As this boating season comes to an end, if you plan to sell your boat, check your insurance policy, because if the boat sinks you could find yourself up a well-known creek without a paddle.  Jeffrey and Christie bought a 50-foot steel house sailboat which they insured with a well-known boat insurer.  Three years later they decided to sell the boat to Joe, who was supposed to pay them $1400 a month until the full purchase price was paid.  What was a little unusual was even though Joe now owned the boat, Jeffrey and Christie could still use it until the last payment was in.  Everything was going great until the boat broke loose and ended up hard aground on a set of dangerous rocks.  At this point the insurer learned the boat had been sold and refused all coverage under the policy, which provides that coverage terminates automatically if the boat is sold without prior written consent of the insurer.  Jeffrey and Christie argued the fact they could use the boat meant they still actually owned it during the payoff period.  But the Court held for the insurer, and both boat and insurance ended up on the rocks.  So reading and understanding your insurance policy is the best policy all aground.

THIS IS NEIL CHAYET LOOKING AT THE LAW™

Conlon Insurance Company v. Jeffrey H. Garrison and Christie R. Garrison and Nations Bank, U.S. District Court, Eastern District of Wisconsin, June 16, 1999, Gordon, J., 1999 W.L. 421014 (E.D. Wis.)

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