A Sinking Feeling is not Enough for Coverage

Warranty of Seaworthiness is Essential

Insurance protecting against the risk of loss of a vessel – whether it operates on inland waterways or on the open sea – always requires that the insured keep the vessel seaworthy. Failure to do so voids the coverage. Seaworthiness is usually defined in the policy and must be proved by the insured.

In Progressive Gulf Insurance Company v. William Burke, Civil Action No. 7:18-cv-00293, United States District Court for the Western District of Virginia Roanoke Division (May 10, 2019) the USDC was asked to determine if Progressive Gulf Insurance Company is obligated to provide insurance coverage for the loss of a yacht owned by William Burke, which sank at its dock on Smith Mountain Lake, behind Burke’s house. Progressive moved for summary judgment because it claims it had no duty to provide any coverage for that loss because Burke failed properly to winterize the yacht, which failure was the cause of the damage.


Progressive’s motion for summary judgment set forth a numbered statement of undisputed facts. Burke made no attempt to respond to specific facts or to cite any specific portions of the record, as required by Federal Rule of Civil Procedure 56(c). Therefore, the court deemed the facts set forth by Progressive undisputed.

The Sinking of the Yacht

The yacht owned by Burke is a 2006 custom catamaran motor-yach (the Vessel). The Vessel includes two air conditioning units (the A/C units), which were installed more than ten years ago. According to the reports of Progressive’s two experts, the Vessel sank because it had not been properly winterized.

In particular, neither Burke nor his adult son, Travis—to whom Burke had delegated winterization tasks—properly winterized the A/C units. The manufacturer’s instructions required that all water in the A/C units be replaced with antifreeze and that the Vessel’s sea cocks be closed. It is undisputed that neither of these steps were taken.

Because there was water left in the Vessel’s raw-water inlet that water froze. It then expanded and caused part of the A/C system to crack and break free of its mount. That, in turn, allowed lake water to enter the Vessel through its open seacock to flow unimpeded into and out of the broken strainer, flooding the Vessel until it sank.

The Policy

Progressive issued a “Virginia Boat and Personal Watercraft” insurance policy (the Policy) to Burke. The Policy was an “Agreed Value Policy,” with a coverage limit of $150,000. The policy excluded from coverage a loss “that occurs because a covered watercraft has not been properly winterized in accordance with the manufacturer’s specifications, subject to local customs.”

The policy required the vessel to be “seaworthy” which was defined as to be fit to “withstand the foreseeable and expected conditions of weather, wind, waves, and the rigors of normal and foreseeable use in whatever type of waters a watercraft will be located.”

For a watercraft to be considered seaworthy the policy required the insured to exercise due diligence to properly manage the watercraft; comply with all federal safety standards and provisions; and follow all customary and manufacturer-recommended maintenance guidelines.


Under Virginia law, the interpretation of an insurance policy presents a question of law. Just as with any contract, the court must interpret the policy by determining the parties’ intent from the words they have used in the document.

The court determined that there was ample evidence to suggest that the loss was caused by a failure to winterize in accordance with the manufacturer’s specifications, subject to local customs. The one marina manager at Smith Mountain lake who was willing to talk with Progressive’s expert likewise testified that customary winterization for a vessel in the area included removing all water from systems, lines and fittings and replacing it with antifreeze – exactly what was recommended by the AC manufacturer.

Because is it undisputed that neither Burke nor Travis followed the manufacturer-recommended maintenance guidelines regarding winterization of the A/C units, the vessel was not seaworthy as that term is defined in the Policy. Because that failure was the undisputed cause of the loss, the loss and damages are not covered by the policy, under its plain and unambiguous terms and summary judgment was granted in favor of Progressive.


The USDC, by Elizabeth K. Dillon United States District Judge, read a clear and unambiguous policy condition, applied the facts established by the insurer, and determined that the vessel sank because it was not properly winterized and was, therefore, not seaworthy as required by the policy. Insurance never provides indemnity against every possible risk of loss. All have conditions and exclusions, as did the Progressive policy. We read here another suit that could probably justify sanctions for bringing a frivolous suit.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.



Insurance is a contract between a person seeking insurance and an insurer. It is obtained by making contact with the insurer as a prospective insured seeking insurance. The homeowners policy is a specialized policy of insurance that protects the homeowner from certain risks of loss to the real and personal property at the home, the exposure the insured faces for injury to a household employee, and the exposure the insured faces to liability for bodily injury or property damage caused to third parties. The book explains how to buy a homeowners policy and how to collect on any claim made to the homeowners insurer.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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