Articles Tagged with “Wrongly Denied Marine Insurance Claim Maritime Law Attorney Law Firm”

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.

We often times represent clients whose marine insurance companies wrongfully deny claims based upon exclusions even though the loss was really caused by a covered risk. This is a common tactic of marine insurance companies as they often play the odds that you will simply go away and not fight. Fortunately, maritime law is on your side should you decide to fight.

sailing_accident.jpgTo illustrate this point, we recently represented a yacht owner whose engine sustained serious damage as a result of an improperly installed coolant plug which fell out while cruising. Boat/U.S. (Continental Insurance Company) denied the claim because the policy excluded damage resulting from overheating engines. It is true the engine overheated; and, at first blush, an owner may think he has no insurance. However, under maritime law, insurance companies are to look at the cause which is most essentially connected with the loss and not merely an incidental cause which may be nearer in time to the loss.

Brais & Brais filed suit for breach of contract alleging the policy covered damages resulting from the improper plug installation, and such improper installation was the cause essentially connected with the engine damage. We argued if the plug was properly installed, the engine would not have overheated and the loss would not have occurred. We also filed a claim for punitive damages and the assessment of attorney fees under the Rhode Island Bad Faith Insurance Statute for the claim’s wrongful denial. Shortly thereafter, Boat/U.S., instead of defending the case, changed course from denying coverage to paying the claim.
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