I grew up on the water, the son of a US Coast Guard officer. Racing sailboats was something I grew to love. When I was 19 years old, I read one Sports Illustrated article about an iconic 70-foot racing sailboat named Merlin. The Merlin was a first-of-its-kind, ultralight ocean racing yacht that set a record in its race from Los Angeles to Honolulu. I promised myself that if I could ever afford it, I would buy her. In 2017 I did just that and have written about some of my adventures in Mavericks & Merlins: Sailors and Renegades leave the coast, how about you?
The 2023 Islands Race was canceled yesterday due to safety concerns. Los Angeles has a freak, never-before-issued blizzard warning with cold winds of over 50 miles per hour along the California coast. So instead of racing the Merlin today and this weekend, I̵7;m writing a blog for all my friends who love water sports and are on their boats of all shapes and sizes.
This post is a warning that your answers on the insurance application about how you maintain your boat and your plans for its safety may be considered warranties, which, if not followed carefully, could void your insurance coverage and cost you dearly in the event of a disaster .
A federal case was settled just two weeks ago1 should be a warning about the seriousness of representations made in marine applications. The federal judge noted the basic facts of the yacht’s death:
“Ralph Young owned and occupied a 74-foot motor vessel named SUMMER STAR (the “vessel”). Mr. Young insured the vessel through plaintiff Transpac with defendant Yachtinsure Services, Inc. from 2013 to 2019. On August 28, 2019, the vessel foundered and was destroyed when Hurricane Dorian struck St. Thomas, US Virgin Islands, where the vessel was moored. Mr. Young applied to abandon the vessel, filed a claim with Yachtinsure and demanded payment in accordance with his policy. Yachtinsure rejected the abandonment and denied Mr. Young’s claim, based on what it believed to be his material misrepresentations in his April 2019 policy renewal application.”
The last thing anyone wants to hear after their insured boat is damaged is that the insurance company will not pay for the damage. In this case, the insurance company successfully argued that the boat owner failed to have the boat moored with certain types of lines at the time of the hurricane, as stated in the application.
Applying federal maritime law and New York law, the federal judge agreed with the insurer:
Mr. Young testified that he traditionally used only four lines to secure the vessel to a single mooring. He further testified that he used only six nylon lines to secure the vessel in Crown Bay during Hurricane Dorian. It is therefore undisputed in the summary judgment that Mr. Young did not follow through on the promissory notes he made when negotiating the insurance with Yachtinsure because he did not secure the SUMMER STAR with the ten 3/4 inch nylon mooring lines he agreed to use in his answer to question 15 of the hurricane plan.
Mr. Young contends that his assurance to use ten 3/4 inch lines is only applicable when moored at a marina, and therefore not relevant when moored to a single point mooring as he was during Hurricane Dorian. I reject this reading of his response in the hurricane plan. I am not convinced by this interpretation because there is nothing in the hurricane plan to indicate that Mr. Young’s intention to use ten 3/4 inch lines is limited only to when he was docked at a marina. If Mr Young planned to secure the vessel with ten lines only when moored at Crown Bay, rather than moored in a marina. With Mr Young’s admission that he would moor at Crown Bay and, four issues later, his agreement to use ten 3/4 inch lines, the clear reading of Mr Young’s Hurricane Plan response is that he confirmed to Yachtinsure that he would use at least ten 3/4-inch nylon braid lines whether he was moored at a single point mooring or docked in a marina.
Mr. Young’s additional assurances that he would double the mooring lines in the event of a named or numbered storm are separately sufficient to support summary judgment for breach of contract. It is undisputed that Mr. Young did not double the number of mooring lines to secure the SUMMER STAR when a hurricane watch for Hurricane Dorian was issued on August 27Th nor when Hurricane Dorian approached the US Virgin Islands on the morning of August 28. Instead, Mr. Young argues about the tensile strength of the ropes he used, claiming that his six rows of undetermined diameter had a strength equal to or greater than the 3/4 inch ropes he had agreed to use. I reject Mr. Young’s claims that 1) the thicker mooring lines he says he used to secure the SUMMER STAR actually increased the strength of the lines; and 2) that he fulfilled his contractual obligations under the hurricane plan by using larger lines to secure the vessel.
Yachtinsure need not explain why it required the mooring configuration it did although its reasoning is understandable, particularly in light of the circumstances of the actual loss of the SUMMER STAR after Mr Young’s six lines became detached from the mooring ball resulting in the vessel drifting out to sea during Hurricane Dorian. It does not matter whether the configuration of the mooring line was causally related to the loss of the SUMMER STAR or whether Mr. Radulewicz’s actions served as a third-party intermediate cause of the vessel’s loss. Mr. Young’s admission that he did not use twenty 3/4 inch nylon braided lines to secure his boat during Hurricane Dorian—and thereby satisfy a prophylactic condition required by the policy—is sufficient to bar him from recovering under the policy. For this reason, I find that Yachtinsure is entitled to summary judgment…
Policyholders who have had claims denied for any number of reasons come to us for help. Most people may think this judgment is too technical a reason to prevent recovery under the policy. However, the judge cited maritime cases where even a fire extinguisher was not properly maintained and up-to-date in terms of its testing, leading to a valid denial of a claim – and the damage to the boat had nothing to do with the extinguisher.
The lesson is that marine insurance policies and applications for these insurance policies can have clauses that must be adhered to to exacting standards. Most owners of boats and yachts are much more concerned with the pleasure of using them and may forget these clauses and representations made in applications long ago.
So while I can’t enjoy racing Merlin this weekend, I’m double-checking my application representations after reading this case. If you own a boat or yacht, I suggest you consider pulling out the never-read policy and checking it for what you promised to do to keep it. You may even need to get your application from your insurance agent to know what you were promised before buying the policy.
Fast is fun!
1 Transpac Marine, LLC v. Yachtinsure Services, Inc.No. 20-10115 (D.Mass. Feb. 13, 2023).