Last month, I received the following homeowners insurance claim question:
The insured’s boat lift had been placed on land but, when the insured went to check on things, he noticed that the lift was in the water and believes that strong winds caused this to happen. As a result, the lake froze and the lift was damaged.
The insurer has denied the claim on the basis that the boat lift is personal property and that it is specifically “watercraft equipment” for which the windstorm peril is excluded. I’m not sure that I agree with this, but I could be wrong. I would think it’d be a structure. Playgrounds are “other structures,” so why isn’t a boat lift?
The insurer also says the cause of loss is water damage…flood/surface/waves and overflow. I disagree. The lift was on land and then blew/fell into the crest of the lake water, where it stayed and was frozen into. There was no flood, waves or overflow of water to make this happen.
This was my response:
You might be able to argue either way that the boat lift is Coverage B vs. Coverage C. I live on a 97-mile long lake and have a covered boat dock attached to a bluff with a boat lift (see the photo). The lift is affixed to the dock which is attached to the bluff. It’s not readily removable, though I’ve heard of people selling their boat lifts. I’ve even heard of people selling their docks and having them towed somewhere else on the lake. I don’t believe the ability to do that makes them personal property. They are otherwise always affixed at the same location and would likely remain with the home if it was sold.
I would argue that the permanency that is a factor in determining real property structure vs. personal property is measured by intent. If we were to sell the house, the dock and boat lift would stay with it. Removing either the dock or lift would significantly impact the sale and pricing of our home. For me, it is definitely a structure and not personal property and that’s how the personal lines carriers have insured it over the past 8 years.
However, I can’t really picture what you describe. Around here, you won’t find a boat lift that can be pulled on shore out of the water in the fall and then put back in the spring. That movability does sound like personal property.
As for the boat lift being “watercraft equipment,” that makes no sense whatsoever. Look at the policy limitation for watercraft and its equipment, furnishing, engines, etc. These are all property that are related to the operation and movement of the boat. A boat lift does not fall into a listing of that type. Contract law attorneys refer to this interpretation as noscitur a sociis, “it is known from its associates.” You can’t operate a motor boat without a motor, but you can use it without a boat lift. A boat lift isn’t “watercraft equipment.” I don’t think the watercraft limitation applies here at all.
What is material to the claim is exactly how the boat lift was damaged and what caused it. It appears that the proximate cause was windstorm and not the WEIGHT of ice. But I don’t know any of the details of the equipment or loss.
The moral of this story is that determinations like this should be made BEFORE a loss occurs. My HO policy provides Coverage B to structures on my “residence premises.” That dock is not on my premises that are declared to be 1313 Mockingbird Lane. The bluff is actually owned by the government under the auspices of the Army Corps of Engineers. In short, I have no property coverage on the dock unless I take steps to extend the coverage.
My former HO insurer allowed me to add a description of the dock, bluff struts and cables, and stairs up the bluff to my Declarations page reference to the “residence premises,” bringing coverage under Coverage B on my policy for no charge. My next HO insurer would only do it using an ISO endorsement for that purpose and a charge of $100.
I’d be willing to bet that not 1 in 10 docks on this lake have HO property coverage. On another issue, our neighborhood uses the NextDoor app and someone with a boat was looking for someone with an unused slip on their dock that they could rent to keep their boat there. Several people expressed interest. I pointed out that they likely now had a Coverage B structure (if that’s even the case) used for business. No property coverage unless the underwriter is willing to endorse it. The business activity probably also removes liability coverage. How many underwriters would voluntarily insure this exposure. The first claim scenario that comes to my mind is a child or an intoxicated adult drowning or getting electrocuted while renting a dock.
These issues are all part of the loss exposure analysis that is advisable to undertake at the beginning of the insuring process. No telling how many uninsured exposures are on this lake, each one with the potential to financially ruin the families living there. Situations like this are why insurtechs can’t really properly insure you in 60-90 seconds.
Noscitur a sociis
Note in this article that a legal contractual interpretive doctrine known as noscitur a sociis was referenced in the argument that a boat lift is not “watercraft equipment.” This is a powerful doctrine that I’ve used dozens of times to get claim denials reversed. I discuss this and other doctrines in my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes” which is available in print and ebook format at Amazon.com or the web site below.