As Southport Marina continues rebuilding from catastrophic damage inflicted by Hurricane Isaias last August, nine insurance companies have retained legal council to investigate damage on behalf of 104 of those companies’ clients who are former marina slip holders.
According to Christopher Abel of the law firm Willcox and Savage, one additional insurance company, AIG, retained its own attorney and marine surveyor to represent its clients and investigate damage claims.
Those boat owners received letters making demands against them arising out of Hurricane Isaias, according to Abel.
“At this point, each of the insurance companies is investigating what position to take regarding those demands. Our clients, the insureds, received letters that we’ve been assigned to investigate.”
As part of that investigation, an onsite inspection meeting took place May 19 at the marina. The meeting was to include inspection of some of the debris left over from the storm including pilings and other pieces of the marina’s damaged dock system. According to Abel, approximately two dozen people representing various entities were present for that meeting.
Willcox and Savage has also retained the services of an engineer to aid in its investigation of the claims. Abel has requested photos, records, permits and other documentation from the marina as part of the law firm’s investigation. Findings had not yet been released as of press time.
“It’s an ongoing process of evaluating the merits of the claims that have been made,” said Abel, and because of that no checks have yet been written by the insurance companies. “Presumably, at some point, the companies will individually make decisions for their insureds about what they want to do in this situation,” he said.
Surprise for boat owners
Last March, Southport Marina sent claim packets to slip holders for filing with their individual insurance companies. As part of their lease agreements, slip lessees are required to have proof of insurance for their boats and have the marina listed as “additional insured.” The packages contained calculated costs of salvage operations and repair for which the marina claimed the owners were liable.
Each claim amount was based on the lengths of individual slip holders’ boats as a percentage of the total lineal footage of all boats in the marina at the time of the storm. The first cost included salvage operations to remove the boats from the marina basin and a few boats from the west side of the marina that were carried into Cottage Creek by the storm surge. According to letters from the marina, the total of costs associated with salvage operations totaled $334,022. That resulted in a prorated cost for each boat owner of $75.21 per lineal foot. For an owner of a 42-foot boat, that would amount to $3,159.
A second cost figure was calculated to cover damage that the slip holders’ boats allegedly did to the marina docks during the hurricane. Prorated cost to each boat owner, again factored from total lineal footage of 185 boats in the marina at the time of the storm, was based on a cost of just over $3.3 million “for like kind rebuild of the Southport Marina,” according to letters received by slip lessees. For the 42-foot boat owner mentioned above, that would amount to $19,715.
The marina’s claim that boats moored at the marina during the hurricane caused catastrophic damage to its docks was backed up by findings of the Wilmington marine engineering firm the marina retained, Andrew Consulting Engineers, P.C.
Willcox and Savage, on behalf of each insured slip holder, sent some 150 letters to the marina requesting more information and justification for salvage operations, damage assessment and assignment of prorated costs for dock rebuilding. To date, according to Abel, the marina has not responded to any of those letters.
The actual cost to rebuild the marina will be more than $6 million, per Robin Rose, Vice President of Preston Development Company in Cary, North Carolina, the owner of Southport Marina.
“The marina could only file a claim for ‘like kind,’ meaning value as it sat in the water before the storm, which was $4.1 million,” said Rose. “Only the transient and fuel dock was insured for $1 million due to the liability of the fuel.”
Reimbursement from that policy was spread over rebuilding the marina’s other docks to lessen costs for the slip holders, he added. Also, revenue lost due to being out of business with no docks was not factored into the totals and will never be recovered, according to Rose.
Owners question actions
As insurance companies are investigating circumstances at Southport Marina, individual boat owners are questioning the marina’s procedures and insurance claim rationale. Some had never heard of a marina saddling slip holders with the financial responsibility for rebuilding after sustaining damage in a storm.
According to Stephanie Heard and Stephen Hale, who moored their boats in slips at Southport Marina at the time Hurricane Isaias swept through, “A marina’s holding boat owners responsible for storm damage could set a dangerous precedent. We have talked to management at another area marina where we now have our boat and they have never heard of anything like this before.”