Is the Damage to My Boat Covered by Insurance?

While boats are a prized possession of many Florida residents, boats constitute a substantial financial investment.  When your boat is damaged, the cost to repair your boat might amount to tens or even hundreds of thousands of dollars.  If your boat is severely damaged, you will trust your insurance company to provide the compensation necessary to restore your boat to pre-loss condition.

Compensation under an insurance claim can be complicated because you might be unclear regarding the cause of the damage.  If you are uncertain about the cause and manner of the damage, the insurer might deny the claim.  A decision from the United States Court of Appeals for the Eleventh Circuit demonstrates how a court might handle this type of situation.

The policyholder’s boat suffered devastating engine damage to the point the vessel was beyond repair.  The vessel was an 85 foot Broward Motor Yacht that was equipped with two turbo charged Detroit Diesel 12v71 engines.  While he was traveling between the Bahamas and Miami, the insured observed black smoke coming from the engines.

When the insured returned to dock, he inspected his engines but was unable to determine the nature of the problem nor the cause of loss.  He filed an insurance claim for the damage to his boat engines.  He carried an all-risk policy.  This type of coverage does not just cover a number of specified risks.  Rather, all risk policies cover all risks unrelated to fraud that are not expressly excluded.  The policy placed the impetus on the policyholder to establish that the loss was caused by a peril covered under the policy.  The insurance company denied the claim alleging that the loss resulted from wear and tear.

Following denial by the insurer, the policyholder retained an expert to inspect the vessel, so the nature of the peril could be identified.  The expert determined that the cause of the loss was a relief valve in the oil system that became frozen in the open position.  This mechanical problem eventually caused the engines to fail.  The insured filed a lawsuit in the U.S. District Court for the Southern District of Florida.  The trial court rendered a decision for the insurance carrier. 

The insured appealed to the Eleventh Circuit Court of Appeal which reversed the decision of the trial court.  The appellate court considered two issues on appeal: (1) Did the trial court properly interpret the policy as excluding coverage for the loss; and (2) Did the policyholders sufficiently prove that the damage was the result of a fortuitous and accidental loss under the all-risk marine insurance policy. 

The court noted that the policyholder only needed to prove that the loss was fortuitous even if the precise cause of the loss could not be determined.  The court determined the loss was fortuitous and accidental, so the evidence supporting the actual cause of the loss from plaintiff’s expert simply reinforced this conclusion.  The court also reasoned that imposing more than a minimal evidentiary burden on the insured to prove the loss was fortuitous and accidental would defeat the purpose of all-risk insurance.

The 11th Circuit Court of Appeal ultimately held that the case could proceed to trial where the insurer would have the burden of proving that the claim was subject to a policy exclusion.  If you have questions about a Florida insurance claim that your insurer is not processing in a fair and timely manner, you are welcome to contact my Miami boat insurance claims law firm.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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