Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
August 14, 2023
Strict Compliance With Warranty Required

Promissory Warranty Must Be Fulfilled

Barry Zalma
Aug 14, 2023

Read the full article at https://lnkd.in/gam6Eshm; se the full video at https://lnkd.in/gxhepeXV and at https://lnkd.in/gcxTvJtf and at https://zalma.com/blog plus more than 4550 posts.

Ralph Young owned and lived on a seventy-four-foot motor operated vessel named the SUMMER STAR (“the vessel”). Mr. Young insured the vessel with Yachtinsure Services, Inc. from 2013 through 2019. On August 28, 2019, the vessel ran aground and was destroyed when Hurricane Dorian hit St. Thomas in the United States Virgin Islands, where the vessel was moored. Yachtinsure rejected the abandonment and denied Mr. Young’s claim, based on what it considered his material misrepresentations in his April 2019 policy renewal application.

As a result the USDC was asked to resolve an issue of the voidability of a marine insurance policy under principles of federal maritime law. The Insured pursued a claim for breach of contract against the Insurer, based on the insurer’s refusal to pay for damage sustained by Plaintiff’s insured vessel during a hurricane in August of 2019.

In Transpac Marine, LLC v. Yachtinsure Services, Inc., Civil Action No. 20-10115-DPW, United States District Court, D. Massachusetts (February 13, 2023) followed the precedent establishing the inviolability of a promissory warranty.

BACKGROUND

Yachtinsure asserts counterclaims for declaratory judgment seeking judgment that Mr. Young’s insurance policy was void as a matter of law and that Yachtinsure had no obligation to pay damages or the benefits promised by the policy.

Mr. Young’s Renewal Application

On April 16, 2019, Mr. Young applied for the renewal of his marine insurance policy to Yachtinsure to renew his existing policy, Mr. Young was obligated to submit an updated application form and a Hurricane Plan for review by Yachtinsure’s underwriters.

The Hurricane Plan included a warranty by Mr. Young that the vessel will be secured with “10 lines, 3/4 inch Nylon braid.” The applicant was warned that the Hurricane Plan contains “statements upon which underwriters will rely in deciding to accept this insurance” and that the Hurricane Plan “will form the basis of” any insurance contract between the parties. The declaration also stated that misrepresentation or nondisclosure of material facts “may entitle underwriters to void the insurance.”

After an inquiry from the insurer Mr. Young confirmed that in the event of a named/numbered storm, mooring lines will be doubled. Mr. Young’s email representation that he would double the mooring lines on the vessel in the event of a named windstorm was incorporated into his policy agreement with Yachtinsure.

Events Preceding the Destruction of the Vessel

During an examination under oath conducted by Yachtinsure Mr. Young testified he decided to sail to Crown Bay in St. Thomas, U.S. Virgin Islands where the storm was expected to pass with windspeeds below thirty-miles-per-hour. Mr. Young resolved to wait out the storm. On August 26, he purchased two, new, one-inch diameter mooring lines from the local chandlery in preparation for the storm. Beyond securing the vessel with those two additional mooring lines and moving upholstery below deck, Mr. Young made no further safety preparations. On August 28, 2019, the storm, by then named Hurricane Dorian, changed its trajectory and struck the Virgin Islands. By the time he learned that the storm would hit the Virgin Islands Mr. Young determined sailing away from the Virgin Islands to be unsafe. Instead, he decided to remain moored to a single mooring in Crown Bay, secured by six lines, four of unspecified diameter and two of a one-inch diameter.

Just after noon, high winds from Hurricane Dorian parted Mr. Young’s mooring lines, causing the vessel to drift out to sea. However, the anchor’s chain became entangled with a sailboat operated by a third-party mariner, Dan Radulewicz. Thereafter, as alleged, Mr. Radulewicz disconnected Mr. Young’s anchor gear causing the SUMMER STAR to be swept up in the storm. The vessel eventually ran aground on the lee shore about four miles from Crown Bay. Mr. Young was airlifted from the wreck by the United States Coast Guard.
Plaintiff’s Claim and Defendant’s Denial

Mr. Young filed a claim declaration with Yachtinsure on September 3, 2019.

DISCUSSION

The Supreme Court held in Norfolk S. Ry. Co. v. Kirby, that “federal law controls the contract interpretation” of a marine insurance policy when the contractual dispute at issue “is not inherently local,” observe that the First Circuit has held that there is a judicially established federal rule governing the particular area of marine insurance contract interpretation relevant: whether an insured’s representations in the policy constitute unambiguous, promissory warranties which, if breached, excuse the insurer from coverage.

The court found the Hurricane Plan to be unambiguous. The plain language of Mr. Young’s answer to Question 15 cannot be reasonably read to convey anything other than that Mr. Young would use ten lines of 3/4 inch Nylon braid to secure the vessel. Mr. Young’s response to Question 15 of the Hurricane Plan states unambiguously that he will secure the vessel with the configuration of mooring lines he specified in his response.

Mr. Young responded to the Hurricane Plan with what is, in essence, a stipulation that he would secure the SUMMER STAR with the mooring configuration he identified when the policy took effect and during its continuance. Thus, this provision of the Hurricane Plan constitutes an unambiguous promissory warranty to secure the SUMMER STAR with ten nylon mooring lines that were 3/4 inch diameter in normal circumstances (i.e., in the absence of a named or numbered storm) and with 20 in a named and numbered storm.

Consequences of Breach of Promissory Warranties

Under both federal law and New York law, a breach of a promissory warranty will permit the insurer to void a marine insurance contract. Simply material compliance will not satisfy the insured’s obligations. The weight of authority holds this strict compliance requirement applicable even to “collateral” warranties unrelated to the insured’s claims for damages.

Plaintiff’s Breach

The court concluded that Yachtinsure established beyond reasonable factual dispute that Mr. Young failed to meet his obligation of strict compliance with his warranties under the Hurricane Plan.

Mr. Young’s admission that he did not use twenty 3/4 inch nylon braid lines to secure his boat during Hurricane Dorian – and thereby satisfy a prophylactic condition the policy called for – is sufficient to prevent him from recovering under the policy.

Summary judgment granted to Yachtinsure.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.

Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808

Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01

Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257

Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library\

00:10:36
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
1 hour ago
An International Convention Requiring Enforcement of Foreign Arbitration Award Doesn’t Apply

Louisiana Statute Prevents Enforcement of Contract Term Requiring Arbitration of Disputes

Post 5241

Read the full article at https://www.linkedin.com/pulse/international-convention-requiring-enforcement-award-barry-sttdc, see the video at and at and at https://zalma.com/blog plus more than 5200 posts.

In Town of Vinton v. Indian Harbor Insurance Company, Nos. 24-30035, 24-30748, 24-30749, 24-30750, 24-30751, 24-30756, 24-30757, United States Court of Appeals, Fifth Circuit (December 8, 2025) municipal entities including the Town of Vinton, et al sued domestic insurers after dismissing foreign insurers with prejudice. The insurers sought arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”) but the court held Louisiana law — prohibiting arbitration clauses in such policies—controls, as the Convention does not apply absent foreign parties who ...

00:08:06
placeholder
December 10, 2025
$500 a Day Penalty if no Workers’ Compensation Insurance

Refusal to Provide Workers’ Compensation is Expensive
Post 5240

Read the full article at https://lnkd.in/guC9dnqA, see the video at https://lnkd.in/gVxz-qmk and at https://lnkd.in/gUTAnCZw, and at https://zalma.com/blog plus more than 5200 posts.

In Illinois Department of Insurance, Insurance Compliance Department v.USA Water And Fire Restoration, Inc., And Nicholas Pacella, Individually And As Officer, Nos. 23WC021808, 18INC00228, No. 25IWCC0467, the Illinois Department of Insurance (Petitioner) initiated an investigation after the Injured Workers’ Benefit Fund (IWBF) was added to a pending workers’ compensation claim. The claim alleged a work-related injury during employment with the Respondents who failed to maintain workers’ compensation Insurance.

Company Overview:

USA Water & Fire Restoration, Inc. was incorporated on January 17, 2014, and dissolved on June 14, 2019, for failure to file annual reports and pay franchise taxes. It then operated under assumed names including USA Board Up & Glass Co. and USA Plumbing and Sewer. The business ...

00:09:22
December 09, 2025
Go Directly to Jail, Do not Pass Go

Arsonist Incompetently Moves Pro Se to Avoid Prison

Post 5239

Read the full article at https://lnkd.in/gRX8TfKn, see the video at https://lnkd.in/gY3Jvnqp and at https://lnkd.in/gRCaaf-3, and at https://zalma.com/blog plus more than 5200 posts.

In Christopher A. Barosh v. Morris Houser, et al., Civ. No. 22-0769, United States District Court, E.D. Pennsylvania (November 25, 2025) a convicted arsonist and insurance fraudster moved the USDC acting in Pro se filed Objections to Magistrate Judge Reid’s Recommendation that the US District Judge dismiss his § 2254 Petition to avoid jail.

BACKGROUND

In October 2005, Barosh set fire to his girlfriend’s Philadelphia home — some 25 hours before the cancellation of the property’s insurance policy. Several witnesses saw Barosh leaving the property shortly before the fire erupted. After the fire, Barosh made “two separate admissions of guilt.”

He attempted to pay an acquaintance to provide him with an alibi for the time of the arson. The eyewitnesses, brother, and ...

00:07:00
October 31, 2025
The Zalma Philosophy of Claims Handling – Part 9

The Professional Claims Handler
Post 5219

Posted on October 31, 2025 by Barry Zalma

An Insurance claims professionals should be a person who:

Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.

How to Create Claims Professionals

To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...

post photo preview
October 20, 2025
The Zalma Philosophy of Claims Handling – Part I

The History Behind the Creation of a Claims Handling Expert

The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster

When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.

I was initially sat at a desk reading a text-book on insurance ...

post photo preview
October 20, 2025
The Zalma Philosophy of Claims Handling – Part I

The History Behind the Creation of a Claims Handling Expert

The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail

Post 5210

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.

My Training to be an Insurance Claims Adjuster

When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.

I was initially sat at a desk reading a text-book on insurance ...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals