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Ben Glass
Ben Glass
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Allstate Told to Pay for Loss of Boat

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In a case from the Supreme Court of Virginia, Allstate Insurance Company has been told to pay the owner of a boat that sunk over $40,000.00. Allstate had denied coverage under the insurance policy that it sold the boat owner. It lost at trial, appealed, and lost again.

The boat owner had disconnected a water pump from the boat in order to take the water pump to someone else to repair. He negligently failed to close off the seacock [valve] after removing the water pump. The boat sunk overnight.

Both parties agreed that the loss was caused by the negligence of the owner and that owner’s negligence was something this particular insurance policy did cover. However, the insurance company contained an exclusion by which losses resulting from “repairing, renovating, servicing, or maintenance” of the boat were not covered. Allstate contended that this loss was not covered because the negligence occurred during a repair.

Both the trial court and the Supreme Court found, however, that it was the water pump and not the boat which was being repaired. Thus, there was only one cause of loss and that was negligence in not closing off the valve. The Supreme Court found that the trial court’s finding that the negligence did not constitute “repairing” the boat could only be overturned if it was plainly wrong.

Importantly, the court reaffirmed general insurance rules that “exclusions in insurance polices must be read narrowly in favor of coverage.” Exclusionary line in which an insurance policy will be construed most strongly against the insurer and the burden is upon the insurer to prove that an exclusion applies. If Allstate intended for negligent acts that occurred while in preparation of repairs to be excluded, they needed to use language clearly accomplishing that result. The Supreme Court of Virginia found that the trial court’s findings of fact when it plainly was without evidence to support them.