Galveston: Insurers, companies push new salvage rules

Print
Email
|

by Laura Elder / The Daily News

khou.com

Posted on September 19, 2010 at 11:49 AM

GALVESTON, Texas -- Insurers and some salvage and transport companies working for them are pushing Texas lawmakers to create tougher rules to stop widespread "piracy" of boats grounded or adrift after major storms.

The group seeks regulations about how much salvage yards can charge to release boats collected — or stolen, some in the industry argue — after hurricanes.

Hurricane Ike pushed sailboats, motorboats and even huge yachts onto yards and commercial property and into city streets and major roadways all across the Upper Texas Coast.

Insurance industry officials said they understand municipalities and state agencies must remove boats blocking roads and waterways, which otherwise would pose a threat to the public.

But problems occur when so-called pirates and storm chasers, often without any authorization, haul boats to makeshift salvage yards and demand payment as much as $375 a foot, along with daily storage fees.

Some salvage yards accept only cash. Retrieving a single boat from an unscrupulous salvage yard could cost owners or insurers thousands of dollars.

"It’s absolutely astronomical and so far out of the realm of reality," said Ben Morgan, who, with wife, Connie, owns Freeport, Fla.-based Morgan Marine. Insurers hire companies such as Morgan Marine to retrieve damaged boats belonging to policyholders.

Most insurers contract with salvage yards and companies to take in damaged property after a storm. And some salvage yards are legitimate and charge about $100 a foot, Morgan said.

But some other salvage yards never were authorized to take the boats.

"The bottom line is that they shouldn’t have the boats to begin with," Morgan said. "If you have something that’s not yours, why should you be able to charge for it?"

The Morgans research wind and tidal patterns to determine where to find boats after a storm. But sometimes, detective work leads them to salvage yards.

Even when a boat is a total loss, insurers want to be able to salvage it and sell off parts in auctions to recoup some of their losses, Mark Hanna, spokesman for the Insurance Council of Texas, said.

The push for legislation to stop boat piracy is in the very early stages. And there are no legislative guides to formulate regulations, officials said.

"There’s not model legislation out there," Hanna said.

The problem isn’t confined to Texas and was widespread in Louisiana after Hurricane Katrina struck in 2005, said Lori Davidson, business development manager of Salvage Direct, a Pennsylvania-based company that retrieves boats and other properties for insurers around the nation.

The industry isn’t seeking drastic changes in the law, she said. What it wants is regulation that would require salvage yards to turn over a boat without charging fees if the yard had no proper authorization and paperwork to take it, Davidson said.

"If it’s not yours, you can’t legitimately hold it captive," Davidson said. "It’s no different from breaking a window, stealing a TV and saying: ‘You want it back? Pay me money,’"

While there are no statistics about how much piracy costs the insurance industry, it’s enough to prompt a push for legislative action.

State Rep. Larry Taylor, a North County Republican, has expressed an interest in the issue, Hanna said. Taylor was not available for comment.

Taking a boat without permission is the same as looting, Hanna said. Most boats have identification numbers and are registered. Owners aren’t hard to find, he said.

Rates to retrieve boats from salvage yards should be regulated like those of the automobile towing industry, Hanna said.

Penalties and jail time should be imposed on those who take boats without permission, Davidson said.

While there were some isolated piracy problems in Galveston, the city had a system that kept looting and piracy to a minimum, Morgan said. Morgan Marine traveled to the island a few days after the storm to work for insurers.

The city used prearranged contractors to retrieve cars and boats. It also used approved Galveston wrecker companies to tow the property to temporary impound lots around the island, officials said.

After Hurricane Ike, which struck Sept. 13, 2008, the lots were manned by police officers seven days a week.

Owners of vehicles or boats could show up with proof of ownership to receive their property at no cost, city officials said.

The city paid for the towing and lot services and was reimbursed by the Federal Emergency Management Agency, officials said.

If a vehicle or boat went unclaimed, the city worked with the state to send two letters to the registered owner. What wasn’t retrieved went to auction, city officials said.

Although unpopular, the city’s decision to restrict access on the island immediately after the storm helped limit looting and piracy, Alicia Cahill, a spokeswoman for the city, said.

After storms, opportunists come from everywhere to capitalize on chaos, Davidson said. Davidson wants Texas to set an example.

Even consumers who don’t own boats pay for theft of insured properties, she said. All policyholders pay in the way of higher premiums, she said.

"When we have to pay to get it out, we get our money back from the insurance industry," she said. "It’s wasteful spending."

This story was brought to you through khou.com’s partnership with the Galveston County Daily News.

 

Print
Email
|