Summary: The American Association of Insurance Services (AAIS) has developed a boatowners policy (BT 0100) that provides coverage to meet the needs of the average boatowner; generally, that is, the family-oriented watercraft.
There is limited property and liability coverage for watercraft in the standard homeowners policy. The AAIS homeowners form, in the limitations on certain property section, provides $1,500 coverage for watercraft, “including their trailers, furnishings, equipment, and engines or motors.” This coverage, however, is not open perils coverage. Similarly, the homeowners form liability coverage applies to watercraft but subject to many restrictions.
The best procedure, therefore, is to cover a watercraft exposure with a boatowners policy. Following is a discussion of the AAIS boatowners form.
Topics covered: Eligibility Underwriting criteria Policy overview Insuring agreement Definitions Property coverages Liability coverages Uninsured boaters coverage Duties in event of loss or claim Loss settlement provisions Payment provisions Policy conditions
The American Association of Insurance Services (AAIS) boatowners form is designed to cover an individually owned pleasure craft that is not greater than thirty feet in length. The watercraft will not be capable of speeds in excess of 50 miles per hour; personal watercraft capable of greater speeds may be written subject to insurer approval. (Although 45 mph may not seem very fast, operating a boat on water is similar to driving a car equipped with racing slicks on wet pavement. The water offers minimal resistance and so speeds are magnified.)
Additionally, the watercraft should be 20 years or less in age, and with a value not greater than $75,000.
Watercraft that do not meet this criterion may be eligible for another AAIS program; consult the individual insurer.
Certain types of boats are not eligible: amphibious vehicles, air powered boats, ice boats, and submersibles among them. For a complete list of ineligible boats, consult the insurer.
Although underwriting criteria may vary from insurer to insurer, there are some general points the underwriter will consider. First, the watercraft itself. Does it meet the eligibility criteria in regards to length, maximum speed, and value? What type of boat is it? For example, a flat bottomed bass boat with a 60 hp motor on it presents a greater exposure than does a boat with a modified v-hull. Although generally flat bottomed boats are not likely to tip, at a fast speed light weight bass boats react much like a stone being skipped across a pond. Any object in their way causes them to veer sharply.
Next, the underwriter will consider the operator(s) of the boat to be insured. How experienced is the operator? Has the operator taken any water safety courses such as those offered by the Coast Guard or Power Squadron? What does the operator's motor vehicle record reveal? If an operator is likely to drink and drive, the likelihood of drinking and boating is even greater. Has the operator had any previous boating losses?
Finally, the underwriter may consider where the boat is to be operated. Operating a pleasure boat on a crowded river subject to barge traffic involves skill and care, while operating the same boat on a large open lake may not require the same level of competence. The AAIS program recognizes five rating territories: South Atlantic and Gulf; North Atlantic; Great Lakes; Pacific; and Other Inland Waters. Each of these territories may be subject to its own hazards, and the underwriter will consider these when reviewing an application.
The AAIS boatowners special form provides open perils property coverage for watercraft (including motors, boat trailers, and miscellaneous property), liability coverage, medical payments, and uninsured boaters coverage. Various terms and conditions round out the form.
AAIS boatowners policies may be written for a term of either one or three years. The term may be less than a year if the policy is written to coincide with common anniversary dates of the insured's other policies.
Rates are based on limits selected, type of property to be insured, and the navigational territory. The rates for the North Atlantic and Great Lakes are based on an eight month navigation period. The remainder of the year the boat should be out of the water or otherwise protected against freezing. Premiums are then modified based on the age of the boat, safety equipment, and the operator's completion of safety courses.
This form, subject to all of its “terms”, provides the described coverages during the policy period. In return, “you” must pay the required premium. Each coverage described in this form applies only if a “limit” is shown on the “declarations” for that coverage.
“We” cover direct physical loss to: (1) “boats; (2) “motors”; and (3) “boat trailers” described on the declarations and for which a limit is shown.
Analysis
The property insuring agreement makes the point that the boatowners form is an open perils type policy (and, as is shown in the liability section of the policy, BT 0100 is also an occurrence type policy). The covered property consists of boats, motors, and boat trailers, all of which are defined terms.
1. The words “you” and “your” mean the person or person named as the insured on the “declarations”. This includes “your” spouse if a resident of “your” household.
2. The words “we”, “us”, and “our” mean the company providing this insurance.
3. ”Actual cash value” means the cost to replace property using materials of like kind and quality, to the extent practical, less a deduction for depreciation.
Analysis
Nothing out of the ordinary in these definitions.
4. ”Boat” means a watercraft, including sails, spars, fittings, and all permanently attached equipment. It does not include outboard motors.
Analysis
A spar is something such as a mast or boom that supports rigging. All permanently attached equipment falls within the scope of the definition, except for outboard motors which are discussed in an other definition.
5.”Boating equipment” means:
a.portable boating accessories and detachable equipment used in the operation, maintenance, or navigation of a “boat”;
b.dinghies and their outboard motors used to service “covered property”;
c.citizen band radios, ship to shore radios, radar systems, sonar, and other transmitting and receiving systems while in or on “covered property”, unless permanently attached to the “covered property”; and
d.water skis and other water sports equipment intended to be towed by a “boat”, including but not limited to, wake boards, knee boards, and tubes.
6.”Boat trailer” means a trailer designed specifically for the transportation of a “boat”.
7.”Bodily injury” means bodily harm to a person and includes sickness, disease, or death and any required care. However, “bodily injury” does not mean bodily harm, sickness, disease, or death that arises out of:
a.mental or emotional injury;
b.suffering; or
c.distress
that does not result from actual physical injury to a person.
Analysis
This definition of “bodily injury” is common to most insurance forms and this definition continues the normal practice of distinguishing bodily injury from pure mental injury. The boating equipment definition is quite broad in scope, including items both attached and unattached to the insured boat. But note that the insuring agreement refers to coverage for boats, which is defined to include all permanently attached equipment. So, is there a contradiction here over the coverage for attached and unattached boating equipment? The issues is resolved in a different section of BT 0100 wherein coverage for boating equipment as defined is listed as an additional property coverage.
8.”Business” means any trade, profession, or occupation including but not limited to:
a.selling, chartering, renting, repairing, servicing, storing, mooring, or anchoring “boats”; and
b.operation of yacht clubs, shipyards, and marinas.
Entertainment of business clients on “your boat” is not considered “business”.
Analysis
This definition gets its significance in the fact that BT 0100 does not cover property used for or involved in a business. This is a policy meant to apply to recreational uses of a personally owned boat and not a vessel used for commercial purposes.
9.”Covered property” means the “boats”, “motors”, and “boat trailers” as described on the “declarations”; “substitute boats”; and property covered under Newly Acquired Property.
10.”Declarations” are all pages labeled Declarations, Supplemental Declarations, or Schedules that pertain to this form.
11.”Insured” means:
a.”you”;
b.”your” relatives if residents of “your” household; or
c.persons under the age of 21 residing in “your” household and in “your” care or the care of “your” resident relatives.
With respect to Coverage X, Personal Liability, and Coverage Y, Medical Payments, “insured” also means:
d.persons using or caring for the “covered property” with “your” permission. This does not include persons using or caring for “covered property” in the course of any “business” or without the owner's consent; or
e.a person or organization legally responsible for the use of “covered property” by a person listed in 11.a., 11.b., or 11.c. However, “we” will cover that person or organization only with respect to the “covered property”. This does not include persons using or caring for “covered property” in the course of any “business”.
With respect to Coverage Z, Uninsured Boater, “insured” means only:
f.any person in, upon, or getting in or out of “covered property” or a “non-owned boat”. This includes any person being towed on water-skis or similar devices not designed for flight by “covered property” or a “non-owned boat”; or
g.any person who is entitled to recover damages because of “bodily injury” that is covered under Coverage Z, Uninsured Boater, and sustained by a person described in f. above but only to the extent of those damages.
Analysis
Although this definition contains elements found in the AAIS homeowners forms, there are some differences that recognize the nature of the insured property; for example, persons being towed on water-skis behind the covered boat are given “insured” status for uninsured boaters coverage. Also, note that for liability and med pay purposes, insured also means persons using or caring for covered property with the permission of the named insured. But, persons using or caring for covered property in the course of any business are not insureds. This is similar to auto insurance. The mechanic who road tests an insured vehicle should be insured under his own policy; so with a mechanic repairing a boat who takes it out to test it.
12.”Limit” means the amount of insurance that applies for the coverage.
13.”Motor” means an outboard motor and its equipment, including start up equipment and controls, batteries, electric harnesses, fuel tanks and other pressure control tanks.
Analysis
Note that fuel tanks are included as part of the motor and so are covered property. However, just what is meant by “equipment” is not fully clarified.
“Non-owned boat” means a “boat” not over 30 feet in overall length, its “motor”; and its “boat trailer” that “you” do not own and that is used by
a.”you”;
b.”your” relatives if residents of “your” household;
c.or persons under the age of 21 residing in “your” household and in “your” care or the care of “your” resident relatives.
This does not include a “boat”, “motor”, or “boat trailer” that is owned by or furnished for the regular use of an “insured”.
Analysis
This definition is rather explicit.
15.”Occurrence” means an accident, including repeated exposure to similar conditions, that results in “bodily injury” or “property damage” during the policy period.
Analysis
This definition is identical to that found in the AAIS homeowners forms, and is similar to that found in other personal liability coverage forms.
16.”Personal watercraft” means a watercraft equipped with a water jet pump propulsion system and designed to be operated by a person or persons while sitting, standing, or kneeling on the watercraft. “Personal watercraft” includes but is not limited to:
a.jet skis;
b.wave runners; and
c.similar watercraft.
Analysis
Examples of personal watercraft are listed here, but note that many insurers do not wish to insure these types of watercraft. So, it would be prudent to check before binding coverage.
17.”Pollutants” means:
a.any solid, liquid, gaseous, thermal, or radioactive irritant or contaminant, including acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Waste includes any materials to be recycled, reclaimed, or reconditioned, as well as disposed of; and
b.electrical, magnetic, or electromagnetic particles or fields, whether visible or invisible, and sound.
Analysis
This definition is similar to the one in the AAIS personal lines coverage forms.
18.”Property damage” means:
a.physical injury to or destruction of tangible property; or
b.the loss of use of tangible property whether or not it is physically damaged.
19.”Terms” means all provisions, limitations, exclusions, conditions, “declarations”, and definitions that pertain to this form.
Analysis
These definitions are standard in insurance forms.
PRINCIPAL PROPERTY COVERAGES. “We” cover direct physical loss to:
1.”boats” described on the “declarations” for which a “limit” is shown;
2.”motors” described on the “declarations” for which a “limit” is shown;
3.”boat trailers” described on the “declarations” for which a “limit” is shown.
Analysis
Boats, motors, and boat trailers must be individually shown on the declarations page, with a limit of insurance applying to each. Coverage is on a per item, rather than a blanket basis, so selecting and indicating appropriate limits is imperative for coverage to apply. Any deductible shown on the declarations applies.
PROPERTY NOT COVERED. “We” do not cover property used for or involved in:
1.Business–”We” do not pay for loss or damage to “boats”, “motors”, “boat trailers”, or “boating equipment” while the property is:
a.being used in a “business”;
b.hired out or chartered for the use of others;
c.used to transport people or goods for a fee; or
d.rented to others.
2.Racing and Stunt Activity–”We” do not pay for loss or damage to “boats”, “motors”, “boat trailers”, or “boating equipment” caused by or resulting from involvement in an organized or impromptu race including, but not limited, to:
a.preparation for a race;
b.participation in a race; or
c.practicing or qualifying for a race.
A race means any competition for speed or endurance whether against another competitor or time. “We” also do not pay for loss or damage caused by or resulting from involvement in an organized or impromptu contest involving stunts. But, this exclusion does not apply to sailboats in an organized or impromptu race.
3.Residential Use–”We” do not pay for loss or damage to “boats”, “motors”, “boat trailers”, or “boating equipment” while the “boat” is used as a primary or permanent residence.
Analysis
This section of BT 0100 describes the property that is not going to be covered under the terms of the policy. The section emphasizes that this is a personal property type policy and not to be used for a commercial or business risk exposure. Also, racing and stunt activity are coverages that belong in a specialty type market; these activities are not meant to be covered by a personal boat policy. And, if the insured is using his boat as a residence, that type of exposure belongs in a residential type policy, not a pleasure boat policy.
ADDITIONAL PROPERTY COVERAGES. “We” cover the following in addition to the Principal Property Covered.
The “limit” available for each Additional Property Coverage:
a.is the only “limit” available for the described coverage; and
b.is not the sum of the “limit” indicated for an Additional Property Coverage and the “limit” for coverage described under Principal Property Covered.
1.Boating Equipment
a.Coverage–”We” cover direct physical loss to “boating equipment” owned by you.
b.Limits—Unless otherwise shown on the “declarations”, the most “we” pay under this coverage is $2,500 for any loss of or damage to “boating equipment”. However, for loss of or damage to “boating equipment” in, on, or cast overboard from a “personal watercraft” while the “personal watercraft” is in use, the most “we” will pay is $500 under this coverage.
Analysis
This coverage applies to such property as boating cushions, life jackets, water skis, and other boating paraphernalia. This coverage has two limits; one applying to property lost from or damaged by a personal watercraft while the watercraft is in use, and the other applying to equipment in other circumstances. These limits may well be inadequate, and can be increased in $100 increments.
1.Newly Acquired Property
a.”We cover direct physical loss to “boats” up to 30 feet in length, “motors”, and “boat trailers” that “you” acquire during the policy period.
b.This coverage applies for 30 days after “you” acquire the “boat”, “motor”, or “boat trailer” or until “you” report the newly acquired property to “us”, whichever occurs first. This coverage does not extend beyond the end of the policy period.
c.”You” must pay any additional premium due from the date “you” acquire the “boat”, “motor”, or “boat trailer”.
d.The most “we” pay for newly acquired property is $25,000.
Analysis
The boatowners policy provides for newly acquired boats, motors, or trailers. There is no distinction between an additional boat and a replacement boat, as there is in the PAP coverage for newly acquired vehicles. For coverage to apply, though, the newly acquired boat must meet certain criterion: not longer than 30 feet in length. Coverage is limited to $25,000 and applies for 30 days after the acquisition or until the newly acquired property is reported to the insurer, whichever occurs first. Coverage does not extend beyond the end of the policy period. Any additional premium resulting from the property must be paid by the named insured and that premium is charged as of the date of acquisition.
3.Emergency Service
a.”We” will cover the reasonable cost of towing and labor arising out of the disablement of a covered “boat” or “motor”.
b.”We” do not cover the cost of:
1)the delivery of batteries, gas or oil;
2)parts or supplies; or
3)changing a “boat trailer” tire.
c.The labor costs are covered only for labor performed at the place of disablement.
d.The most “we” pay for towing and labor is $500 per incident.
No deductible applies to a loss under this additional coverage.
Analysis
This is the only one of the additional property coverages in which the deductible is discussed, and it does not apply. The coverage is for reasonable costs, but a maximum of $500 is set. Note that in order for the labor costs to be paid, the labor must be performed at the place of disablement.
COVERED LOSSES. “We” cover direct physical loss or damage to “covered property” and “boating equipment” except as limited or excluded in this form.
Analysis
Coverage for insured property is on an open perils basis. Of course, limitations and exclusions still apply.
EXCLUSION THAT APPLY TO PROPERTY COVERAGES
“We” do not pay for a loss or damage to “covered property” or “boating equipment” caused directly or indirectly by any of the following. Such losses are excluded regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce the loss before, at the same time as, or after the excluded cause.
1.”We” do not pay for loss caused by or resulting from animals including, but not limited to, birds, vermin, rodents, insects, animals owned by or kept by an “insured”, or marine life.
2.”We” do not pay for loss caused by or resulting from bubbling or delamination of fiberglass or plywood.
3.”We” do not pay for loss caused by or resulting from the order of any civil authority including:
a.seizure or destruction under quarantine or customs regulations;
b.risks of contraband or illegal transportation or trade; or
c.confiscation or destruction by order of a government or public authority.
“We” do pay for loss which results from acts of a civil authority to prevent the spread of fire.
4.”We” do not pay for loss caused by or resulting from contamination or deterioration including:
a.weathering, corrosion, decay, or rust
b.bacteria, fungi, wet rot, or dry rot;
c.hidden or latent defect; or
d.any quality, fault, or weakness in “covered property” or “boating equipment” that causes it to damage or destroy itself.
5.”We” do not pay for loss caused by or resulting from the criminal acts of an “insured” including illicit transportation or trade.
6.”We” do not pay for loss caused by or resulting from freezing or overheating including damage due to ice, thawing, or sudden changes in temperature.
Analysis
These exclusions are standard to property coverages. Inherent defects, freezing, acts of civil authority, and criminal acts of the insured are not usually covered by an insurance policy. The bubbling (a method used to keep water from freezing) and delamination exclusion addresses matters considered to be in the nature of maintenance, the insured's responsibility.
7.”We” do not pay for loss caused by or resulting from any act committed:
a.by an “insured”, alone or in collusion with another; or
b.at the direction of an “insured”
with the intent to cause a loss.
This exclusion applies even with respect to an “insured” who was not involved in the commission or direction of the act that caused the loss.
8.”We” do not pay for loss caused by or resulting from a process to repair, adjust, service, or maintain the covered equipment or property. But, if maintenance or repairs results in fire or explosion, “we” do cover the loss or damage caused by that fire or explosion.
9.”We” do not pay for loss caused by or resulting from mechanical or electrical breakdown or failure of the property including, but not limited to, rupture or bursting by centrifugal force. But, if mechanical breakdown results in a loss that would otherwise be covered under this form, “we” do cover the resulting loss or damage.
10.”We” do not pay for loss caused by or resulting from nuclear reaction, radiation, or radioactive contamination whether controlled or uncontrolled; or however caused; or any consequence of such reaction, radiation, or contamination. Loss caused by nuclear reaction, radiation, or radioactive contamination is not considered loss caused by: fire; explosion; or smoke. “We” do cover the loss caused by a fire that results from the nuclear hazard.
11.”We” do not pay for loss caused by or resulting from:
a.war, including undeclared or civil war;
b.warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign, or other authority using military personnel or other agents; or
c.insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.
With respect to any action that comes within the “terms” of this exclusion and involves nuclear reaction, radiation, or radioactive contamination, this exclusion supersedes the exclusion for nuclear hazard. Discharge of a nuclear weapon is deemed a warlike action even if it is accidental.
12.”We” do not pay for loss caused by wear and tear, marring, or scratching.
Analysis
Many of the excluded causes of loss, such as war and nuclear hazard and intentional acts, are standard. But note that the intentional acts exclusion applies even with respect to an insured who was not involved in the commission of the act. In other words, the intentional act of one insured affects the coverage for any innocent insured.
It is interesting to note that, in common with many inland marine forms, the boatowners policy does not cover losses resulting from repairing or servicing the covered property. Note that the wording used is “a process to repair…” which makes it clear that responsibility for those losses rests with the entity making the repair or performing the service. But if the servicing or repairing results in fire or explosion, those losses are covered.
As is common with open perils forms, those things that are bound to happen over time and are therefore uninsurable are excluded, such as normal wear and tear.
An element of boiler and machinery coverage is present in the exclusion for mechanical breakdown, rupture or bursting by centrifugal force. Note that ensuing loss is covered, so that if, for example, a fire starts as a result of the breakdown, the loss caused by the fire is covered.
PRINCIPAL LIABILITY COVERAGES
1.Coverage X—Personal Liability—”We” pay, up to the “limit” that applies, all sums for which an “insured” is legally liable because of “bodily injury” or “property damage” caused by an “occurrence” arising out of the ownership, maintenance, or use of “covered property” or a “non-owned boat”.
“We” will settle or defend a claim or suit seeking damages if the claim or suit resulted from “bodily injury” or “property damage” caused by an “occurrence” to which this insurance applies. Such defense will be provided at “our” expense by counsel that “we” choose. “We” may investigate and settle claims or suits that “we” decide are appropriate. “We” do not have to provide a defense after “we” have paid an amount equal to the “limit” that applies as a result of a judgment or written settlement.
2.Coverage Y—Medical Payments—”We” pay the necessary medical expenses for “bodily injury” arising out of the ownership, maintenance, or use of “covered property” or a “non-owned boat”. “We” only pay the necessary medical expenses for “bodily injury” if the expenses are incurred or medically determined within three years from the date of an accident.
Medical expenses means the reasonable charges for medical care, surgery, X-ray, CAT scan, or MRI, dental care, ambulance services, hospital care, professional nursing services, funeral services, prosthetic devices, hearing aids or eyeglasses, including contact lenses, prescription drugs, and first aid at the time of the accident.
Analysis
The base limits, which may be increased, are $100,000 bodily injury and property damage liability, and $1,000 medical payments. Bodily injury or property damage that occurs during the policy period and is accidentally caused is covered. Although the insuring agreement states that the loss or damage must arise out of covered property or a non-owned boat, in this instance “nonowned” can also mean a boat that is a substitute for an insured boat.
Medical expenses incurred or determined within three years following a covered accident are covered. The medical payments coverage is similar to that found in the personal auto policy (PAP) in that an insured is eligible for the coverage. This is unlike the medical payments to others coverage found in homeowners forms, for which insureds are not eligible.
ADDITIONAL LIABILITY COVERAGES
The following Additional Liability coverages are subject to all the “terms” of Coverages X and Y. In addition to the “limit” of liability for Coverage X, “we” will pay for the following:
1.Claims and Defense Cost—”We” pay for:
a.the costs incurred by “us” and the costs taxed to an “insured” in a suit “we” defend;
b.the premiums on required bonds in a suit “we” defend, but only for bond amounts up to the “limit” that applies. “We” are not required to apply for or furnish bonds;
c.the necessary costs incurred by an “insured” at “our” request for assisting “us” in the investigation or defense of a claim or suit. This includes up to $250 per day, per “insured”, for the actual loss of earnings, but not loss of other income, for time spent away from work at “our” request;
d.the interest on the entire that accrues after the entry of the judgment, but ending when “we” tender, pay, or deposit in court that part of the judgment that does not exceed the “limit” that applies; and,
e.prejudgment interest awarded against an “insured” on that part of the judgment “we” pay. If “we” offer to pay the “limit” that applies, “we” will not pay any prejudgment interest based on that period of time after the offer.
2.Removal of Sunken Property—”We” pay the reasonable cost incurred for the raising, removal, or destruction of “covered property” or a “non-owned boat” caused by its stranding, sinking, or burning, if required of an “insured” by law or governmental authority. This includes the cost of unsuccessful attempts to raise, remove, or destroy this wreckage. “We” will not pay more than 25% of the “limit” for Coverage X that applies to the lost or damaged property.
Analysis
Claims and defense costs are in addition to the limit of liability shown on the declarations. However, the insurer does not have to continue providing a defense once it has tendered its limit of liability. The insurer will pay interest—either prejudgment, or accruing after the entry of a judgment. But once the insurer either offers to pay, or pays up to the policy limit, no further interest is payable.
Premiums on bonds are payable. An insured may be reimbursed up to $250 per day for actual loss of earnings because of time spent from work at the insurer's request, and for other reasonable expenses incurred by an insured at the request of the insurer.
An interesting coverage that survives from ocean marine protection and indemnity insurance, which covers liability exposures a vessel may face, is removal of sunken property. Law or governmental authority may require, for example, that a boat sunk in a shipping lane or harbor be removed. This coverage responds. The limit is 25% of the limit applying to the lost property.
EXCLUSIONS THAT APPLY TO COVERAGES X AND Y
“We” do not pay for “bodily injury” or “property damage”:
1.that arises out of abuse. Abuse includes but is not limited to:
a.actual, alleged, or threatened sexual molestation;
b.corporal punishment; or
c.physical or mental abuse.
2.that occurs when “covered property” or a “non-owned boat” is:
a.being used in the course of “business”;
b.hired out or chartered for the use of others;
c.used to transport people or goods for a fee; or
d.rented to others.
3.that arises out of the transmission of a communicable disease by an “insured”.
4.that arises out of the use, sale, manufacture, delivery, transfer, or possession by any person of Controlled Substances as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812, including any amendments. Controlled Substances include but are not limited to cocaine, LSD, marijuana, and all narcotic or hallucinogenic drugs. However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed physician.
5.that arises out of criminal acts of an “insured” including illicit transportation or trade.
6.that results from an intentional act of an “insured”.
a.”Bodily injury” or “property damage” that results from an intentional act of an “insured” includes, but is not limited to, “bodily injury” and “property damage” that is:
1)expected, directed, or intended by an “insured”; or
2)the result of an intentional and malicious act by or at the direction of an “insured”.
b.The intentional acts exclusion applies even if the “bodily injury” or “property damage”:
1)that occurs is different than what was expected, directed, or intended by the “insured”; or
2)is suffered by persons, entities, or property not expected, directed, or intended by the “insured”.
This exclusion does not apply to “bodily injury” or “property damage” that arises out of the use of reasonable force by an insured to protect people or property.
7.while “covered property” or a “non-owned boat” is being transported by a land vehicle or a trailer.
Analysis
These exclusions address intentional acts and illegal acts by an insured. And, like the AAIS homeowners forms, the boatowners policy excludes coverage for intentional bodily injury or property damage even if the outcome is different from what was intended. Also, the exclusion does not apply to bodily injury or property damage arising out of the use of reasonable force to protect people or property. So, if an insured boatowner saw a drunken operator coming dangerously near to some swimmers, and rammed the other boat in an attempt to stop it, the resulting damage would be covered.
Bodily injury and property damage arising out of business pursuits of the insured are not covered since this is a boat policy for personal use of the insured. It might be tempting, while a boat is not in use by the insured, to recoup some of its expense by renting it, but exclusion 2 eliminates coverage while an insured or nonowned boat is hired out or rented to others.
There is no coverage while the insured boat or a nonowned boat is being transported on a trailer or another land vehicle. This is because, while being so transported, coverage follows the land vehicle.
8.to anyone using “covered property” or a “nonowned boat” without the permission of an “insured”.
9.that results directly or indirectly from an “occurrence” for which an “insured” is also an insured under a nuclear energy liability policy or would be an insured but for the exhaustion of its “limits”. A nuclear energy liability policy is a policy issued by American Nuclear Insurers, Mutual Atomic Energy Liability Underwriters, Nuclear Insurance Association of Canada, or their successors.
10.that occurs while “covered property” or a “nonowned boat” is towing a parasail, kite, hang glider, or s similar device designed for flight.
11.that arises out of the actual, alleged, or threatened discharge, dispersal, emission, leaching, seepage, migration, release, spillage, or escape of “pollutants” into or upon land, water, or air. “We” do cover the discharge, dispersal, emission, leaching, seepage, migration, release, spillage, or escape of “pollutants” if it is sudden and accidental.
12.that arises out of the rendering of or the failure to render a professional service.
13.that occurs while “covered property” or a “nonowned boat” is involved in an organized or impromptu race including, but not limited to:
a.preparation for a race;
b.participation in a race; or
c.practicing or qualifying for a race.
A race means any competition for speed or endurance whether against another competitor or time.
“We” also do not pay for bodily injury or property damage that occurs while “covered property” or a “nonowned boat” is involved in an organized or impromptu contest involving stunts. This exclusion does not apply to sailboats in an organized or impromptu race.
14.that results directly or indirectly from war or military action including:
a.war, including undeclared or civil war;
b.warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign, or other authority using military personnel or other agents; or
c.insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.
Discharge of a nuclear weapon is deemed a warlike action even if it is accidental.
Analysis
The non-permissive users exclusion precludes coverage if anyone uses an insured or nonowned boat without specific permission from an insured; and note, that any insured may give permission.
It is a fact of boating life that boat motors occasionally leak oil or gas. Normally such leakage is in such minute amounts that there is no problem. But, this policy excludes any release or escape of pollutants into land, water, or air; it is similar to a total pollution exclusion. However, there is an exception for a sudden and accidental escape or release. This type of language can be troublesome, but an example is: the insured's fuel tank suddenly ruptures and he is required to clean up the damage he caused. This would be covered as a property damage claim.
A favorite boating activity is kite skiing or parasailing. This activity can be a very difficult risk to control; for example, if the skier is up in the air, it is easy to lose control and crash down into the water. The same can be said of racing and speed contests. All these activities are things considered far beyond the scope of a personal pleasure boat liability policy. So, these types of activity are excluded from coverage under BT 0100.
The professional services, war, and nuclear energy exclusions are common in liability policies. These types of risk exposures require specialty type policies.
ADDITIONAL EXCLUSIONS THAT APPLY ONLY TO COVERAGE X
“We” do not pay for:
1.”bodily injury” or “property damage” liability assumed under any contract or agreement, except a written contract relating to a dock rental or boat storage indemnity agreement.
Analysis
The exception to a hold harmless agreement is a written contract relating to a dock rental or boat storage agreement. Although some liability forms state that a hold harmless agreement can either be written or simply a verbal agreement, the boatowners policy states clearly that a written contract must be in place.
2.”bodily injury” to an employee of an “insured” if the bodily injury occurs in the course of employment, nor do we pay for consequential injuries to a spouse, child, parent, brother, or sister of such injured employee. This exclusion applies where:
a.the insured is liable either as an employer or in any other capacity; or
b.there is an obligation to fully or partially reimburse a third person for damages arising out of the injuries described above.
3. “bodily injury” to:
a.you;
b.your relatives if residents of your household; or
c.persons under the age of 21 residing in your household and in your care or the care of your resident relatives.
4.”property damage” to property:
a.owned by an insured;
b.occupied or used by an “insured”; or
c.rented to or in the care of an “insured”.
However, “we will cover “property damage” to a launching ramp, dock, or boat storage house rented solely to an “insured”.
Analysis
Typically, insureds cannot be liable for property damage to their own property. This is not to say there is no coverage for owned property; the property coverages in the boatowners policy provides physical damage coverage for covered property (the boats, motors, and trailers described in the declarations, miscellaneous property, substitute boats, and nonowned boats). Coverage for other property owned by an insured or in an insured's care would be on the appropriate form; homeowners, for example.
The point of the liability to insureds exclusion is similar to that of the property damage exclusion. The insured cannot be liable to himself; this exclusion simply extends that thinking to relatives and others in the care of the insured.
The injury to employees exclusion is the employers liability exclusion that is found in standard general liability policies. This is a workers comp type exposure.
“bodily injury” to a person if benefits are provided or are required to be provided by an “insured” under any law or regulation covering:
a.the U.S. Longshore and Harbor Workers Compensation Act;
b.workers compensation;
c.non-occupational disability; or
d.occupational disease.
Analysis
The U.S. Longshore and Harbor Workers Compensation Act provides compensation to those persons engaged in maritime employment. This exclusion prevents BT 0100 from covering such benefits or any similar type of benefits.
ADDITIONAL EXCLUSIONS THAT APPLY ONLY TO COVERAGE Y
“We” do not pay for:
1.”bodily injury” to a person who is entitled to benefits that are provided or required to be provided under any U.S. Longshore and Harbor Workers Compensation Act, workers compensation, non-occupational disability, or occupational disease law.
2.”bodily injury” to a person who is in or on “covered property” or a “non-owned boat” as a trespasser.
Analysis
This benefits exclusion applies to medical payments coverage and it mirrors the benefits exclusion for the liability coverage of BT 0100.
Persons who trespass cannot look to the boatowners policy for medical payments coverage.
Coverage Z—Uninsured Boaters—”We” pay, up to the Coverage Z “limit”, all compensatory damages that an “insured” is legally entitled to recover from the owner or operator of an uninsured “boat” because of “bodily injury” sustained by an “insured” and arising out of the ownership, maintenance, or use of an uninsured “boat”.
Any judgment for damages arising out of a suit brought against the owner or operator of an uninsured “boat” without “our” written consent is not binding on “us”.
An uninsured “boat” is a “boat” that causes “bodily injury” to an “insured” and:
1.for which no “bodily injury” liability bond or policy applies at the time of the accident;
2.that is a hit and run “boat” and the owner or operator of that “boat” cannot be identified; or
3.for which “bodily injury” coverage is in force at the time of the accident but the insuring company:
a.becomes insolvent; or
b.denies the coverage.
However, this does not include a “boat” that is covered under Coverage X of this form for which “we” deny coverage, or a “boat” owned by a governmental unit or agency.
Analysis
The policy pays compensatory (note, not punitive) damages an insured is legally entitled to collect because of bodily injury caused by the negligence of an uninsured or hit-and-run boat operator. Property damage to insured property is not covered, nor is there underinsured coverage. Note that an “uninsured boat” is not a boat covered under Coverage X (liability) of the boatowners policy if the insurer denies coverage for the accident. For example, say an insured negligently runs into a resident relative while towing the relative on a parasail. This is excluded. The insured relative cannot then seek coverage for the his own bodily injury under uninsured boaters coverage.
EXCLUSIONS THAT APPLY TO UNINSURED BOATERS COVERAGE
1.”We” do not pay for “bodily injury” to an insured while using or occupying “covered property” or a “non-owned boat” that is:
a.being used in a “business”;
b.hired out or chartered for the use of others;
c.used to transport people or goods for a fee; or
d.rented to others.
2.”We” do not pay for bodily injury to a person injured while involved in an illegal or criminal act including illegal trade or transportation.
3.”We” do not pay for bodily injury to a person who occupies, or is struck by a boat that is not covered under Coverage X—Personal Liability, and that is owned by, rented to, or available for the regular use of:
a.you
b.your relatives if residents of your household; or
c.persons under the age of 21 residing in your household and in your care or the care of your resident relatives.
4.”We” do not pay for bodily injury to a person while that person is involved in an organized or impromptu race including, but not limited to:
a.preparation for a race;
b.participation in a race; or
c.practicing or qualifying for a race.
A race means any competition for speed or endurance whether against another competitor or time.
“We” also do not pay for bodily injury to a person while that person is involved in an organized or impromptu contest involving stunts.
This exclusion does not apply to sailboats in an organized or impromptu race.
5.”We” do not pay for bodily injury to a person or that person's legal representative who settles a bodily injury claim with any person who may be liable without our consent.
6.”We” do not pay for bodily injury to a person who is in or on covered property or a nonowned boat as a trespasser.
Analysis
There is no coverage for injury arising from occupying or being struck by a boat owned by or rented to an insured that is not covered under coverage X, personal liability. There is no coverage if the boat is used as a livery conveyance. There is no coverage if a claim for bodily injury is settled without the insurer's consent. There is no coverage if the boat, other than a sailboat, is used for any racing activity. There is the exclusion of coverage while the insured boat is “used for business.” And, criminal acts and trespassers also fall into the exclusion section of this particular coverage section.
ARBITRATION
If “we” and an “insured” do not agree whether an insured is legally entitled to recover damages under Coverage Z or as to the amount of damages, either party may make a written demand for arbitration. Arbitration will only take place if you and we agree to arbitrate the dispute.
Each party will select an arbitrator and notify the other of the arbitrator's identity within 20 days after the receipt of the written demand. The two arbitrators will select a third. If they cannot agree within 30 days, either may request that selection be made by a judge of a court having jurisdiction. Arbitration will take place in the county in which the “insured” lives, unless both parties agree otherwise. Local rules of law regarding procedure and evidence will apply.
Any decision by the arbitrators will not be binding on either party. The arbitrators may not award more than the limits available.
Each party will pay the expenses it incurs and bear the expenses of the third arbitrator and all other expenses equally.
Analysis
Like the personal auto policy (PAP), the boatowners policy provides for arbitration in the event that there is a dispute over coverage for an uninsured boaters loss. The dispute may involve either whether there is coverage, or what the amount of damages should be. Note that the decision of the arbitrators is not binding.
Duties in Event of Loss or Claim
In event of a loss, certain duties apply. These duties must be performed by the named insured, his representative, an insured seeking coverage, or that insured's representative. The insurer declares that it is not obligated to provide the coverages described in the policy if the failure to perform these duties is prejudicial to the insurer.
1.Notice—In case of a loss, an “insured” must promptly give “us” or “our” agent notice (“we” may request written notice) and give notice to the U.S. Coast Guard, police, or local authority when there is a loss involving covered property or a nonowned boat and the disappearance of a person from a boat, the loss of life, or theft, vandalism, or other criminal act.
The notice to “us” must state:
a.the name of the “insured”, the policy number, and the time, place, and the details of the loss; and
b.names and addresses of all known witnesses and potential claimants.
2.Cooperation—All “insureds” seeking coverage and the representatives of all insureds must cooperate with “us” in any matter concerning a claim or lawsuit.
3.Volunteer Payments—An “insured” must not make payments, pay or offer rewards, or assume obligations or other costs, except at the “insured's” own cost. This does not apply to costs that are allowed by the “terms” of this form.
4.Repairs—An “insured” must take all reasonable steps to protect property covered under this form at and after an insured loss to avoid further loss. “We” will pay the reasonable costs incurred by an insured for necessary repairs or emergency measures performed solely to protect covered property and boating equipment from further loss following a loss we cover. An “insured” must keep an accurate record of such costs. This does not increase “our” limit.
5.Other Duties—Property Coverages—At “our” request the “insured” must:
a.give “us” a signed and sworn proof of loss, within 60 days after “our” request that shows:
1)the time, place, and the details of the loss;
2)the interest of the “insured” and of all others in the property. This includes all mortgages and liens;
3)other policies that may cover the loss;
4)changes in title or use of the property during the policy period;
5)detailed estimates for repair of replacement; and
6)in detail, the quantity, description, cost, amount of loss, and actual cash value of the property involved in the loss. The “insured” must give “us” copies of all bills, receipts, and related documents to confirm these;
b.submit to examination under oath and sign such statements made under oath in matters that relate to the loss or claim. If more than one person is examined, “we” have the right to examine and receive statements separately from each person and not in the presence of other “insureds”;
c.show the damaged and undamaged property as often as “we” reasonably request and allow “us” to inspect and take samples of the property for inspection, testing, and analysis;
d.show records, including tax returns and bank records of all canceled checks, that relate to the value, loss, and costs, and permit copies to be made of them as often as “we” reasonably request; and
e.assist “us” to enforce any right of recovery that an “insured” may have against a party causing the loss.
6.Other Duties—Coverages X and Z—In case of an “occurrence” that might result in a claim, the “insured” must promptly give “us” copies of all notices, demands, and legal papers that relate to the “occurrence” or the claim.
At “our” request, the “insured” must help “us”:
a.to settle a claim;
b.to conduct suits. This includes being at trials and hearings;
c.to enforce the right of recovery or indemnification against all parties who may be liable to an “insured” for the injury or damage;
d.in the securing of and giving of evidence; and
e.in obtaining the attendance of all witnesses at all related proceedings requiring their attendance.
7.Other Duties—Coverage Y—In case of an accident, the injured person or someone acting on behalf of that person must:
a.give “us” written proof of claim (under oath if “we” request) as soon as practical; and
b.authorize “us” to get copies of medical records.
The injured person must submit to physical exams by doctors chosen by “us” when and as often as “we” may reasonably require.
Analysis
The reader will recognize the bulk of those duties relating to a property loss from the AAIS homeowners forms. A substantial investment in property—the insured watercraft—is often involved. Therefore, the insured is called upon to take steps to protect the property in event of a covered loss. Note, though, that any expense borne by the insured for repairs to protect from further loss, although recompensible by the insurer, falls within the applicable limit of insurance.
The duties to be carried out in event of a loss involving liability or medical payments coverage, again, are similar to those found in the AAIS homeowners forms. The insured agrees to cooperate with the insurer in settling a claim.
1.Property Coverages
Losses to covered property and boating equipment are settled on actual cash value basis. “We” will pay the lesser of the following amounts:
a.the actual cash value of the property at the time of loss;
b.the amount spent to repair or replace the damaged property with material of like kind and quality according to the manufacturer's specifications or accepted repair practices; and
c.any policy limits which apply.
2.Deductible—This applies to all Property Coverages except Emergency Service. “We” pay only that part of “your” loss over the deductible shown on the declarations. Except as noted under More Than One Boat, only one deductible applies per loss. When a loss affects two or more items with different deductible amounts, the highest deductible applies. If the insurer covers More Than One Boat, a deductible applies to each boat and its motor and boat trailer as shown on the declarations.
3.If there is a loss to a part of an item that consists of several parts when it is complete, “we” pay only for the value of the lost or damaged part of the cost to repair or replace it.
4.Even if more than one person has an insurable interest in the property that is covered, “we” pay no more than the amount of “your” interest in the property.
Analysis
“Actual cash value” means that a deduction will be taken for depreciation. Thus, the indication is that in a settlement involving actual cash value the usual way of obtaining this figure (replacement cost less depreciation) will be used, rather than, say, market value. Some boats appreciate (a Cris Craft mahogany runabout comes to mind), but any time the term “actual cash value” is used, a deduction for depreciation will be taken.
A deductible applies to all property coverages and all additional property coverages except for emergency service. An insured may select different deductibles applying, say, to miscellaneous property, the boat, and the trailer. In event of a covered loss involving different property, however, the highest deductible applies. So, if an insured selects $100 miscellaneous property; $250 boat; and $100 trailer, and a fire destroys all three, the $250 deductible will apply to the loss.
A loss involving parts—for example, a propeller blade—means that the blade will be repaired or replaced. The entire motor or engine will not be replaced.
In event of a covered loss, no more than the named insured's interest in the covered property will be paid.
1.Liability Coverages
a.The limit shown in the declarations for coverage X—Personal Liability, is the most we will pay for each occurrence. This applies regardless of the number of:
1) persons insured under this form;
2)parties who sustain injury or damage;
3)claims made or suits brought;
4)”boats”, motors, boat trailers, or premiums shown on the “declarations”; or
5)”boats”, motors, or boat trailers involved in the accident; or
6)policy periods involved.
All bodily injury and property damage arising out of any one accident or out of repeated exposures to similar conditions will be considered one occurrence.
b.Coverage Y—The “limit” shown on the “declarations” for Coverage Y is the most “we” will pay for all medical expenses payable for “bodily injury” to one person as the result of an accident. Medical expenses payable under Coverage Y will be reduced by the amount payable or paid for the same expenses under Coverage Z or Coverage X.
The payment of a claim under Coverage Y is not an admission that “we” are liable under Coverage X.
Analysis
Liability coverage is on a per-occurrence basis. The limits will not be increased beyond what is indicated on the declarations no matter the number of claims or claimants arising out of any one occurrence. The provision stating that the limit does not change no matter how many boats are shown on the declarations is the boatowners equivalent of an auto anti-stacking provision. Thus, the limits will not be increased no matter how many boats the insured has covered.
Note that any medical payments made as the result of bodily injury will be reduced by any amounts paid or payable under coverage Z, uninsured boaters or coverage X, personal liability.
1.Coverage Z, Uninsured Boater—The “limit” shown on the “declarations” for Coverage Z is the most “we” pay for each accident. This applies regardless of the number of:
a.persons insured under this form;
b.parties who sustain injury or damage;
c.claims made or suits brought;
d.”boats”, motors, boat trailers, or premiums shown on the “declarations”,
e.”boats”, motors, or boat trailers involved in the accident; or
f.policy periods involved.
Amounts otherwise payable for damages under coverage Z will be reduced by:
a.amounts paid because of “bodily injury” by or on behalf of persons or organizations that may be legally responsible. This includes amounts paid under Coverage X; and
b.amounts paid or payable for “bodily injury” under any U.S. Longshore and Harbor Workers Compensation Act, workers compensation, non-occupational disability, or occupational disease law.
Amounts payable under Coverage Z will reduce the amounts that person is entitled to recover for the same damages under Coverage X and Coverage Y.
Analysis
The limit of uninsured boaters coverage is the most the insurer will pay for any one accident involving this coverage. If another coverage applies—whether the legally responsible party's coverage, the insured's liability coverage, or any amounts payable under workers compensation or U.S. Longshore and Harbor Workers Compensation Act, then any amount so payable reduces the Coverage Z payment for the injury.
Any amounts payable under Coverage Z reduce any amounts an injured person is entitled to collect for the same loss under Coverage X and Coverage Y.
Insurance Under More than One Coverage—If more than one coverage of this form applies to a loss, “we” pay no more than the actual claim, loss, or damage sustained.
Insurance Under More Than One Policy —
a.If this form and any other form or policy issued to “you” by “us” apply to the same loss or claim, “our” maximum “limit” under all such insurance will not exceed the highest applicable “limit” under any one form or policy. However, if the other insurance is specifically written as excess over this form, the limit of this form applies first.
b.If other insurance that applies to the loss or claim is provided under a form or policy that has not been issued to “you” by “us” for:
1)Property Coverage—”We” pay “our” share of the loss. “Our” share is that part of the loss that the “limit” of this form bears to the total amount of insurance that applies to the loss.
2)Coverages X and Z—This form is excess over the other insurance. However, if the other insurance is specifically written as excess insurance over this form, the “limit” of this form applies first.
3)Coverage Y—This form is excess over the other insurance. However, if the other insurance is specifically written as excess insurance over this form, the “limit” of this form applies first.
Analysis
It is stated that, even if more than one coverage contained in the boatowners form applies to a loss, no more than the actual amount of the loss will be paid. For example, if a covered loss involves the $1,500 additional coverage for property of others, and the insured is also found liable for $5,000 for the damaged property, the claimant cannot collect both the $1,500 plus $5,000.
Also, these clauses relate how the boatowners form will apply in the event of other coverage; the first part states how a loss will be settled in event the insurer has issued both the boatowners and any other form or policy that could apply to the loss to the named insured. The insurer's limit will not then exceed the highest limit under any one form. The limits are not stacked.
The clauses also specify how the boatowners form will respond if there is another policy in force that the insurer has not issued to the insured. In event of a covered loss to property, the boatowners form pays on a pro-rata basis. Homeowners forms contain some coverage for physical damage to watercraft. In event of a boatowners total loss to a $9,000 boat, a homeowners with $1,000 watercraft coverage could contribute 1/10 of $9,000 or $900; the boatowners 9/10 of $9,000 or $8,100.
If a covered liability or uninsured boaters claim is made, the boatowners form is excess over other insurance the insured might possess, unless the other form is specifically written as excess. In that event, the boatowners form responds on a primary basis.
Coverage Y medical payments coverage is payable on an excess basis to insureds, unless the other insurance form is specifically written as excess. Then the boatowners form responds on a primary basis. So, for example, if an insured has health care coverage through an employer, the boatowners form would respond depending upon how the other policy was written.
1.Your Property—”We” adjust each loss to “your” property with “you”. “We” pay a covered loss within 60 days after an acceptable proof of loss is received and the amount of the loss is agreed to in writing. If “you” and “we” do not agree, “we” pay within 60 days after the filing of an appraisal award with “us”. Payment is made to you unless a loss payee is named or is legally entitled to payment. At “our” option, “we” may:
a.pay the loss in money; or
b.rebuild, repair, or replace the property. “We” must give “you” notice of “our” intent to do so within 30 days after “we” receive an acceptable proof of loss.
“We” may take all or part of the damaged property at the agreed or appraised value. Property paid for or replaced by “us” becomes “ours”.
2.Coverage X—A person who has secured a judgment against an “insured” for a loss covered by the Personal Liability Coverage provided by this form or has liability established by a written agreement between the claimant, an “insured”, and “us” is entitled to recover under this form to the extent of coverage provided.
3.Coverage Y—Payment for medical expenses may be made to the injured person, their representative, or the provider of medical services.
Analysis
The loss payment provisions give the insurer two ways to settle a loss. First, the insurer may elect to make a monetary settlement. Second, the insurer may elect to repair, replace, or rebuild the damaged property. The insurer, following settlement of a covered loss, may also choose to take the damaged property. In that case, salvage rights go to the insurer.
Another loss settlement provision states that in event of a covered liability claim, the claimant is entitled to recover to the extent of the judgment or agreement; of course, within the applicable limit of liability.
ADDITIONAL EXCLUSIONS AND LIMITATIONS
1.”We” do not pay for fines, penalties, or tax liens arising out of the violation of law or government assessments.
2.”You” warrant that covered property is and will be kept in a safe and navigable condition whenever afloat or being operated. We do not cover any loss or damage caused by your failure to exercise due diligence to properly maintain covered property in a seaworthy condition.
Analysis
The first provision merely reinforces the intent of this policy; it will cover accidental losses but will not cover the penalties for violations of the law by the insured. Also, tax liens are not covered since these usually result from intentional or knowing conduct on the part of the insured.
The other provision makes the insured responsible for the upkeep of his boat. BT 0100 is not meant to be a maintenance policy.
1.Assignment—Coverage under this form may not be assigned without our consent.
2.Change, Modification, or Waiver of Policy Terms—A waiver or change of the terms of this form must be issued by us in writing to be valid. Our request for an appraisal or examination under oath does not waive policy terms.
3.Conformity With Statute—”Terms” of this form in conflict with the applicable laws and statutes are changed to conform to such laws and statutes.
4.Death—On your death, we will cover the following as an insured:
a.the person who has proper temporary custody of your property until a qualified legal representative is appointed; or
b.your legal representative.
This person or organization is an insured only with respect to property covered under this form and liability arising out of that property.
This coverage does not go beyond the end of the policy period.
5.Misrepresentation, Concealment, or Fraud—”We” do not provide coverage for any “insured” if, before or after a loss:
a.an “insured” has willfully concealed or misrepresented a material fact or circumstance that relates to this insurance or the subject thereof; or
b.there has been fraud or false swearing by an “insured” with regard to a matter relating to this insurance or the subject thereof.
This applies even with respect to an insured who was not involved in the concealment, misrepresentation, fraudulent conduct, or false swearing.
Analysis
The conformity with statute provision is interesting in that it is closer to that found in the PAP than in the homeowners forms. This recognizes the fact that boats are movable property and may be operated not only in different territories within the United States, but may also be operated outside the country—the Canadian side of the Great Lakes, for example. Therefore, the boatowners form could not use the homeowners provision “conflict with the laws of the state in which the premises shown… is located.”
All coverage is void (which essentially voids the policy) if before or after a loss, it is discovered that any insured has concealed or misrepresented a material fact, an insured's interest, or committed fraud or false swearing.
6.Recoveries—This applies if “we” pay for a loss and lost or damaged property is recovered, or payment is made by those responsible for the loss.
a.The “insured” must inform “us” or “we” must inform the “insured” if either recovers property or receives payment.
b. Property costs incurred by either party are paid first.
c.The “insured” may keep the property. The amount of the claim paid, or a lesser amount to which “we” agree, must be returned to “us”.
d.If the claim paid is less than the agreed loss due to a deductible, or other limiting “terms, the recovery is prorated between the “insured” and “us” based on the interest of each in the loss.
7.Subrogation—If “we” pay for a loss, “we” may require that an “insured” assign to “us” the right of recovery up to the amount “we” pay. “We” are not liable for a loss, if, after the loss, an “insured” impairs “our” right to recover against others. An “insured” may waive his or her right to recover, in writing, before a loss occurs without affecting coverage. If “we” pay a loss to or for an “insured” and the “insured” recovers from another party for the same loss, the “insured” must pay “us” as stated above.
In the event that we require an assignment, an insured must sign and give to us all related documents, and cooperate with us.
Subrogation does not apply to Coverage Y.
Analysis
The provisions governing recovery for a loss are similar to those in the AAIS homeowners forms. The difference is that, in the boatowners form, the “insured,” rather than “you”—the named insured—may interact with the insurer.
In event a deductible applies to a loss so that the claim paid is less than the agreed loss, any recovery is prorated between the insured and insurer based on the interest of each. For example, say the insured carries a $1,000 deductible and the insured boat, valued at $10,000, is run into by another boat, and totaled. The insured receives $9,000 from the insurer. The other insurer contends that its insured was not completely to blame, and so will only be responsible for $5,000. The insured's share of the $10,000 claim was $1,000, so the insured receives 1/10 or $500 of the $5,000 payment. The insurer's share was $9,000, and so it receives 9/10 or $4,500 or the $5,000.
The subrogation provision does not apply to medical payments. Note that, if an insured acts in such a way as to impair the insurer's right to recovery, the insurer can deny payment. For example, if a insured offers to settle a bodily injury claim before the insurer has a chance to investigate the claim and possibly defend the insured, the insurer can then deny coverage.
8.Territory—Unless otherwise shown on the declarations, we only provide coverage under this form for losses, bodily injury or property damage that occur within:
a.the United States of America or Canada including the inland lakes, tributaries, rivers, and navigable waterways;
b.the Great Lakes; or
c.coastal waters that extend 100 statute miles or less from the coast of either the United States of America or Canada.
This does not include the territory or territorial waters of any country other than the United States or Canada.
9.Suit Against Us—No suit may be brought against “us” unless all the “terms” of this form have been complied with and:
a.Property Coverages—The suit is brought within two years after the loss. If the applicable law makes this time period invalid, the suit must be brought within the time period allowed by the law.
b.Coverage X—The amount of an “insured's” liability has been fixed by:
1)a final judgment against an “insured” that is the result of a trial or
2)a written agreement of the “insured”, the claimant, and “us”.
No person has a right under this form to join “us” or implead “us” in actions that are brought to fix the liability of an “insured”.
10.Bankruptcy of an Insured—Bankruptcy or insolvency of an “insured” does not relieve “us” of “our” obligations under this form.
11.Liberalization—If “we” adopt a revision which broadens coverage under this edition of “our” form without an additional premium, the broadened coverage will apply to “your” policy as of the date “we” adopt the revision in your state. This does not apply to changes adopted as a result of the introduction of a subsequent edition of “our” form.
Analysis
The suit against us condition contains two provisions—one that applies to property coverages, and the other to liability. In event of a covered property loss, a suit against the insurer must be brought within two years after the loss, unless this period is altered by law. In event of a covered liability loss, suit against the insurer cannot be brought until the amount of the insured's liability is determined by either a final judgment against the insured resulting from a trial, or by an agreement among the insured, insurer, and claimant.
The coverage territory is set under this section of BT 0100, with the United States and Canada being the only countries mentioned.
12.Abandonment of Property—An “insured” may not abandon any property to “us” unless “we” agree to it in writing.
13.Appraisal—If “you” and “we” do not agree on the amount of loss or the value of property, either party may demand that these amounts be determined by appraisal.
If either party makes a written demand for appraisal, each will select a competent independent appraiser and notify the other of the appraiser's identity within 20 days after the receipt of the written demand. The two appraisers will select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, “you” or “we” can ask a judge of a court of record in the state where the property is located to select an umpire.
The appraisers will determine and state separately the amount of loss and also determine the value of property items covered at the time of loss, if requested. If the appraisers submit a written report of an agreement to “us”, the amount agreed upon will be the amount of the loss. If the appraisers fail to agree within a reasonable time, they will submit only their differences to the umpire. A written agreement so itemized and signed by any two of these three sets the amount of the loss.
Each appraiser will be paid by the party selecting that appraiser. The compensation of the umpire and the other costs of the appraisal will be shared equally by “you” and “us”.
14.Inspections—”We” have the right, but are not obligated to, inspect your covered property. This inspection may be made by us or may be made on our behalf. An inspection or its resulting advice or report does not warrant that your property is safe; free of fungi, bacteria, pollutants, or other toxins that may be hazardous to health; in compliance with codes, standards, laws, rules or regulations; or seaworthy. Inspections or reports are for our benefit only.
15.Benefit to Others—Coverage under this form will not directly or indirectly benefit those who are caring for or handling property covered under this form for a fee or being compensated for their service.
Analysis
The appraisal provision allows determination, when there is dispute between the insured and insurer, of the amount of a covered loss. The coverage itself is not a subject for appraisal.
Note that the inspections clause declares that an inspection does not mean the insurer is passing judgment on the safety or seaworthiness of the insured's boat. This is not the responsibility of the insurer.
The final boatowners form provision, benefit to others, is often referred to as the “no benefit to bailee” provision. Anyone handling someone else's property for a profit should have insurance. Although the use of “others” rather than “bailee” may appear to be more encompassing, the key is that the insurance cannot relieve the responsibility to maintain insurance of those who take custody of property in order to perform some function for which they will be paid. If a boat repair shop has the insured's boat and negligently sets it on fire, the shop cannot refuse to pay for the damage because the insured has a boatowners policy.