Maryline Bossar: you you ⁓ Hi everyone and welcome back to Full Displacement, podcast by Current Yachts. We are here today to talk again about yacht insurance, such a spicy topic that comes up a lot, sometimes blamed for the cost of ⁓ owning a boat and the rising cost in So today we've invited John Jarvey. He's a principal at Oversea Insurance. you to share some of his lessons learned over the years, as well as address in more specific details, very common sticky points that buyers have to work through as they come to owning a boat. with this, welcome back, Amanda Haley, to the show. How are you, Amanda, today?

AMANDA: Very good in Placencia Belize, enjoying the beautiful weather here.

Maryline Bossar: Sounds great. Without further delay, welcome John. How are you today?

John Jarvie: Hi, thanks for having me. I'm doing wonderful. It's a pleasure to be here.

Maryline Bossar: was Palm Beach Boat Show for you, John?

John Jarvie: It was good. Just finished the boat show last week. had an opportunity to meet with various insurers, ⁓ new markets that have recently launched ⁓ connect with some customers. So it's always a good good boat show.

Maryline Bossar: It is a great boat show, definitely a favorite for a lot of our clients too. So I guess we'll start with your background, John. How long have you been in marine insurance? Are you a boater? Tell us more about you.

John Jarvie: I've been in marine insurance for about 20 years. It's basically the only job I've ever had, which is a good thing when we're talking about boat insurance. very skilled at this single siloed specialty of boat insurance. My grandfather started the business over 50 years ago. very fortunate to work with my father in San Diego where I'm from and I moved out to Fort Lauderdale in 2009 to open our office here at the Bahia Mar Yachting Center where I'm sitting right now. And I grew up boating, grew up hanging out on my dad's boats, my grandfather's boats. My first boat was a 34 foot Catalina sailboat in San Diego that I actually lived on for about a year. And most recently was a 34 Grady White, 336 Canyon. that ⁓ I sold last summer. I too am scared of hurricane season ⁓ I'm in the market to purchase another boat now.

Maryline Bossar: Great! John, are you already working with a broker to help you with your search?

John Jarvie: I am, as you can imagine, I know lots of brokers, ⁓ but I'm still kind of zooming in on the boat that I want first, and then I'll connect with some friends and find somebody to help me buy it.

Maryline Bossar: That's awesome.

AMANDA: How you say is the overall insurance market at this moment in time? ⁓ Are going up or going down? Are there more or less boat insurance companies than there were five years ago? And why?

John Jarvie: I would say that the market right now today is soft, softening. Softening, use that term in the insurance space, meaning rates are going down, insurers are a little bit more flexible, everybody's kind of in growth mode. Every company is asking us for more business, which means they're hungry. They're making exceptions ⁓ in areas they historically would not. And we're also... as I mentioned, seeing some new insurers come into the market. So as you may recall being boaters, the softest boat insurance market ever was leading up to 2017. We had those three hurricanes, right? Maria Harvey and Irma. And that wiped out maybe 80 % of the boat insurance industry. The companies didn't go out of business. They just said, what the heck are we doing insuring boats? It's hard to make money.

AMANDA: good. Yep.

John Jarvie: And so we had a withdrawal of insurers, ⁓ especially in the market under, call it 60, 80 feet. And the last five years, we've slowly but surely added markets back. Those are markets that package assets that you've heard of, but also markets that only insure boats and ⁓ have into. hopefully for their sake be a force in the boat insurance space. But that competition is ultimately a very good thing for the boat owner.

Maryline Bossar: And I had a clarifying question on this. Here we're mentioning the presence of carriers, those who underwrite insurance. And then you are a specialty broker that brings carriers and match carriers with boat owners, correct?

John Jarvie: Yeah, that's correct. We're not the individuals paying out claims. Those are from the checkbooks of the actual insurance companies. So you hear that term insurer, carrier, underwriter, that's all on the insurance company side of the house. We are agents, brokers, those terms are different, but they are used interchangeably where we represent various insurance as opposed to just one insurer.

Maryline Bossar: And so the questions that comes up a lot, especially when people grow into larger vessels, do you really need a marine insurance specialist or can you just go through, a homeowner's agent, say state farm or travelers? Why would I need a specialist? Tell us about that.

John Jarvie: Well, I should probably clarify. So we insure over 10,000 boats worldwide. So in the last week, we've insured a $75,000 boat and a $75 million boat. So the answers I'm gonna give probably will be more tailored to boats under a million dollars here because a very common answer in my world is it depends. but I don't wanna answer every question with it depends. So I'll try not to. The larger the boat, obviously the more helpful it can be to have a specialist. But in most cases, a marine insurance it doesn't cost you any more money to work with them versus a generic homeowners or auto insurance broker. In most cases, a insurance broker has access to more marine insurers ⁓

Maryline Bossar: you

John Jarvie: than a generalist insurance agent or broker. And nine out of 10, if you're working with an experienced specialist, they are great deal of help. Not just during quoting and underwriting process, but all the way through the lifeline of the insurance policy, and God forbid if there's ⁓ a claim. The that marine insurance brokers have with insurers usually run pretty deep and even though it shouldn't work this way, most things in life are subjective. And so it is entirely possible that two different brokers submit the same risk to the same insurer and get two different outcomes. Now, an insurer cannot give agent A one price and agent B a different price if you're talking about the same exposure, agent A might get a declination from Chubb, where Agent B might not, either because they have a stronger relationship or in fact they have a better opportunity to actually paint a picture and in fact sell it to the insurer and explain why this insurance company would want to insure this boat instead of just sending a generic email or submission. ⁓ this company declined, sorry, ⁓ couldn't help you. But it takes a lot of reps. to know that this particular insurer, I know that they can insure this boat. They've done it for me before. know for a fact they have the ability where that might not be held completely equally if just any general agent made that same submission.

Maryline Bossar: We have.

AMANDA: And I can speak to that personally myself, since ⁓ Brian Rasmussen is one of your agents and is my insurance broker. He tailor made a specific policy to me as someone who would be staying on my boat of the time in South Florida, which is the ⁓ hurricane zone and was able to make that policy so that I could be able to use the boat and go further offshore because I knew I would wanted to at certain times. ⁓ So working with a specialist, telling him how I plan to use the boats. And sometimes he suggested that I would just have a rider for the times I wanted to go to the Bahamas. So ⁓ is very valuable. And ⁓ unfortunately did have a claim and we can get to this later. ⁓ unfortunate one where my boat burnt to a crisp ⁓ of a shore power arc. ⁓ Brian was there, your agent, ⁓ step along.

John Jarvie: Okay.

AMANDA: the way to walk me through the claims process, the outcome of it all, ⁓ most importantly, to sure that I was protected ⁓ from the beginning, not after the ⁓ So that leads to next question. Does the insurance agent ⁓ that you choose ⁓ any part ⁓ the claims process or the outcome?

John Jarvie: ⁓ Good question, and they should. But ⁓ on the agent, ⁓ few agents have a lot of experience with marine claims. ⁓ And so there is kind of a dotted that an agent can follow to assist with a claim. And as long as most of it is relatively straightforward and the insurer does what they're supposed to do and the boat owner does what they're supposed to do, an agent can and should be directly involved in a claims process. At least at agency, when claims get complicated or expensive or there's a... a severe injury or potential that the claim might not be covered, it usually will get passed up to me. I'm surprised, frankly, your ⁓ total loss didn't get passed up to me, but Brian must have done a fantastic job. ⁓

AMANDA: It was a very cheap boat. was a very cheap vote. That's probably why.

John Jarvie: But in a claim scenario, depending on the type of loss, first of all, what helps as an agent is to know how the claims process works and if there's a likelihood of a declination from an insurer or if it's a pretty straightforward, we got struck by lightning, here's your lightning deductible, here's your payout. when it can get complicated, our in areas where there may not be coverage, like mechanical breakdown gets with machinery, electronics claims can get complicated, injury claims for sure. the insurance companies, they a surveyor, right? And there's about more or less a dozen marine surveyors that work specifically for And even though the insurer is paying that surveyor, the surveyor for the boat owner, but also works for the insurer. ⁓ a little bit of a conflict, but in theory, they are also representing the boat owner's interests. That surveyor is going to have an opinion. That opinion is very valuable opinion because that becomes the gospel of the way the insurance company underwrites the payout for the claim. We've had, I mean, we had an example where, this was about 10 years ago, where there was a claim in Mexico in one of our boats in Baja, California, and the surveyor visited the boat and said that the propellers were corroded, deteriorated, and are probably only worth about 20 % ⁓ of the full replacement value. Now that was not a full new for old policy, so there was depreciation in the policy. And so the insurance company sitting in their ivory tower looks at the report and says, okay, we're gonna give you 20 % of the value of a new propeller. We actually flew down to Mexico, because I saw pictures of this propeller, got it, flew it back, brought it to the insurer's desk, the head underwriter's desk and said, tell me this is 80 % deteriorated. It wasn't. And that's not because the surveyor was out to get anybody. He might've had five claim reports to do that day and he was just moving right along. And when the surveyor gives an opinion, if we like their opinion, then your agent doesn't need to do much. But if we don't like their opinion, you have two choices. You can hire your own independent surveyor or in some cases, a maritime attorney, but you don't always wanna put the boxing gloves on at the onset with an insurer. can kind of put them on their heels. But also your agent, that's where your agent can get involved and put up a fight with the insurer on your behalf without having to hire an attorney or a surveyor or any third party to represent your interest. But you have to be an experienced agent that knows how it should go under the best circumstances because there are times when a client will argue, you know, this should be paid, why is that excluded, why is that depreciated? side with the insurer because they're right. But if the insurer is not right, you also have to know when to go up against them and to lobby for your client. I'll be the first guy to say, hey, it's time to get an attorney, here's why, here's what we're gonna do with it. And ⁓ also say, you're gonna waste your money if you hire anybody to support your case because I've seen this claim a hundred times and there's nothing you can do to get it paid or ⁓ it further paid than what. is depreciated. but that was a scenario where we ended up getting that depreciation flipped. So they depreciated the propellers 20 % instead of 80%. But the insurers just looking at a report the surveyor gives them, they're not trying to hurt anybody, but it all comes down to what the surveyor's opinion is on the day.

Maryline Bossar: So John, you were just talking about the fact that you have surveyors involved when there's partial losses, for example, or even total loss, right?

John Jarvie: Absolutely.

Maryline Bossar: Do you as a broker have any input into who that surveyor is or is that strictly at the discretion of the

John Jarvie: Good question. We absolutely can give suggestions ⁓ depending the ⁓ type loss. So if it's a fire, for example, versus a grounding, ⁓ a claim, gonna want a specific type of surveyor. ⁓ But normally the insurers, they know the right to call. And so they'll generally have the surveyor attend with a fire expert. perhaps even somebody from the fire department, perhaps even somebody manufactured the component that caught fire, ⁓ ⁓ know the cause of the claim at the onset. But in general, yes, the agent absolutely can recommend surveyors. And ⁓ if there's surveyor appointed who maybe we've worked with and we've seen their mastery and we don't love it, ⁓ we can in front of that at the onset. They don't always agree. But if you get involved early enough, you can have some sway there.

Maryline Bossar: So to your earlier point, even more critical to have a specialist working on your behalf in your corner, because this is the kind of situation that as a private boat owner, you will have no sway over. But if you have an insurance broker whose specialty is marine insurance and has experience with these situations, you can see how all of a sudden there's a lot more power on your side. So we started talking about... how things can get really complicated. And so I wanted to understand from your perspective, what are you seeing, what's changing ⁓ in the way ⁓ boats are alongside changes in So complexity such as, you know, lithium battery, hydrofoil boats, ⁓ carbon fiber materials, and then also even AI integration, electronics getting more complicated. Are insurance carriers proactive or reactive to these changes? ⁓

John Jarvie: recreational marine or boat insurance carriers are absolutely reactive. wants to be the first one to learn how to ensure lithium batteries or hydrofoil boats or ⁓ I it's hard enough to make money ⁓ as marine insurer, even when the wind doesn't blow and the rain doesn't fall and ⁓ everything's ⁓ it's to be profitable and we need them to be profitable if they're gonna stay in the business.

AMANDA: you

John Jarvie: But if you think about cars, know, when Tesla came in, ⁓ cars came in, every insurer was figuring out a way to insure these cars because they had to. In the marine space, when you get new technology or different configurations engines or vessel material, the manufacturing material, like carbon fiber or composite materials, there are the majority of insurers, at least at the onset, will say, we don't insure those. I remember when a twin outboard boat used to be daunting to an insurer. then they all got on board with the twin outboards and then we had three and four and now quint and even six outboards. ⁓ So ⁓ at each level, and that's nothing fancy technology wise, we're just adding more outboards, which we already understand and can underwrite, but.

Maryline Bossar: Yeah, that's insane.

John Jarvie: There's a ⁓ fear. a couple of the largest insurers in the country that only started doing quad outboard boats ⁓ the last couple of months. With five and six outboards, there's still very limited market. So at the onset, you need to find kind of even more specialty underwriters within the marine space to do things like carbon fiber or electric power or lithium battery. And then as it gets proven, because even the lithium space, mean, geez, in 2023, we paid out somewhere around $30 million in lithium fire claims. Or I should say we represented the payout of about 30 million. In 2025, maybe 4 million. So the technology improves. In their eyes, there is no motivation to be first to market. while we test these things. And so as the technology is a little bit more proven, you get the more common well-known insurers saying, okay, I'll do that now.

AMANDA: That's a really interesting dynamic there to say, hey, nobody knows how this is going to go when something is first out there. your numbers are very real and true. I wouldn't either if I was the insurance company. I'd wait to see how it goes.

Maryline Bossar: And since you spoke earlier about providing support, finding coverage for larger yachts, can you speak to cyber attacks and risks? Any spike in these recently or an issue?

John Jarvie: an interesting one. It a lot of ⁓ different So ⁓ cyber be, we hacked the owner's email or bank account from his laptop on board. Cyber could be, we hacked into the vessel's actual computer system and took control of the boat, whether we are not allowing the boat to power on, whether we're changing the course of a vessel underway. And cyber relates to both property coverage and liability coverage. So most policies, not all, have a straight exclusion for cyber. ⁓ And so yeah, it's a really difficult coverage for an insurer to get their arms around. There are some supplements that you can purchase where

Maryline Bossar: Really.

John Jarvie: you have your yacht policy here that excludes cyber and you can go purchase a cyber policy separately for your boat. It's a rather new product in the boating world, generally that product costs more than the yacht insurance policy itself. So I've sold one, I've been to quote it, but ⁓ nobody wants buy it because it's expensive. I think eventually you might find a way to build it into the yacht policy itself for an additional premium. ⁓ but there's a very, very big exposure there. We have seen some instances hacking ⁓ big boats and small boats into personal data, crew data, owner information, banking information, things like that, but haven't been able to file any claims for it. And then on the larger boats and even the commercial boats, we've seen a lot threat ⁓ of the ignition just started while we were at the dock and still tied down to the cleats. And in a rare occasion, they did take over the vessel's autopilot while underway. So these are concerns. ⁓ Obviously, the world land based and water based ⁓ is a area of concern. But the marine insurance space hasn't totally figured out how to underwrite it for boaters. Because you have You have these other exposures too. You can have one of your crew members, you you go down to the Bahamas for a weekend, your captain gets off the boat, shares the wifi password with a friend he meets at the bar, and now you got a stranger in into your boat's wifi. So it's really hard to keep a net around everything when these water-based exposures are on the water but can easily creep onto land. Whereas, you know, Bank of America, We know where their buildings are.

Maryline Bossar: Very interesting. We might have a dedicated episode on that soon. Great, moving on. Next question, Amanda, what you have for John?

AMANDA: Yes. we had an instance happen ⁓ just on a boat that we were going to survey on, but I wanted to hear your thoughts first. Are boat insurance policies permissive use, like on a car where if your friend comes into town, ⁓ they to drive your car and they're covered, ⁓ or operators need to be approved by the underwriter?

John Jarvie: I said at the beginning, I was gonna try not to say it depends, but I'll use it here quickly. It does depend. And I know it's complicated when every insurance policy is different, every insurer has different language, but it is both. So typically when you get into larger boats, call it over 50 feet, you can have ⁓ a more frequency of named operator, which means unlike our ⁓ cars, if give Amanda the keys to my car. has my permission to go to the grocery store. ⁓ same can be true for a boat. What you find most often ⁓ areas ⁓ windstorm, areas of higher concern like the Southeast USA, more common to have a named operator policy. The Northeast or ⁓ the Great Lakes Southern California where I'm from. it's usually permissive use, even on larger boats. So it does depend on the insurer, absolutely. But it also depends on the owner's experience. So an experienced owner generally knows not to give the keys to their cousin who's never run a boat before. A newer boater, it's more common, or either a newer boater who hasn't owned a boat before, or you're going from a 30 footer to a 60 footer.

AMANDA: Right.

John Jarvie: and we got a big jump in size, that individual owner will usually see a permissive use type of clause or provision on there until they get comfortable with owning a boat of that size and then you can see it fall off.

AMANDA: Interesting. in this case, the boat was going to survey. A hired captain ⁓ was to bring the boat to the survey, and during that time, ⁓ the hit a bridge and the mast fell down, ⁓ and insurance company ⁓ denied claim because that operator, that who was delivering the vessel, wasn't a named operator on the policy.

John Jarvie: Yep, that's exactly right. And it's, I mean, it's rather straightforward, but the important part is that the owner knows it's there. And, you know, we as agents, we're not the police. We don't know that Amanda's always the person driving her boat, but we trust that you are, if you say you are. And we really don't know what's happening until there's a claim. And that's when they open up the file and say, where was the boat and who was driving? And if you say we were in Cuba, well, hey, you're not covered for Cuba. I didn't know you were going there. You didn't tell me. You didn't tell me Maryline was driving the boat that day. But I know that boating can be tricky too because a lot happens outside of Monday to Friday, nine to five. And you need a captain to run your boat up to the shipyard on a Sunday so that you can do a Monday haul out. You really can't get the operator approved in most cases. So it does take a little bit of foresight. And the other thing you can do is you can kind of preload your policy with, here's four people that might drive my boat this year. And granted, you'd need one of them to be available, but you can pre underwrite that if you are thinking forward enough. ⁓ if not, that happen from time to time. And again, we don't always know about it, but if you have a named operator policy, that's an important provision to know about. And it's usually on the first or second page. It's usually on the quote, It's usually, it's not something that's buried on page 28 that you would have no idea about, but it's always worth double checking.

Maryline Bossar: And in this particular case, would you imagine that the owners of the vessel have a recourse to go directly after this captain or is it just their fault and therefore they're out of luck? What do you think is gonna happen there? Just really curious.

John Jarvie: Yeah, that's a tricky one. That's a great question. are some something that an owner can do is there are captain insurance policies out there, captain's liability. They're not actually very expensive. Most captains don't carry it, but some do where you can actually make sure that your captain has a million dollars of negligence liability insurance should something like that occur. And but the owner would usually need to bring it up. Now the captain would typically say, well, don't you have insurance? Yes, I do, but don't wanna be the first line of defense. And the owner's policy will also have a deductible that the owner will likely have to pay. Now to go after a captain because they caused the loss, if there was no negligence, ⁓ the wasn't drinking, he was following the rules and there was an unmarked log ⁓

Maryline Bossar: Bridge?

John Jarvie: Palm tree, the bridge is a little bit more marked traditionally. I would say there's negligence there. for an owner to actually pursue them legally, it depends on what the damages are because if the insurance policy pays, there's theoretically minimal damages other than maybe the deductible and the resale value. ⁓ if the insurance policy doesn't pay, the captain could easily turn around to the owner and say, that's your insurance policy. You gave me permission to drive the boat.

Maryline Bossar: Ha!

John Jarvie: I assumed you had the insurance company's permission. usually what we see happen.

Maryline Bossar: And that's fair. Okay, thank you for that. So digging into some of those buyer pain points now, my first question for you in that area of very specific ⁓ clarifications or understanding that we wanted to have your take on, are boats typically covered when they're getting worked on at a shipyard or if they are being hauled out? What should a owner be aware of in that circumstance that we know about named operators and being paying attention to that? What else should we know about? for this circumstance, boats being worked on or hauled out.

John Jarvie: This might be the most important question that you ask today. so I'm guessing that the answer I'm about to give, neither of you have heard before. Most owners don't know, most insurance brokers don't know, most yacht brokers, most captains. So it is perfectly legal for a shipyard to absolve themselves of any liability, even if it's their fault, while your boat is at their boat yard. The insurance policy, a boat insurance policy covers every boat to be maintained, hauled out, worked on with some provisions. If you're more higher exposure work like welding, what we call hot work, yeah, you need to get approval for something like that. If there's a fire because of a weld or something, the insurer needs to underwrite that. But if you're getting out for a bottom paint, for zincs, for a short haul, for a survey, or for a six month refit. Just about every shipyard in the country you a work order. Now, sometimes that's a two page work order, sometimes it's 15 pages. But in that work order, there usually are ⁓ of three, if not all three things. A limitation of liability, a hold harmless, and a waiver of subrogation. Which means, ⁓ one, ⁓ we're hauling your boat out and the strap breaks and we drop your boat on the concrete, you'll hold us harmless. even though it's our strap, our lift, our shipyard and you paid us, you will limit all liability and you'll waive subrogation. So where it can interfere with your boat insurance policy is you're allowed to get hauled out, you're allowed to get worked on, but there's something called subrogation in insurance, which means that your insurer pays and then they go after the insurance of the at-fault party, right? So imagine you hire an electrician and you sign a contract with the electrician that says, you burn my boat down, I won't hold you at fault. He burns your boat down because of some faulty work that the electrician did. Your insurance company will not pay that claim because we've interrupted their ability to recover. So your insurer cannot go get their money back from the party that should have paid in the first place. But because we held them harmless, your insurance policy basically is void. And so this is important because anytime a boater is hauling out at a boatyard, we're signing language that basically voids our policy. so yes, we're allowed to haul out as long as that language isn't in there, but it is. And if you don't know to look for it and you're only looking at the first page of the work order that says bottom paint, zincs, prop speed, whatever, you didn't even know to look at page four. ⁓ And many cases, ⁓ You're not telling your agent, not sending them a copy of the contract ⁓ you're, hey, I just got hauled out for bottom paint, my boat dropped. What do mean there's a problem? And so this a big hole in our industry. It hasn't been exploited much because there haven't been massive cases. I mean, I know of a few that we've been involved in and big called as expert witness in ⁓ probably polar bear case would be an easy one that anybody could Google. $20 million boat that caught fire in San Diego, I don't know, 10 years ago as a big one, but there haven't been enough landmark cases for the industry to really be aware of this. And because the boat yards are allowed to put this language in there, why you? If I put language in my services that said, mess up and you're not covered on your insurance policy, you're not gonna hold me liable. Who doesn't like that?

Maryline Bossar: So hold on John, let me put this into very simple words. What we've just discovered is that there's a massive void for when boats are being worked on because the minute we agree to a work order in the same breath, we agree to all these three statements, generally three, that provide a loophole and that the yard is taking no responsibility should something occur. And in the same minute, it voids our insurance on the boat?

John Jarvie: Yeah, in theory, yes. Now, boatyard will tell you, hey, look, if we mess something up, of course we're gonna fix it. I've seen enough examples where that's not the case. if ⁓ the situation, then why does your contract say this? Why don't we just remove it?

Maryline Bossar: Right, why would you put the language if you don't really mean it?

John Jarvie: Right? And so, what does a boater do? So what am I supposed to do then? I need to haul my boat out. We need to get it surveyed. We need to get it painted. So what am I supposed to do? You're supposed to tell your agent. The agent is supposed to tell the insurer and you get their approval. The problem is, as you can imagine, the insurance companies don't wanna pick up the shipyard's exposure. We don't know how often they drug test their employees. When was their lift straps last? ⁓ examined and surveyed, we're basically being asked to ensure the boatyard's liability without being able to underwrite it. So are we supposed to charge a premium for that? Are we just supposed to say, okay, no problem, Mr. Jones, you're approved? So depending on the insurer that you have, some insurance companies say under no circumstances are you allowed to sign anything, we recommend you talk to your attorney, which isn't fair because it's a catch-22. If you don't sign it, you don't get hauled out. your attorney's gonna call them and say, waive this language, and they're gonna say no, go to a different boatyard, but the next boatyard has the same language. there are some insurance companies, probably the majority, that know how to underwrite around this. ⁓ they charge a premium, sometimes they don't, or sometimes they add a unique endorsement that basically says, look, ⁓ approve this, and cover ⁓ these but we're gonna cover our faults. they need to cover theirs. it can, shoot, I've spent weeks working on single boat haulout contracts back and forth with an insurer to get it properly approved. The other thing that happens is we usually get the contract after it's been signed. So we don't really have an opportunity to negotiate terms, because the owner's already signed it. So it's a big, big problem. But again, to have a specialist that knows what to do, when you tell them I'm hauling the boat out and knows how that can impact your policy. It really frustrates boaters because they go, well, aren't I insured to be hauled out and worked on? Yes, you are, as long as you don't sign that language. So it's a major, major issue. Most boats hauled out at any boatyard at any time didn't tell their insurer. So the boatyards usually tell me, hey, no one else here has a problem except for your clients, John.

Maryline Bossar: It's insane.

John Jarvie: That's, yeah, that's cause I know what to do with it. And my clients tell me they're hauling out. aren't enough hours in the day for me to handle every haul out contract for all of our clients. But I only know about the ones that tell me. And so we have to do something about that. Now there are smaller boat yards, mom and pop yards that sometimes they just have a one page napkin contract. That's best case for a boater. Certainly not in South Florida. Depending where you are geographically, that does change. But it is something that voters need to be aware of. Ask your agent about it. If they don't know anything about it, ask a different agent.

Maryline Bossar: Very good point.

AMANDA: So that brings it a specific question. there are a lot of marine service in the area and ⁓ I've spoken to a of them and in to work in some of these ⁓ have to carry a million dollar liability policy, ⁓ which is like, if the yard, the yard isn't taking responsibility, are they then putting the liability onto the technician? Are they just skirting it and requiring that any technician that comes and works on the yard has to carry this kind of policy?

John Jarvie: Yeah, good question. So I'm not a commercial expert, but I'll tell you what I know on this topic. There are some boatyards that even require as much as $5 million of liability now. They continue to raise that threshold, which basically prices some of these contractors out where the insurance is too expensive to buy 5 million. So I just can't do business at this boatyard, which is unfortunate, but the boatyard can make those rules and requirements how they see fit. And then depending on the boatyard, Some boat yards, as you may know, are full service yards where they manage all of the staff and contractors and technicians who work on the boats. And there are other boat yards that basically call themselves landlords. We're just a facility. We don't employ anybody that works on any boat. We're just a haul, block and launch facility. And we pass all of that onto the contractors. And... Those are the ones where I usually say, why the heck do you have all this language in there if all we're doing is hauling, blocking, and launching? But yes, as owner, you generally should double check that the contractors you're working with have insurance in the first place. Most boatyards pretty good about making sure contractors have insurance before they enter the yard, but that gate and that is only as good as their experience. Someone might show somebody a car insurance policy and they go, sure, come on in, you've got insurance. So complicated for a lot of these boat yards to have an actual expert up at the front of the parking lot to say, yes, this is exactly what we need, but they have gotten a lot better at it.

Maryline Bossar: And so that is why most marinas facilities will require a contractor sign in, right? Before a contractor comes on your boat, they have to go by the marina office and check in. Okay, good point.

John Jarvie: Yeah, but this is boating. It's old school. There's sometimes a back door as well as a front door into a facility.

Maryline Bossar: So I wanted to go into a few specific scenarios here, things that we hear a lot. ⁓ discussed in a prior episode the difference between actual cash value and agreed value. So when it comes to coverage of the boat ⁓ ⁓ scenario of a total loss, in this case, let's imagine it's a 10 year old boat. The purchase price was say $500,000 and ⁓ three years of ownership, there's a situation with a total loss. can you tell us in few words as possible how the two scenarios would compare and what will be the outcome for that boat owner, whether it's actual cash value or agreed value?

John Jarvie: Sure, so the first component is total versus partial loss. Total losses in most cases, you get stated value on the policy itself. So ⁓ just talk in terms of partial loss here. So if you have a ACV, an actual cash value policy, or sometimes if you don't, you can have a replacement cost policy, but there is a separate provision for ⁓ sales, rigging, spars, outboard motors, canvas, things like that, where, hey, I thought I had a replacement cost agreed value policy. Well, you do, except for these five things. So it's important to note that. So the actual damage sustained depends on, is it one of these things which we're depreciating, again, even on an agreed value policy, but on an ACV policy, insurer dependent. So there are some insurers that state an actual depreciation schedule. So for outboard motors, we'll depreciate at 10 % per year. Well, what does that mean? That means after 10 years, there's zero value left in the eyes of the insurance company. So you need to look at how old your boat is, what age it is, and what that depreciation schedule is, because if you buy a 10-year-old boat, you might already have depreciated everything away per the schedule on the policy. Now, on the other hand, that example I gave earlier about the depreciated propeller or the corroded propeller, some of these things are in the eye of the beholder where there actually is not a depreciation schedule and it just says it's actual cash value. In some cases, that's to the client's benefit. In some cases, it isn't. it really depends on the, obviously the loss itself, but the opinion of the surveyor. And so that's where you might need to get a second opinion, either another surveyor or an actual expert in that particular component to say, hey, how worn is this? Is it 60 %? Is it 20 %? And there's always an opportunity to state your case to an insurer if you disagree with their calculation and their logic. But it is absolutely a vague moving target if there is no firm depreciation schedule. But again, I think that works to the client's advantage.

Maryline Bossar: And so what you end up doing is you're running the math, right? So if you have a depreciation schedule, might get into total loss territory. Is that how it works? You just evaluate both scenarios depending on what actually happened to the vessel.

John Jarvie: Yeah, I mean, for any claim, an insurer will pay the lesser of what it costs to fix it or to write a check. And you can have partial losses, absolutely, that turn into total losses because it would just be so expensive to repair this boat back to the way it was. But when you're talking about ACV policies, you have circumstances where an owner will replace all of the electronics, but nothing else. Lightning strike is probably the biggest because now these, you know, the boats used to be the Black Pearl, right? Captain Jack Sparrow is a wooden boat. If it gets struck by lightning, everything still works. But now the boats are so computerized, everything talks to each other. Can't even start the engines without all of the systems properly functioning. And we had a lightning strike last year. This was an individual, it was an 82 footer. He had the opportunity to buy a depreciation policy or an agreed value policy. if it was agreed value, it would have been a total loss because of the cost to repair. Because he took the actual cash value policy, this was a million dollar boat. It was about just over a million of repairs, but I think he got about 350,000 out of it because it was a 20 year old boat and everything was original. And so, They depreciate everything appropriately, so no lawsuit, no fight. This is what's left over. And so as a result, he got paid 350 or so and had to make the rest of the repairs out of pocket.

Maryline Bossar: So I think we can skip through three and four because we pretty much cover that. Very good. So next I wanted to talk about the liverboard coverage ⁓ questions. We know liverboards can get coverage. There's this misunderstanding sometimes that you cannot get it but actually there are just restrictions to with and I wanted... for you to tell us what you're finding in the market today and what are some of the limitations? What are some of the things that people need to know about ahead of time? Because we talked to a lot of dreamers that have this plan in say a year or two to become live aborts and assuming they still find marine as well facilities to support that plan or as we call it long-term transient. What are you finding John in this space of insurance today?

John Jarvie: Long-term transient, I like that. Yeah, you make a great point. A lot marinas are getting stricter about liveabords as well. So you have to make sure that you have a slip at a marina that will accommodate that for you because marinas have cranked down on that quite a bit. ⁓ But from insurance perspective, again, there are insurers that are completely comfortable with liveabords. There are some insurers which are not. everything's got to kind of fit into a box. So, you know, if you happen to buy a boat that is over a certain amount of years or it's under or over a certain value, you might not actually be fitting in the guidelines of the insurers who are comfortable with liveabords. So ⁓ probably 25 % of the market, the insurance market that will accommodate a liveaboard scenario as long as the boat you're buying is also within their appetite as underwriters.

Maryline Bossar: So could you perhaps share an example of like the typical trap where the 25 % of carriers will actually shy away from living board policies? What kind of specifics on these boats are you finding make it super difficult to achieve?

John Jarvie: Well, traditionally what see is there's two types of boats, ⁓ of course generalizing here, there's two types of boats where you see live aborts. Very neglected floating houses are still floating so I don't need to do any work to them. And so the boat itself is already a difficult risk to ensure. And on the other hand, ⁓ a couple that wants to do the great loop on their new Nordhaven or Grand Banks or Fleming, and we're gonna live on this boat for the next two years and actually be transient on it. not a stationary boat, we're gonna be moving, but now we're talking about a two, three, five, $6 million boat that isn't quite the same type of live aboard as this is my house, ⁓ we're gonna be fixed at this marina. So the larger, more expensive boats traditionally you have more markets for, you have more accommodations, but for the vessels that are tend to be a little bit older, it's mostly condition based, right? So as there'll be a survey requirement. ⁓ And long as we can comply with the recommendation list on that survey, generally one of the three or four insurers can accommodate ⁓ depending we are.

Maryline Bossar: Okay.

John Jarvie: So in South Florida, there seem to be far less live aborts here than for example, Southern California. But fortunately, there's a lot more markets in Southern California. There aren't a lot of carriers available in South Florida to begin with. So you're losing the...

Maryline Bossar: Is that because of the hurricane risk, John, generally?

John Jarvie: Primarily, yes. Primarily, yes. There's a couple of other exposures we worry about down here, but primarily it is the windstorm exposure. But the other side of it is, do you have an actual home or is this your home? Are you using the boat commercially? Like, hey, this is our liveaboard, but if we get a charter or an Airbnb or an overnight request, we're gonna rent it out and we'll find somewhere else to stay. So when you add a charter or a commercial component, that can make it a little bit more complicated as well. But for the most part, we find that liveabords are perfectly insurable as long as the boat is in good condition as it would need to be even if it wasn't a liveaboard.

Maryline Bossar: Okay, really good, really good stuff. What about other scenarios for older boat coverage? So assume here, not strictly live aboard, but is there a cutoff where, I don't know, after 30 years, it's just you're self-insured. That means you have no insurance and you're on your own. do you find or options for maybe some of those classic boats? And are you finding in today's market? Let's talk about right now.

John Jarvie: Yeah, so when you have the classic market, you can have a 30 year old 40 meter fedship. You can also have a 50 year old wooden criss-craft and you can also have a 30, 40 year old 60 foot hatters, right? Those are all kind of in the same category. So the fedship will be just fine. So we don't need to touch on that. They'll be fine. But.

Maryline Bossar: Yep. Yep.

John Jarvie: for the older wooden boats are in a different category than just, let's say, the older boats. So the older wooden boats, there's nothing wrong with them. There are fewer insurers that are comfortable with wooden boats, but there are a few areas where an owner can make sure that they're buying a quality wooden boat. Why don't we like wooden boats? I don't mind them to be clear. I love the Chris Craft and the Hacker Craft and the Stan Craft and all those classic boats, but... it's the degradation of the wood itself. And so when we're buying a wooden boat, insurers require that we pull the fasteners, these plugs in the vessel itself, and that gives us an idea of the actual quality of the core of the wood, the construction and the condition, the current condition of the boat. So if the fasteners come out clean and the boat's in good shape, you don't really have too much of a problem. Presuming again, it fits in the box of some of the insurers that will do wooden boats. Same is true for non-wooden boats as you get to the 20, 30, 40 year mark. So some insurers have a 20 year cutoff, some of them it's 30, some of them it's 40. For the most part, there's almost always an insurer out there if you bought a 1960 boat, there might be one market, you're not gonna get 10 quotes, you can still get insurance. But when you get into that 20 to 40 year old boat range, regardless of the type or manufacturer of fiberglass, metal or wood. It's very slim. ⁓ market is very slim. Again, always comes down to the condition of the boat, the survey report ⁓ and qualifications of the owner. Are we buying 60-year-old 60-foot boat and we've never owned a boat? Or are we an experienced boater who's, you know, haven't had a claim or haven't had many claims and we're buying a 60-footer? It shouldn't be as much of a problem. But there are, similar to how there are collector car insurers, there are kind of these collector boat insurers as well.

Maryline Bossar: So assuming we're not in the collector boat category, we're just in the very old boat category, are there situations where it makes sense and is it available to just get liability coverage in those cases?

John Jarvie: Yeah, absolutely. I mean, you can be an 80 footer and just get liability. Yeah, because you at least need to get in and out of various marinas and facilities to prove that you have insurance. But that's most often what we find is liability only policies for those types of boats. You know, especially if the value of the boat is under say 50,000. The owner generally is willing to take some risk on the the property insurance and go liability only. You can generally get about a million dollars of liability for about a thousand bucks. It's not very expensive. The liability is the cheapest expense within a boat policy. So liability only is pretty straightforward. Some insurers don't even require a survey for liability only depending on the boat.

Maryline Bossar: Very good. Can we talk about other specifics than for my buyer pain points? What are you seeing in Caribbean and Bahamas coverage? Do premiums go up in those regions? And if so, why and what are you finding again in today's market? What is very new or unknown to most boat buyers that are discovering buying a boat and insuring a boat in those markets? If you want to spend part of the time cruising the Bahamas, for example, what should you know?

John Jarvie: Okay, good question. So there are some insurers that will only cover you in the United States, but most companies can add a rider and endorsement for the Bahamas for the Caribbean. Getting Bahamas coverage is not very difficult, is not very expensive. during the winter season. Getting Caribbean coverage during the winter season depends on the owner's experience ⁓ familiarity with those waters. But also what insurers are more concerned with is we're gonna take our boat down to the British Virgin Islands in ⁓ and we're gonna leave it there till April, and we're gonna be back in Chicago where we live. It's not so much that your boat is in the Caribbean, it's that you're not there with it. so depending on your caretaker arrangements, maybe you have a captain or a crew, or you're gonna stay on board it or you have a caretaker plan while the boat's down there, but that's more of the concern than being just in the Caribbean. Typically that is coverage that a boater can get. The summer season is a very different story. So there are almost no insurance companies for boats under, let's call it $5 million value, that can get windstorm coverage in the Bahamas or Caribbean today, there are almost no insurers that you've heard of. And even for most part, Lloyds, ⁓ I mean, fallback insurer, if something gets tricky, we go to Lloyds, even Lloyds won't give you wind in the Bahamas or Caribbean. ⁓ So ⁓ do do? You either have bring your boat back to Florida,

Maryline Bossar: ⁓ huh. ⁓ huh.

John Jarvie: for a storm or further north, of course. you have to ⁓ for the wind exposure and just say, hey, if a storm's coming this direction, I'm gonna run the other direction. Or you have to go with a inferior insurer. So since those hurricanes of 2017 that we talked about, ⁓ particularly over the last three years, various insurers have emerged with no financial stability rating. So. We might've heard of the term AMBest rating. So they're A rated AMBest or SMP company. much all the companies we write with are A rated or better. There are a handful of companies that unrated. They couldn't qualify for a rating and they're not subject to any regulatory rules. So you could have your boat with one of these insurers. There's a claim, there's a hurricane. You file a claim and they just say, sorry, we're out of business. And there's no recourse like there is for the traditional rated insurers in the United States. So boats in the Caribbean and Bahamas are buying that insurance right now if they want hurricane coverage. It's just what's available. And there are carriers operating out of St. Kitts, Trinidad, Bahamas, BVI's, pretty much every island, American Samoa, Costa Rica, where you can buy this insurance. Is it good or bad insurance? I couldn't tell you. I just know it's not the same quality that we rely on in the event of something like insolvency. So we've got to be very, very aware of that concern down there. And I sometimes get asked like for homeowners insurance in Florida, you can buy property insurance, then you can buy a separate hurricane policy for your home, ⁓ combine the two. That doesn't really exist in boating.

Maryline Bossar: Mm-hmm.

John Jarvie: So you can't buy a policy that doesn't have hurricane coverage and then just a hurricane policy and merge them. There are some services that have come around in the parametric realm, which is really complicated where if the wind blows and you're in this zip code ⁓ ⁓ blows for more than 30 seconds above a category three, we'll pay you out X. it's a. specific hurricane coverage the way we're used to it in boat insurance, but that's about the closest you could get as a parametric product.

Maryline Bossar: Wow, that's super specific. I'm definitely not familiar with those products, but good to know. And what can you tell us about the deadline and conditions for those survey recommendations compliance, right? So you write out a letter some of the time to say, well, we want to underwrite this boat only if you can address the following points from the survey. So it's very common that you have a couple of sticky points that must be addressed and you have to provide this. statement that says these things have been addressed and sometimes we run out of time. So what happens if you don't have the work completed in time for the insurance to be binding? What have you found happen in the real world?

John Jarvie: Yeah, good question. Again, depending on the insurer, some insurers will give you 30, 45, 60 days from binding to address your recommendations. Some insurers require them to be completed before closing, which is not realistic and rarely actually happens, but some of them require that. And then depending on the survey itself, if there's safety or C-worthy items, you might have an insurer that says, we'll give you 60 days to address the recommendations. except for that one. You don't have a working fire extinguisher right now or your through holes are faulty, your bilge pump has oil in it. We're actually not gonna give you coverage until that one or two recommendation one or two are addressed. So good things to get in front of when you're closing. But again, in Marine Insurance, everything is based on honesty and good faith. ⁓ So don't want all the receipts for the 49 recommendations. and all the emails and invoices that prove that they're done, everything comes down to one piece of paper. there's three boxes to check. Nothing completed, everything completed, ⁓ or done except for the following. Now, an insurance company is not gonna go back and check, but if there's a loss, the ⁓ one that excluded on every insurance policy is lack of maintenance. And so the easiest, way to get stung by that exclusion is the surveyor recommended you do this. You said you did it. You didn't do it and it caused a claim. What do you expect? And so no insurer is

Maryline Bossar: That's totally right. That's totally reasonable. Agreed.

John Jarvie: So what could a boater do is you're not obligated to do everything necessarily. What a boater can do is say, and it helps when a yacht broker preps them on this when you're buying a new boat, is to have a survey recommendation plan. And you go, hey, before closing, we're doing numbers one through six. Within the first 30 days, we're doing number seven through 40. And anything after 40, that's kind of cosmetic. We'll get to it in the first year.

Maryline Bossar: Mm-hmm.

John Jarvie: your agent can bring that to the insurer before they give a quote or during the underwriting process and they agree to it or they don't or the insurer says, we agree with that but we really want you to do number 58 in the first 30 days and you're negotiating with them. It doesn't have to be all or nothing. And so ⁓ in the best interest of the client to actually have a plan. It shows the insurer you've thought this through. But the easy example I give is you know, because every owner and every yacht broker has said, do they really need to do everything? Some of this stuff is just cosmetic. What is the minimum that the insurance company wants them to do? That's never a question we want to ask the insurer. What's the least amount of repairs we need to do to a boat? But the example I give is if a surveyor says screw in the light bulb because there's a risk of electrocution and you think it's just a light bulb. not a big thing. We can do that whenever we want. Somebody kid sticks their finger in it, gets electrocuted. There's an easy lack of maintenance issue on something that was easy to fix, but we just didn't think it was important because we needed a new fire extinguisher. So are they all important? Kinda. of them are important until they are, but that's where it gets difficult. And if you go to an insurance say, we are going to screw in the light bulb in six months. And if they agree to it, you're good. You're good. they don't, look for a different insurer who's more comfortable with your plan or sorry, you got to buy a new light bulb.

Maryline Bossar: Okay. Very good. John, it was really great to have you. Thank you for sharing your time, your insights with us. I know allisoners will find tremendous value in this, you know, Q &A and I will also link in the description below to your page on our marine directory where ⁓ sellers that want to talk to you about insurance can learn more about your expertise and ⁓ perhaps have questions directed you to help them in their ⁓ yacht insurance matters. So you again for joining us. Are you coming to any big boat shows ⁓ soon that where we see you?

John Jarvie: We're at most boat shows. If anybody, including yourselves, are at the next Fort Lauderdale show, that's where our office is here in the Freedom Tower at the Bahia Mar above the fuel dock. we just had Palm Beach. ⁓ Next I'm heading out to California for the Newport Beach Boat Show out there. Kind of got our summer season San Diego show, Chicago, and then Cannes and Monaco ⁓ into Newport, Rhode Island, we're pretty much at all of them. So we try to do the full circuit and serve our clients at just about all these shows.

Maryline Bossar: Great, well we'll look forward to seeing you in person. then, you'll find us in the future episode of Full Displacement. Subscribe if you haven't ⁓ we'll see you on the water. Fair winds! ⁓ Is a boat owner's insurance valid when a boat is hauled out?

John Jarvie: Probably not.

Maryline Bossar: How many boats do you underwrite every year at Oversea Insurance?

John Jarvie: 500 and a thousand. 100 meter.

Maryline Bossar: So what's the smallest boat value that you've covered?

John Jarvie: Jet Ski, $5,000.

Maryline Bossar: And the highest?