No coverage for vessel that sank when bilge pump failed
September, 2007
By
Marilyn Raia
Great Lakes Reinsurance (UK) PLC v. Soveral
2007 AMC 672 (S.D. FL 2007)
Soveral's boat was insured with Great Lakes. The boat sank while tied up to the dock at Soveral's home in the Bahamas. The boat sank because rainwater accumulated in the boat. The bilge pump was unable to remove the water because the boat's batteries had died, rendering the bilge pump inoperable.
Great Lakes filed a declaratory relief action arguing that the sinking of the boat was not accidental or fortuitous as required by the policy. It also argued that Soveral failed to exercise due diligence which preclude coverage. Great Lakes filed a motion for summary judgment on the fortuity issue and Soveral filed a motion for summary judgment on the due diligence issue. The Court granted Great Lakes's motion and denied Soveral's motion.
Great Lake's policy provided coverage for "accidental physical loss of or damage to" the boat. The policy excluded coverage for losses due to "wear and tear, gradual deterioration, lack of maintenance". The parties disagreed as to which of them had the initial
burden of proof. The District Court held that Soveral had the initial burden of proof . He had to prove that the sinking of the vessel was due to an accident, which the parties agreed was defined as a "fortuity," and not due to "wear and tear." The District Court held that the sinking which resulted from the inoperability of the bilge pumps, was not accidental. It reasoned that the boat was left uncovered in the Bahamas where rain was expected and thus, the entry of rain into the boat was not fortuitous. Further, the fact that the batteries had worked two days prior to the sinking but had lost their charge, likely due to the continuous operation of the bilge pump to remove the accumulating water, was normal wear and tear, an excluded peril.