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Pirates or Samaritans?

Stories about predatory salvage and towing claims are a dockside staple.

October 4, 2007
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On November of 1718 the notorious Edward Teach, also known as Blackbeard the Pirate, was hunted down and killed at Oracoke Inlet, N.C. Thus ended the golden age of piracy. Or did it? We’ve all heard stories of grinning Samaritans whose offer of a tow nets a whopping salvage bill. Or high-speed, brightly colored inflatables pulling alongside, their crew bearing high-capacity pumps and high-tech towing gear instead of cannon-because they intend to make their fortune by saving, not sinking, their victims’ vessels.

What’s the truth behind salvage? What are your options and rights? And how do you evaluate what the various towing services offer?

Emergency salvage is a broad legal term covering rescue from anything ranging from raging fire or uncontrollable flooding to simply missing the channel and getting stuck in the mud. In the U.S., salvage awards to a rescuer, called a salvor, range from around 5 percent to 35 percent of post-casualty value (the fair market value of the vessel less the cost of repairs). Depending on the efforts required and the likely outcome, had salvors not been there, an award of 8 percent to 12 percent is typical, with the fee negotiated between salvor and insurer.

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To answer the question on everyone’s lips, yes, salvors can exaggerate circumstances to boost claims, something I’ve seen first hand. But to be fair, boat owners sometimes cry piracy just to nurse their own bruised egos. Either way, the operating theory is that it’s better to pay even a third of a yacht’s residual value than to lose it to the sea. In the old days, even to run aground could mean losing everything.

While growing up boating in South Florida and the Bahamas, Will Beck, a Sea Tow operator in West Palm Beach, saw outbreaks of pure opportunistic larceny. “I would see boats hit a reef or wash up on the beach and just sit there,” he says. “The locals’ idea of salvage was to take their tool kits and strip the boat, right down to wire and plumbing. The boats were always total losses.”

The professional networks now available like Sea Tow and TowBoatU.S. have definitely improved the odds in favor of the beleaguered yachtsman. Says Beck: “Now there’s typically at least one Sea Tow or TowBoatU.S. boat at every inlet, with trained people and the right equipment, poised for fast response.”

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But, you may ask, aren’t salvors charging to do what the Coast Guard is there to do? The answer is a clear no. “Our main goal is preservation of life,” says Petty Officer Dana Warr, spokesman for the Coast Guard’s Seventh District. “We often put ourselves in harm’s way, but not when it comes to saving a vessel.” Coast Guard boats are equipped with pumps and patching gear, and repairs may be the best option for everyone’s safety. But, Warr says, “If a boat is deemed in danger, we’ll get everyone off and call in commercial salvors.”

Of course, there’s nothing to stop you from accepting help from a fellow yachtsman before you call in the pros. But even seemingly simple towing jobs can be dangerous to the uninitiated. Nylon lines may stretch to near double their length, becoming deadly slingshots if one breaks or a cleat pulls out. Handling a tow is difficult, particularly at inlets, which are usually congested and often rough even when it’s fairly calm offshore.

And then there are the other dangers. Rescue on the high seas is often made by merchant ships, which sometimes leads to questions of salvage. In his recent book, A Mile Down, Capt. David Vann tells of being saved by a German freighter, after his boat’s rudder broke during a nasty storm. Claiming he didn’t have the equipment to tow him, the freighter captain took Vann and his crew aboard, but then miraculously rigged a tow and claimed salvage.

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“You’re a criminal,” Vann said to the first mate. “The captain and I are smart,” the mate replied, “and you are not. Poor little stupid American out on the high seas. It’s a big world, isn’t it?”

A Mile Down is a cautionary tale, replete with three salvage incidents that Vann experienced, none of which reflect well on the foreign “Samaritan” salvor community. Then again, Vann himself comes across as impulsive and naive, something hinted at in his book’s subtitle: The True Story of a Disastrous Career at Sea.

In the U.S. at least, most of the salvors we usually encounter are professional services such as Sea Tow and TowBoatU.S., which represent the vast majority of towing operators. Much like roadside assistance plans, both companies offer contracts providing free services for offshore breakdowns, dead batteries or even low fuel. (Neither plan includes emergency salvage.)

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To be a professional salvor costs money. In Beck’s case, he has spent over $1 million in equipment, $800,000 in annual payroll, and $150,000 for fuel. He carries gas-powered pumps, specialized airbags to float grounded vessels higher, even dive gear and underwater patching supplies just for salvage cases. Towing companies also carry oil-spill response gear to protect the environment, as they are often the first on the scene.

Like any entrepreneur, a tow operator expects a return on his investment. When tide and current conspire to strand boaters today, the payout for emergency salvage can lead to allegations that towing companies charge ridiculous fees just to pull a boat from a sandbar, even with a pre-paid towing plan. Recognizing this, BoatU.S. (a consumer advocate and lobbying group long before it got involved in towing and marine insurance), coined the term “soft ungrounding” where extraction requires just one towing vessel and no special equipment like lift bags, with no immediate peril such as breaking surf or fear of significant damage to the vessel, and no danger of fuel spilling. “Any grounding is salvage under maritime law,” says Jerry Cardarelli, vice president of BoatU.S. Towing Services. “But our contract with TowBoatU.S. operators requires us to charge a greatly reduced flat rate”-around $10 to $15 per foot plus travel time, often covered by towing plans.

Insurance companies are possibly the biggest variable in salvage cases. Some will pay up to the full hull value for salvage plus up to the hull value again for repairs. Other underwriters cap combined salvage and repairs at the policy’s stipulated hull value, or even limit salvage costs to a percentage of hull value. “Removal of wreck” may be considered salvage or handled under liability coverage, the latter being preferable since accessing a wreck with appropriate equipment can be costly.

Obviously it is important to understand these issues before needing salvage, just as it is equally important to contact your underwriter, agent or admiralty attorney before calling a salvor. But given the fact that we’re talking about the ocean, this isn’t always possible. “If you can’t get an agent or underwriter on the phone or the situation is too dire, be clear with the salvor what type of service is being offered,” suggests Carroll Robertson, who handles claims for BoatU.S. insurance. Ask if it is “towing” or, if “salvage,” ask why and whether the salvor can quote a fee beforehand.

Despite what some disreputable salvors may claim, “The boat owner does not have to sign a contract,” says Robertson. “The salvor is always protected under the law.” That’s information you want to file away, as pitfalls in salvage contracts can include boat owners paying legal fees for both parties regardless of the outcome of proceedings, or language that specifies arbitration that will favor the salvor. The BoatU.S. salvage contract, which can be downloaded from the Web site and used with any salvor (www.boatus.com), calls for three arbitrators: one selected by the salvor, one by the vessel’s owner, and a chairman of the panel chosen by those two. Sea Tow may use a similar plan, but individual operators are given some latitude-so read the fine print.

Robertson also cautions never to sign a Lloyds Open Form, which requires litigation in Great Britain at significant expense. Other dirty tricks she’s run across include salvors claiming that the Coast Guard or Marine Patrol will fine boat owners if they are not ungrounded right away, or “snatch and grabs” where a grounded boat is pulled off a sandbar without the owner’s consent, perhaps while he hiked up to the nearest phone.

Before choosing a towing plan, be aware of differences. The most significant boils down to when the towing company gets paid for service. Sea Tow operators retain about 70 percent of their towing contract fees, but service their local members free of charge. TowBoatU.S. contract fees go directly to BoatU.S. and individual contractors are paid a discounted rate for each incident. Some charge that Sea Tow dispatchers lead boat owners through lengthy troubleshooting to avoid sending a tow boat, or that they will exaggerate a situation until it’s not covered by the plan. Others claim TowBoatU.S. captains, less concerned with customer loyalty since they aren’t paid the annual fee, can be too quick to tow, when the situation may be as simple as an electrical glitch that could have been fixed in minutes. Ask around your dock before you pick a local provider.

Nearly everyone I interviewed believes that just as there are dishonest auto repairmen and unscrupulous attorneys who spoil the reputation of a majority of honest practitioners, there are a few bad apples in towing. However, the majority of the towing services are straightforward and absolutely necessary. “I really hate this piracy thing,” says SeaTow’s Beck. “My reputation is very important to me. I’m very cautious how I handle any salvage, big or small. But some situations are salvage, requiring special gear and training, and I deserve to be compensated. I’m building my business based on repeat customers. I know I’ll be more successful in the long run being honest.”

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