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Claims from boat and yacht insurance coverage: does federal admiralty or state regulation apply?

I have a number of insured boats. Amy Currotto and I represent boat owners in several boat insurance disputes. Maritime insurance policies are often viewed as admiralty laws, but is that it? It is important for the policyholder to analyze which law is applicable in order to correctly assess the coverage.

Maritime insurance policies, together with ship service contracts, are maritime contract contracts within the admiralty and maritime jurisdiction of the federal courts.1 From this declaration, it can be assumed that maritime law will then apply to the interpretation of these types of contracts and disputes. However, this is not the case.

Before a landmark decision by the Supreme Court, 2 Maritime Law was the control law with a very limited exception to state law. This changed when the Court reversed its decision by finding that state law should regulate the interpretation of maritime insurance contracts, except in areas where the opposite of the Confederation is firmly anchored at sea. In its decision, the Court took into account the primary interest of states in regulating insurance.

This participation enables the federal district courts to apply substantive state law to the questions before them. Of course there was a division of decisions between the circuits. The eleventh circle declared that:

If neither legal nor judicial maritime principles provide an answer to a specific legal question, courts can apply state law, provided that the application of state law does not thwart national interests in the uniformity of admiralty law. 3

In the same case, the Court of Appeals also overturned a district court's denial of attorney's fees if the insured claimed an alleged breach of contract and requested attorney fees based on a Florida statue. The court found that since there was no control rule for the award of attorney fees under maritime law and the controlling statue of Florida was content for the purposes of Erie, fees may be awarded under state law.

Prior to this decision, the 11th Circle also confirmed a Florida statue, which granted third-party beneficiaries a direct lawsuit against a marine insurer.4 The court confirmed:

The Federal Admiralty Act does not grant a general right to sue an insurance company directly, nor does it contain a specific obstacle to such measures. A state can, however, file a direct lawsuit against a marine insurer, at least if the state lawsuit does not conflict with a feature of substantive admiralty law or any legal remedy specific to admiralty jurisdiction.

One has to identify the relevant constitutional law and determine whether there is a principle that contradicts constitutional law, and if there is no such principle of admiralty, it must be considered whether such an admiralty rule should be established. If none should be designed, the state rule should follow. If there is a conflict between the admiralty and constitutional law, the comparative interests must be taken into account. They can be designed so that the admiralty takes precedence, or if the policy underlying the admiralty rule is not strong and the impact on the admiralty is minimal, state law can take effect.

In summary, the court found that the court had the ability to create an admiralty rule to cover the matter in question because there was no admiralty principle that was inconsistent with Florida law. The court rejected this and allowed the Florida statue to regulate the importance of the state's interest in regulating insurance.

The courts have agreed that the regulation of maritime insurance contracts should be left to the states and decided on the basis of state law, unless there is a judicial admiralty rule that regulates the issue. It is important to note that there is a small exception to this rule for guarantees. Federal law strictly enforces guarantees when a breach of contract occurs, regardless of whether the breach caused the loss.5 When it comes to boat and insurance litigation disputes, it is best to understand the longstanding principles of maritime insurance and state law.

Thought for the day

If you live a life full of appearances, your life is worth nothing until you do something that challenges your reality. And for me, sailing on the open ocean is a real challenge because it's life or death.
-Morgan Freeman
1 Irwin v. Eagle Star Ins. Co., 455 F.2d 827 (5th Cir. 1972); CPSA v. Ocean Repair Serv. Co., 1994 AMC 402, 1993 WL 427443 (S.D. NY 1993).
2Wilburn Boat Co. v Fireman Fund Ins. Co., 348, US 310 (1955).
3 All underwriters v Weisberg, 222 F.3d 1309, 1312 (11th Cir. 2000).
4Steelmet, Inc. v Caribe Towing Corp., 779 F.2d 1485, 1487 (11th Cir. 1986).
5 Lexington Insurance Co. v Cooke & # 39; s Seafood, 835 F.2d 1364 (11th Cir. 1988).

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