Lawsuit won by smart coverage
After the 43-foot yacht Wild Goose was wrecked in the Bahamas, the vessel's owner was surprised to hear that his insurance company would not pay its insured value of $200,000. The vessel, which was being operated as a bareboat yacht by a charter company called Florida Yacht Charters, was declared a total loss after it was grounded in Sept. 1997 near Freeport. According to the insurance company, La Reunion Francaise, the non-professional skipper should not have been allowed to rent the boat because of a lack of experience. Thus, Florida Yacht Charters did not exercise "due diligence" and would not be entitled to payment, nor would any of its payees, in this case the owner of Wild Goose. A Florida judge disagreed, however, and ordered La Reunion to pay the owner his full due. As is often the case in these matters, the owner's success lay in a fine-print technicality: he had had the foresight to be a "named insured" on his insurance. "The experience of the skipper was a non-issue. But because the owner of the yacht was not what's called an independent loss payee, he was not dependent on the due diligence of Florida Yacht Charters," said Paul Lipton, an attorney with the Coral Gables-based firm Greenberg Traurig, which won the case. "People who have arrangements with charter companies to have their boats chartered should take a close look at their coverage," Lipton said. "Anyone who has an arrangement with a charter company to bareboat their vessel should always pay that little bit extra to be a named insured. That way, you're covered in an instance like this; you definitely don't want to be an independent loss payee," said Scott Smithwick of Smithwick & Clarke Insurance in Portland, Maine.