BOAT OWNER'S LIABILITY INSURANCE HELD PRIMARY OVER PERMISSIVE OPERATOR'S HOMEOWNERS INSURANCE 469_C077
BOAT OWNER'S LIABILITY INSURANCE HELD PRIMARY OVER PERMISSIVE OPERATOR'S HOMEOWNERS INSURANCE

A young woman was operating a boat with the permission of its owner when it struck another boat, resulting in the death of a passenger. The estate of the deceased filed a wrongful death suit against the woman. The owner of the boat that she was operating was added as a defendant by virtue of a Michigan law imposing liability on the owner of a boat that is being operated by another person with the consent of the owner.

A boat owner's protection policy carried by the owner included liability coverage in the amount of $300,000. The young woman was an insured under the provisions of a homeowners policy ($300,000) and a personal umbrella liability policy ($1 million) carried by her parents. The boat insurer undertook defense of the suit and paid $300,000, the amount of a negotiated settlement.

The insurer then sought to collect the entire amount it paid for the settlement, plus $26,000 expended for investigation and defense, from the insurance company that provided homeowners and umbrella liability coverage for the young woman. Motions for summary judgment were filed by both insurers. Their respective obligations were disputed.

It was noted that the "other insurance" clauses in the policies were virtually identical, each purporting to be excess over other valid and collectible insurance. It was also noted that the boat operator's insurer said that it was never approached by the owner's insurer to defend, and that its consent to the mediation settlement had not been sought.

The court followed what it called the majority approach, concluding that the boat insurer was the primary insurer, having issued a policy specifically to cover liability arising from boating accidents involving the described boat. It said that other insurance would have covered the young woman's liability if the boat policy were not in force.

The Michigan law imposing liability on a boat owner for negligence on the part of another, operating a boat with the owner's consent, supported the position taken.

The motion for summary judgment by the homeowners and umbrella liability insurer was granted.

(HASTINGS MUTUAL INS. CO., Plaintiff v. THE AUTOMOBILE INS. CO. OF HARTFORD, CT, ET AL., Defendants. US District Court, Western District of Michigan, Southern Division. No. 1-91-CV-455. September 10, 1991. CCH 1992 Fire and Casualty Cases, Paragraph 3605.)