Articles Tagged with “Marine Insurance Attorney”

Sometimes marine insurance companies outright deny claims, but more often, they file what is known as declaratory judgment actions. A declaratory judgment action asks a federal court if an interpretation of the insurance policy — usually an exclusion clause — can be used to deny the claim. Depending upon the court’s answer, the marine insurance company will either accept or deny the claim.

Marine Insurance Attorney Fees.jpgThe reason why marine insurance companies bring declaratory judgment actions is to avoid the punitive damages statute for the wrongful denial of a claim. Declaratory judgment actions, however, are costly for the boat owner as he or she will have to hire an attorney to fight the insurance company. To combat the expense insurance companies place on their customers in pursuing declaratory judgment actions, Florida enacted a statute which holds the insurance company liable for attorney fees should the boat owner win the lawsuit. The purpose of this law is to discourage litigation over insurance policies. Most beneficial to boat owners is that the statute is one-sided and does not allow insurance companies to seek attorney fees if they are successful.

It is interesting to note the law states it does not apply to, “insurance of vessels or crafts, their cargoes, marine builders’ risks, marine protection and indemnity, or other such risks commonly insured under marine insurance policies.” At first blush, it looks like it does not apply to marine insurance litigation. However, the Florida Supreme Court has found the exclusion only applies to rates and rating organizations and not to boat owners seeking attorney fees if successful in litigation.

Damaged Blue Yacht.jpgUpon 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.