Upon receiving a claim notice, it is often times a marine insurance company’s knee jerk reaction to tell the yacht owner to take all reasonable precautions to mitigate and lessen the damages or the claim will be denied. The yacht owner, wanting the marine insurance company to pay the claim, will hire various contractors to care for the damaged vessel and to undertake work designed to prevent additional damage from occurring. After the insurance company “investigates” the claim, the owner receives a letter stating coverage is denied because the owner breached one of the several warranties buried in the policy. If this happened to you, maritime law may provide recourse.
Can the Marine Insurance Company Deny My Claim After Requiring Me to Mitigate the Damage?
The answer depends upon whether the marine insurance company required you to mitigate the damage after it knew of the warranty breach. Nearly every yacht insurance policy requires the owner to minimize or prevent further damages after an accident. This is to protect the marine insurance company from having to pay more money associated with additional post-loss damage which could have been prevented. However, if the underlying claim is not covered by the policy because the owner breached a warranty, there is no obligation on the part of the yacht owner to mitigate the damage.