On Saturday, the deadly Hurricane Matthew made landfall
in South Carolina. Matthew punished the southeastern states with heavy
rain, winds, and record-breaking flooding in North Carolina. Thousands of people remain displaced from their
homes, and tragically, to date, thirty-four
Americans have lost their lives in the storm.
Many in the marine industry are familiar with dramatic
post-loss photographs of recreational boats impaled on pilings or crashed onto
land after being swept up by a storm surge. There is no doubt that many boats
have incurred damage as a result of Hurricane Matthew, whether they were
flipped, sunk, battered against docks and pilings, or carried ashore. Even
educated boat owners who took recommended precautions, such as
moving their boat ashore and having it anchored, may have suffered potential total losses due to significant structural damage.
Physical damage to the vessels themselves are not the only
recreational marine claims that can be expected from this storm. Liability
claims are also likely. Consider the claims that can be made against the owner
when their boat did get carried ashore, if the result is damage to the property
of others. Many recreational boat policies provide liability coverage that pays
damages for property damage an owner-insured is legally responsible for,
arising out of the ownership, maintenance, or use of their boat. But what if
that damage could have been avoided had the boat owner took proper precautions
before Matthew hit? That boat owner could risk a possible denial of coverage,
as well as uninsured liability for the damage caused.
Hurricane-damaged boats have also been known to cause oil
spills. Fuel spills and the resulting clean-up costs may be covered by
liability provisions in marine policies. “Accidental fuel spill” usually means
the sudden and accidental discharge, spillage, or leakage of fuel, oil, or
lubricants required for the normal operation and use of the boat. A question could
be raised, however, as to whether a spill resulting from an expected storm is
accidental, if precautions were not taken.
Following Superstorm Sandy, a record-breaking number of recreational boats were reported damaged. Of those damaged, however, only about half were reportedly insured.
One would hope that boat owners learned a lesson from that experience. Current
estimates anticipate Hurricane Matthew damage claims to exceed $4-6 billion. For marine insurers, the full extent of claims arising from
Matthew remains to be seen, but will likely involve hull, equipment, and
liability coverage.
Posted by Danielle Sullivan Kaminski
