Munich Re wins ruling over boat destroyed in hurricane

A yacht’s hurricane protection plan is incorporated by reference into its insurance policy, a federal appeals court said Tuesday in affirming a lower court’s ruling in favor of a Munich Re unit in litigation over a yacht that sank during a hurricane.

A yacht owned by Metairie, Louisiana-based Gray Group Investments LLC that was moored behind a group member’s home in Pensacola, Louisiana, was damaged and sank at its mooring during 2020’s Hurricane Sally, according to the ruling by the 5th U.S. Circuit Court of Appeals in Great Lakes Insurance S.E. v. Gray Group Investments LLC.

Munich Re unit Great Lakes had issued a “commercial yacht insuring agreement” policy to the group.

Gray Group filed a claim under the policy, which Great Lakes denied. The insurer then filed suit in U.S. District Court in New Orleans seeking a declaratory judgment over its denial.

The district court ruled in the insurer’s favor, and was affirmed by a three-judge appeals court panel. A “hurricane protection plan” that Gray Group had submitted in response to Great Lake’s hurricane questionnaire said the vessel would be located at the Orleans Marine in New Orleans, and detailed protective measures Gray Group would take when a hurricane approached.

An issue in the litigation was whether the plan was incorporated by reference into the insurance policy, and if so, whether Gray Group had breached the plan.

“The district court did not err in concluding that the (hurricane plan) was incorporated into the policy,” the ruling said. “For starters, under a bolded header labeled “WARNING” the (hurricane questionnaire) which prompted  Gray Group’s’ submission” of the hurricane plan “advised that ‘this declaration and warranty shall be incorporated into its entirety into any relevant policy of insurance,”’ the ruling said.

“The Hello Dolly never got ‘back to where (she) belong(ed),” the panel said, in affirming the lower court.

Attorneys in the case did not respond to requests for comment.

The 5th Circuit ruled in May that coverage litigation over a damaged yacht must be held in England or Wales rather than in the United States, in affirming a ruling in Lloyd’s of London underwriters’ favor.