• Julius "Sam" Hines

Insuring Your Stolen Boat: Another Application of the Uberrimae Fidei Doctrine

Updated: Dec 31, 2020

Students of marine insurance will be familiar with the doctrine of uberrimae fidei, a Latin term meaning “utmost good faith.” The doctrine, which dates back to the early days of marine insurance, requires the insured (or “assured,” as the English say) to tell the marine underwriter about all facts that might be material to the risk—even if the underwriter does not specifically ask about them. The doctrine made plenty of sense when London underwriters sat around Lloyd’s coffee house deciding whether to underwrite shares of a marine venture. But in the modern consumer context of recreational boating, with its standardized application forms, the doctrine can result in harshness if the insured completes the application truthfully but forgets to mention, for example, running aground last season.

Not so in the recent case of Quintero v. GEICO Marine Insurance Company.[1] In Quintero, a Florida boat owner let his policy expire after grumbling about a premium increase. Not long afterward, someone stole the boat from his driveway. The theft took place at about 5:00 a.m., as documented by a neighbor’s surveillance camera. Later that same morning, the owner got on the phone with Geico to reinstate his policy. In the course of the discussion, he was asked some typical underwriting questions. Was the boat damaged? No, replied the owner, no doubt reasoning that the thief was probably taking very good care of the stolen vessel. Asked when he last physically saw his boat, the owner answered “every day”— which had been true up until that morning. Indeed, the boat was, the owner explained, “in my house.” The latter statement was clearly something of a stretcher inasmuch as, at the time of the call, the boat was not actually in the owner’s house—or in his driveway, for that matter.

The owner then proceeded to report his boat as stolen to the police that afternoon, and called Geico to make a claim that evening. In what must have been a tense conversation, the owner explained that he had last seen his boat in the driveway the previous evening, and hadn’t noticed it missing that morning before leaving for work because he ran to his car in heavy rain. It wasn’t until his wife came home that afternoon that the crime was discovered.

Not surprisingly, Geico questioned the owner’s good faith and denied the claim. In the owner’s subsequent lawsuit, the lower court granted summary judgment (laymen’s terms, “threw the case out”) based on the uberrimae fidei doctrine.

On appeal to the Eleventh Circuit Court of Appeals, the owner’s main argument was that uberrimae fidei applies only when the underwriter is deciding whether to accept the risk; it does not apply to subsequent events after the policy has been issued. The owner contended that, since the policy was reinstated with coverage backdated to the previous expiration date, no new policy was ever issued. The Eleventh Circuit rejected this argument, noting that the policy had in fact expired and had to be renewed, even if its coverage was backdated. And even if Geico did not require a full application and underwriting process, the owner was still asked to answer some basic questions about the condition of the boat. The court seemed to place particular emphasis on the fact that the owner had represented that he had possession of the boat, whereas in fact it had already been stolen. Although the court was doubtful of the owner’s claim that he didn’t actually know his boat was stolen when he called to reinstate his policy (remember the part about the heavy rain), it was still something that ought to have been within his knowledge.

The Quintero case seems like an ideal factual scenario for the application of the uberrimae fidei doctrine. It seems pretty clear that the owner called to renew his policy (despite the unwelcome premium increase) after realizing his boat was stolen. The harder cases will remain those in which a well-meaning owner does not think to disclose information that the underwriter does not ask about but that is still material to the risk.

Also, the case does reaffirm the principle that uberrimae fidei applies when insurance is taken out—when the underwriter is deciding whether to take on the risk. It does not apply after the policy is issued, although other maritime law requirements can still mean stormy weather for the careless insured.

[1] Op. No. 19-12734 (11th Cir. Dec. 22, 2020).

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