Posted by Ken Kurtis on June 26, 2003 at 17:29:16:
In Reply to: Re: Chris, Chris, Chris . . . posted by Chris on June 26, 2003 at 11:32:03:
But I think there's a couple of salient points still to be made (in case anyone besides you and I care still care about this).
Chris: "It does not hurt to name them, but this should not be necessary."
I agree with you, but this is not what NAUI told me. They said specifically to names names. Also, if you specifcally name the business, the owner, and the boat on the paperwork submitted, it may avoid exactly the problem Tim faced since the boat itself would have been named, per section C.
Chris: "The problem is that St. Paul, NAUIs present carrier is refusing to pay because they say the boat is not covered. However the policy specifically states that boat owners are covered, thus their argument that he is not covered because the boat was sued holds no water."
There's an important legal distinction to be made here. I don't agree with it, but it exists nonetheless.
Great Escape Charters (boat business), Tim Burke (owner/operator), and the M/V Great Escape (the boat itself) under maritime law are considered three separate entities. The St. Paul's policy specifically mentions the business owning the boat and the operator, but specifically omits the boat itself.
While I agree with you that this would seem to a layman to be ludicrous, it apparantly has basis in case law. One of the arguments St. Pauls made was that because the suit initially specifically named "M/V Great Escape," instead of Tim or Great Escape Charters, St. Pauls denied coverage based on M/V GE not qualifying as an Additional Insured. On top of that, there at some point were also allegations of things like "unsafe anchoring" or "poor dive site choice" that wopuld be covered under th eboat policy, not the DM policy.
Once again, I don't agree with this but, once again, this goes back to why it's a good idea to name the boat on your submitted renewal paperwork.
And some of this is just two insurance companies trying not to pay out any money and lay it off on the other company.
As far as NAUI's silence, again I think we're confusing things here. First of all, to think they'll respond is this kind of a forum is wishful thinking. Even when the discussions are rational, this is NOT the venue to discuss important policy.
Secondly, you're lumping NAUI, St. Pauls, and Monroe & Shapiro together as if they were one entity. They're not. We get the policy from NAUI, M&S represents NAUI (and in theory us) in this, and deals with St. Pauls, who has a lot more say (as does EVERY insurance compnay since it's their money) in the coverage that you might think.
Some of this just comes down to business decisions. If it's going to cost $500,000 to defend a case (and you still stand a chance of losing) and you can settle for $100,000, the cheaper alternative is to settle.
Now in this specific case, it seems to me that the whole thing started because the diver ran out of air. No question it's the stupidest thing a diver can do. No question in my mind that had the diver not run OOA, we'd never be discussing any of this. In my mind, EVERYTHING follows the OOA incident.
Because of that, I wish M&S and St. Pauls would have fought this tooth and nail. But one of the warranties you agree to in the master policy (and this is true of all the policies, not just the NAUI one) is that you give the insurance company the right to settle without your approval. If you really want to challenge that, you get to pay out of pocket any expenses or judgment that goes beyond the settlement offer.
It's never a good situatuion with insurance because there's a lot of stuff that the average DM or Instructor simply doesn't know, and the policies always come to us relatively last-minute (even this year) preventing any kind of a thorough investigation of what's being offered.
Tim's situation stunk. But it's not like they made this up out of whole cloth, whether or not you agree with their basic premises. And if Tim feels this was a particularly egregious breach, he can always take St. Pauls to court for lack of good faith. If he's right, he'll win a judgment.
Ken Kurtis (FTR, NOT an insurance guy or a lawyer)
NAUI Instr. #5936
Co-owner, Reef Seekers Dive Co.
Beverly Hills, CA
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