kelp.
Was Sail Away prepared to make an offer?
We asked Sail Away whether, in these circumstances, it would be prepared to make an ex-gratia offer to pay around $5,000 to resolve Josh’s complaint.
We told Sail Away there was a risk Bruce’s findings would support that the collision with the kelp solely caused the damage meaning the total claim of $11,500 would be payable by Sail Away, in addition to Bruce’s fees.
We said to Sail Away that at the end of the day we were looking at a practical way to resolve the complaint without further delays.
Resolution reached
Although disappointed that Bruce’s opinion could not conclusively say what caused the damage without further investigation, Sail Away agreed to offer Josh $5,000 as a practical way to resolve the complaint. Josh said he thought the offer of $5,000 was fair, he was pleased with the outcome, and the complaint was resolved, without the need for a formal decision to be written.
