Boating is an important part of the Florida lifestyle as evidenced by the fact that Florida has the highest number of registered recreational boats in the United States. As of 2020, there were more than 961,000 registered vessels in Florida with many more unregistered boats.
Several attorneys at Johns Law Group hold LL.M. degrees in admiralty law from Tulane Law School and are available to assist you with your marine insurance and boat damage issues.
Like our automobiles, homes, and businesses, many people elect to purchase insurance on their boats to provide coverage for various risks. These risks range from property damage to potential liability to third parties. For larger personal crafts or commercial vessels, the range of insurance coverages become much more complex to protect against numerous other risks including cargo, pollution, mechanical failure, employee liability, and much more.
Sadly, marine insurers do not always live up to the promises made when they sold you an insurance policy. Once a claim is made, the focus becomes on limiting payments (or denial) rather than indemnifying the customer who has purchased insurance coverage. Too often, simple claims become a drawn-out ordeal.
Types of Damage Covered by Boat Policies
Marine and boat insurance policies often provide coverage for various risks/perils. It is important to review your policy thoroughly to understand the exact coverage that has been sold to you. Marine insurance policies generally do not cover “all risks.” Rather, they provide coverage for specific events or risks. Some common examples of these risks include:
- Collisions/Allisions: Collisions with other boats or objects in the water can cause significant damage to a boat, including hull damage, engine damage, and more.
- Groundings: When a boat runs aground, it can cause damage to the hull, keel, and propeller. Groundings can also cause the boat to take on water or become stuck.
- Weather: Extreme weather conditions such as hurricanes, strong winds, and heavy waves can cause damage to boats. Wind and waves can cause the boat to hit objects or be tossed around, while heavy rain or hail can cause damage to the boat’s exterior.
- Fire: Fires are a distinct risk on a boat or commercial vessel. Fires can be caused by a variety of factors including equipment and electrical malfunctions, cooking accidents, and vandalism. The impact of fire damage is normally much more extensive than meets the eye.
- Wear and tear: Over time, boats can become damaged due to normal wear and tear. This can include issues such as corrosion, mechanical problems, and electrical issues. Some boat policies will provide coverage to replace an outboard or drive motor.
- Improper use: Boats can become damaged if they are used improperly, such as by overloading them with too much weight or by running the engine at too high a speed.
- Theft or vandalism: Boats can also become damaged as a result of theft or vandalism. This can include damage to the boat’s exterior, engine, or other components, as well as theft of equipment or personal belongings stored on board.
Another important coverage contained in some marine insurance policies is liability for personal injury. Boating or commercial vessel use can be risky and accidental injuries are not uncommon. Recently, there were a total of 766 boating accidents within a single year in the State of Florida. Injuries can result in significant damages for medical expenses, lost wages, loss of consortium, and pain and suffering.
Common Marine/Boat Exclusions
While marine insurance policies can vary depending on the provider and specific policy, there are some common exclusions that are often not covered by marine insurance. Here are some examples:
- Wear and tear: Marine insurance typically does not cover damages that are a result of normal wear and tear, deterioration, or maintenance issues.
- Neglect: If a boat owner neglects to maintain the boat properly or fails to take reasonable precautions to prevent damage or loss, the insurance policy may not cover any resulting damages or losses.
- Intentional damage: Marine insurance policies generally do not cover damages or losses caused intentionally by the boat owner or others.
- War or terrorism: Marine insurance policies may exclude coverage for damages or losses caused by war, terrorism, or other acts of violence.
- Consequential losses: Marine insurance policies may not cover consequential losses or indirect damages that result from a covered event, such as loss of income or rental income.
- Racing: Many marine insurance policies exclude coverage for boats that are used for racing or high-performance activities.
- Geographic limitations: Some marine policies limit coverage to a certain geographic area.
Again, it’s important to carefully review your policy documents and discuss any questions or concerns with your insurance provider to fully understand the exclusions and limitations of your policy.
What Legal Duties Are Owed to a Marine Policyholder?
Marine insurance policies are generally not subject to state law unless the vessel insured will not be used on navigable waters. As a consequence, marine insurance policies are often subject to federal general maritime law, not state law.
The general maritime law does not have a comprehensive insurance code like in other states, including Florida. Rather, over several centuries, courts have created rules and guidelines that marine insurers and policyholders must abide by. The most important of these rules is the duty of good faith, which courts have said, apply equally to the insurance company and the policyholder. This duty requires parties to act with honesty, fairness, and transparency in their dealings with each other. Courts have also described this duty as “utmost good faith.”
For a policyholder, the duty of “utmost good faith” requires the disclosure of all material facts that are related to the boat being insured. For example, if the boat has had a prior accident or known mechanical problems, they must be disclosed. Failure to disclose any fact that is “material” or important to the insurance company can result in coverage being cancelled once a claim has been made. The duty of utmost good faith, however, does not require the policyholder to engage in a detailed fact finding mission to understand if there are any potential problems with the boat. Rather, it only requires disclosure of information known to the policyholder.
For insurance companies, the duty of good faith requires the insurance company to issue policies that have terms that are clear and understandable. When a legitimate claim is made, the insurance company must investigate it promptly and pay any undisputed amounts owed. A marine insurance company that conducts a frivolous investigation or refuses to pay money owed, may be pursued for additional damages.
How a Florida Maritime Lawyer Can Provide You an Edge?
Maritime claims are different and having a specialist assist you can be a huge asset. While the attorneys at Johns Law Group have substantial experience pursuing all types of insurance companies over coverage disputes, several attorneys hold advanced degrees in maritime law from Tulane Law School – the most prestigious maritime law program in the world. We have significant experience handling marine insurance matters for clients and invite you to schedule a free consultation to discuss your case.