Does Your Boat Insurance Require You to Have a Trailered Boat Behind a Secured Fence?

Boating provides a great deal of pleasure to millions of Americans. Spring is here, and the horrible winter weather will be getting better for all of us to enjoy time on the water. For those that own boats, my bet is that you have not read your marine insurance policy covering your boat. I will bet you an additional nickel that you have no clue whether your boat insurance policy has boilerplate language, which requires your boat to be behind a secured fence if the boat is on a trailer or lift. 

A recent California federal court decision found that a boater was without coverage based on this policy’s “secured fence” requirement.1 The facts recited by the court were as follows:

Jeremy Satterlee was insured under policies issued by Great Lakes for his 1992 31’ Formula (the ‘Vessel’), which is a type of powerboat….

The Policy ‘provide[s] coverage for accidental physical loss of or damage to’ the Vessel ‘within the limits set out in the insuring agreement declaration page, subject to the insuring agreement provisions, conditions, warranties, deductibles[,] and exclusions.’…The Policy excludes coverage for theft of the Vessel while it was on a trailer ‘unless the . . . Vessel is situate in a locked and fenced enclosure or marina and there is visible evidence of forcible entry and/or removal made by tools, explosives, electricity or chemicals’ (‘Locked and Fenced Enclosure Exclusion’). 

…  Satterlee filed a claim with Great Lakes for theft of the Vessel, stating that the Vessel was ‘stolen from [Satterlee’s] home then recovered stripped . . . a few cities over.’ In March 2020, after an investigation, Great Lakes notified Satterlee it was denying the claim because it had concluded that (1) the Vessel was stolen from Satterlee’s property ‘while on its trailer,’ and not in a ‘secure locked enclosure,’ as required by the Policy.…

The insurance company made a simple argument for no coverage:

Great Lakes argues that summary judgment should be granted because Satterlee has failed to meet his burden of demonstrating a breach of contract…With respect to Satterlee’s breach of contract claim, Great Lakes does not dispute that a theft of the Vessel is within the basic scope of the Policy’s coverage….Instead, Great Lakes argues that it properly denied coverage because the Policy’s Locked and Fenced Enclosure Exclusion,…precludes coverage.…

The court noted that other cases had found the policy requirement valid and disallowed recovery:

Numerous other courts have found that exclusions with similar language are not ambiguous, and the Court agrees with their reasoning. See, e.g., Great Lakes Reinsurance (UK) PLC v. Vasquez, 341 F. App’x 515, 518 (11th Cir. 2009) (holding that a similar exclusion in an insurance policy ‘excludes from coverage unambiguously [theft of] a vessel ‘whilst on a trailer/boatlift/hoist/dry storage rack unless the scheduled vessel is situate in a locked and fenced enclosure’’); Great Lakes Reinsurance (UK) PLC v. Morales, 760 F. Supp. 2d 1315, 1326-27 (S.D. Fla. 2010) (same); see also Sirius Ins. Co. (UK) v. Collins, 16 F.3d 34, 38 (2d Cir. 1994) (holding that there was no ‘ambiguity that would require construing the contract against the insurer’ in a ‘theft warranty’ that required ‘storage in a locked fenced enclosure’).

The court ruled for the insurer:

[T]he Court finds that Great Lakes has met its burden of demonstrating conclusively that there is no potential coverage under the Policy. First, the Exclusion applies if the Vessel was stolen while on a trailer, and it is undisputed that the Vessel was stolen while on a trailer at Satterlee’s property. Second, the Vessel was not in a ‘locked and fenced enclosure’ because it is undisputed that neither the right side nor back of the property had a gate or fence.

RTFP—read the full policy. Sometimes, insurance is cheap because the purchased policy has provisions that make Swiss cheese coverage. These cheap policies have huge coverage gaps and limitations made by policy language, which is not found in other, and sometimes slightly more expensive, policies. Ask a quality insurance agent for quality coverage.  

Thought For The Day  

The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office.

—Dwight D. Eisenhower

1 Satterlee v. Great Lakes Ins. SE, No. 4:21-cv-01774 (N.D. Cal. Mar. 23, 2023).