Homeowner insurance may provide coverage to boats
The application by ING seeking a declaration that it was not obligated to defend the vendor of a motor boat ("Eaton") under homeowner's policy issued to Eaton was dismissed where the Court held that the watercraft exclusion in the policy was not sufficient to relieve ING from its duty to defend.
Here is the case citation: Arand v. Baynham - February 25, 2008.
The case was originally summarized by Jonathan Meadows and edited by David Pilley.
Eaton sold a fourteen foot in-board motor boat to Baynham. Baynham was involved in an incident while tubing whereby a passenger on the boat was killed when struck by the hook at the end of a tow rope on the vessel. The husband and children of the deceased passenger brought an action against Baynham. Baynham brought a third party action against Eaton and Eaton commenced fourth party proceedings against his homeowner's insurer, ING and Lloyd's of London which had issued a marine policy on the vessel. ING and Lloyd's sought declarations that they were not obligated to defend Eaton under the policies.
The ING policy contained a special limitation which provided that Eaton was only insured against claims arising out of the ownership, use or operation of watercraft provided that such watercraft did not have motors of more than 50 horsepower. ING argued that as motor boat at issue had a 125 horsepower in-board motor, it did not fall within the exception to the exclusion and therefore coverage was not available. Eaton argued that the pleadings also contained allegations with respect to the tow rope and hook which had been sold with the boat and that negligence with respect to these items did not necessarily fall within the "use, ownership or operation" of the watercraft. The Court was satisfied that the underlying elements of negligence in the claims against Eaton were sufficiently disparate from the claims of negligence relating to the ownership, use or operation of the boat as to be unrelated. The Court accepted Eaton's submission that the true substance and nature of the allegations against Eaton related to the tube, rope and hook and not necessarily to the ownership, use or operation of the boat. Therefore, ING's motion for a declaration that its policy did not afford coverage to Eaton was dismissed.
The Lloyd's policy issued to Eaton contained a general condition that coverage would cease if the vessel was sold without notice to the insurer and without such a change being accepted by Lloyd's in writing. In this case, Eaton had not notified Lloyd's or sought consent to the change in ownership of the vessel. The Court found that the condition was applicable, and, consequently, there was no coverage available under the Lloyd's policy.
