Salvage or tow? You need to know - Soundings Online

Salvage or tow? You need to know

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You might be surprised to learn that salvage operations aren’t just for wrecks

You might be surprised to learn that salvage operations aren’t just for wrecks

The engine is dead, in spite of your best efforts to revive it, and the wind is pushing you toward an ominous-looking rocky shore. In desperation you deploy the anchor, and it holds at last. But the depth alarm is sounding and you are so close to the hazard that you can see the grain in the rocks. After tightening the straps of your PFD and rechecking the security of the anchor rode on its cleat, you contact the local towing service on channel 16 and nervously wait for help.

Although it may be the farthest thing from your mind at the moment, when it’s all over will you end up paying for a tow or be presented with a much higher salvage bill? From a legal standpoint, the answer is not etched in stone.

Because of a fortunate lack of first-hand experience, most boat owners are blissfully unaware of the laws that regulate such events. Those who subscribe to a towing service, like Sea Tow or TowBoatU.S., contentedly assume that they don’t have to worry about such things since they’re “covered.” Others take comfort in the knowledge that their boat insurance policy provides reimbursement for towing expenses. And most — if they consider it at all — think “salvage” only applies to spectacular wrecks and commercial vessels.

Think again. It would be convenient if the difference between towing and salvage could be determined by a simple set of cut-and-dried rules, but it cannot. In fact, many of the day-to-day services provided by towboat operators could rightfully be construed as salvage under maritime law. Let’s look at the details.

Salvage

The legal definition of salvage is saving a boat or its cargo to preserve some or all of its value. To stand up in court, the act of salvaging has to pass three tests:

1. The boat has to be in peril.

2. The salvage effort has to be voluntary (more on that later).

3. The project has to be successful in whole or in part.

It doesn’t take much out of the ordinary to put a boat in danger. Being dead in the water, drifting toward some peril, taking on water, suffering a fuel leak or simply being lost in fog can reasonably qualify as endangering the boat. And the danger doesn’t always have to be immediate or imminent. If a logical expectation of future peril can be shown, then the rules of salvage can apply.

A salvage effort is considered voluntary when the salvor has no contract or obligation to participate. On the other hand, the owner of a boat or the captain and members of a paid crew are assumed to have a contractual obligation to do whatever is within their means to save the boat and its cargo and preserve its value. As such, their efforts are not voluntary, and they can make no claims to be compensated for their efforts, successful or not.

The effort is considered to be successful only if some portion of the boat and cargo value is preserved and retrieved. If the salvor irreparably damages or sinks the boat while trying to save it, he or she is out of luck. “No cure, no pay” is the common phrase used by people in the business, according to Nicholas Walsh, an attorney who practices admiralty law in Portland, Maine.

A common misconception is that salvaging a boat means that the salvor then owns it. The salvor has a right to place a lien on the boat to ensure that the salvage award will be paid, but he or she doesn’t gain title to the boat. Another surprise is the size of some awards, which often seem excessive at first glance. Walsh cites a case where a boat worth $300,000 was pulled off the rocks after suffering only $5,000 in damage, and the salvor was awarded $25,000 for just three hours of work. He explains that the courts have long recognized that salvors play a vital maritime role that should be encouraged and rewarded, so the expense of acquiring the expertise and maintaining the equipment that makes salvage possible must be considered when granting awards.

Towing

Tow boat operators generally consider their standard assistance offering or “covered service” to be disentangling props, delivering fuel if you’ve run out, jump-starting a dead battery, towing you back to your launch point or a repair facility in the case of a mechanical malfunction, and refloating your boat in the case of a soft grounding. Soft grounding is ambiguous and can be interpreted on a case-by-case basis, but in general it means a situation where minimal effort — a little extra pulling power, for example — is required to refloat your boat in a low-water condition. If your boat is high and dry on shore or teetering on a rock pile, you are beyond the definition of towing and firmly in the realm of salvage.

Sea Tow, for example, has a specific set of six guidelines that are used to decide whether a grounding is a covered service or a salvage operation, according to vice president of operations Capt. Joseph Frohnhoefer III. For a covered service the vessel must be:

1. in a safe, stable position

2. surrounded by water

3. not in the surf or the surf line

4. showing some movement (rocking, etc.)

5. able to be refloated by one towboat in 15 minutes or less

6. able to proceed under its own power after being refloated

If any one of these conditions isn’t met, it becomes a salvage operation. In that event Sea Tow franchisees are strongly encouraged “to inform the boater, whenever conditions are possible, if the service is going to be a salvage before they begin working,” says Frohnhoefer. “[But] in many cases,” he continues, “the events happen too fast for the towboat captain and the owner to discuss or agree on a fee for the salvage in advance.”

BoatU.S. defines towing/ungrounding as any operation not involving imminent peril to the boat or to a legally protected marine environment, and one that requires just one tow vessel with lines attached to a grounded or disabled boat to refloat or tow it, according to Jerry Cardarelli, vice president of BoatU.S. Towing Services.

He says an operation would be considered salvage/ungrounding when there is imminent peril to the boat or to a legally protected marine environment, or risk to the salvage company. A salvage operation requires successful rescue of a boat that is hard aground on rocks, coral or other material that could significantly damage the hull; that is aground on a shoreline exposed to hazards such as breaking surf, submerged or partially submerged rocks, strong onshore winds (19 mph or greater) and may require the use of swimmers exposed to these hazards; that is on land (as in a hurricane or major catastrophe) where special equipment must be used (cranes, barges, dredging equipment, etc.); or where multiple vessels are required to tow the boat and refloat it at high tide.

Cardarelli says salvage may include an emergency plug or patch or pumping to stop significant water intrusion or to provide structural support; dewatering a vessel that is completely sunk or swamped; attachment of lift bags to raise or keep a vessel afloat or to secure it against rocks or other damaging surfaces; or rescue of an unmanned vessel in danger of grounding, collision or other imminent peril.

If possible, BoatU.S. will inform the skipper before beginning any work if the operation is salvage, according to Cardarelli. However, if this isn’t possible due to conditions or the fact that the boater isn’t present, the tower will tell the skipper as soon as possible, he says.

Keep in mind that almost all towboat operators are independent franchisees of the larger towing services but are not controlled by them, so they are relatively free to establish their own terms and practices.

When there is time for a discussion, Sea Tow, like many towing services, endorses the use of the standard U.S. Open Form Salvage Agreement (MARSALV), which allows the parties to agree up front on costs, payment issues and arbitration procedures in the event of a later disagreement.

A common cause of confusion in the salvage vs. tow conundrum is that almost any of the reasons you call a towboat for assistance can be construed to mean that the boat is in some degree of peril and qualifies for salvage. And the towboat operator is under no obligation to take on the job, so his or her participation is voluntary by definition. And it’s successful. The operator either remedies your problem and sends you on your way, or tows you back to safety. Are you going to have to pay a salvage claim? Probably not. And not because the towboat operator isn’t legally entitled to lodge a salvage claim.

Attorney Walsh offers a succinct example. “If a boat is drifting in the harbor and you put a line on it, has it been salvaged? Yes. Are you going to get much of an award? No,” he says. “There’s no immediate peril [to the boat owner, and] the boat wasn’t in significant peril.”

The reason towboat operators won’t lodge claims for salvage in such situations is purely economic in nature. Contested salvage claims end up in arbitration or in court, where salvage fees are set and awarded based on longstanding precedents in admiralty law. The validity and the dollar amount of a salvage award is determined by a wide range of factors, including how much danger was involved, the risk to the salvor, the value of the property involved and saved, and the salvor’s cost to do the job.

The relatively ordinary task of getting you on your way or towing you back to safety may legally qualify for salvage, but in reality it wouldn’t get far in court. Towboat operators are better off accepting the normal towing fee, because it’s probably more than their lawyer could win in court, and they have their reputations in the boating community to consider as well.

Your role

There are several ways to help protect yourself and prevent unwelcome surprises when towing is concerned. If you find yourself in a potential salvage situation, always ask the towboat operator to define the task as soon as he or she arrives on scene. Is it just a tow? If it’s something more, be sure you know what he intends to do, all of the terms and conditions under which the job will be done, how the cost will be determined and what the terms of payment will be.

You also should be thoroughly familiar with the amount and limitations of your towing insurance coverage long before you run into a problem. Some subscription towing services may offer several levels of reimbursement. If you regularly venture offshore, you should make sure your limits are high enough to cover the longer two-way trip that a service call might require. Call a local towing operator to get an idea of the towing charges in your area. Check to see how much towing coverage is included in your boat insurance policy. If it is substantial, it could allow you to reduce the amount of subscription coverage you sign up for, or provide a cushion for extraordinary situations. If you have questions or need advice, talk to the agent who sold you the policy.

Cardarelli says BoatU.S. recommends that boaters determine if their hull insurance policy will pay for a salvage, wreck removal and environmental damage protection with no deductible and without limiting payment to only a small percentage of the insured value of the boat. That fine print is important, and many boaters overlook it when buying insurance, he says.

Although it’s not just a towing or salvage issue, Walsh also brings up a point many boat owners might not normally think about: the need to avoid putting yourself “outside of coverage.” If you operate your vessel at a time of year when it is supposed to be out of the water, or navigate in waters beyond where you are covered geographically, your insurance company can deny coverage under any provision of the policy. Those limitations, and any others, will be clearly spelled out in the policy.

There are precious few silver linings in emergencies, but it might be some comfort to know that in the event you find yourself in a genuine salvage situation, most marine insurance companies are happy to cover the cost of salvage, since it saves the expense of reimbursing you for an even greater — or total — loss of the boat. If you properly maintain your boat, practice good seamanship and enjoy a bit of good luck, you might never go through the experience. But you should at least know what to look for and expect.