Tuesday, December 14, 2021

How Much Limit Should You Buy For A Recreational Boat Builder?

In a landmark court ruling earlier this year, a jury awarded a $200 Million verdict to a family that tragically lost their 7-year-old son in a boating accident in 2014 resulting in the largest single verdict for the pain and suffering for wrongful death in the history of the State of Georgia. 

"The jury sent a very loud and clear message to Malibu and the entire boating industry that manufacturers who have actual knowledge of life threatening safety hazards and intentionally fail to warn and withhold information of dangerous conditions will be held accountable," said Don Fountain, lawyer for the plaintiffs.

In 2014, the Batchelder family rented a 2000 Malibu Response LX open bow ski boat. While the boat was operated at about 5-7 mph and loaded hundreds of pounds below the maximum rated capacity, the bow, carrying four children, swamped washing young Ryan Batchelder into the water. The operator, who did not see Ryan being washed overboard, briefly put the boat into reverse to prevent sinking. Ryan died as a result of drowning and significant injuries. 

Malibu Boats designed this specific open bow boat model by cutting a hole in the forward deck of a closed bow boat and adding seats. During the trial, it was determined that occupant weight forward decreased bow freeboard, making the boat susceptible to bow swamping. What’s more, the design trapped and held water flowing over the bow, exacerbating the swamping effect. 

Malibu defendants were aware of the swamping hazard and the jury found that they were negligent for failing to provide warnings concerning the bow swamping hazard. Because Malibu had made the conscious decision not to warn the boat users, the jury awarded punitive damages. The plaintiffs were awarded $80 million for their son’s pain and suffering and wrongful death and an additional $120 million in punitive damages. 

What would happen if your client had a similar loss? The issue of coverage for punitive damages varies based on state law and carrier practice, but even without punitive, an $80 million claim plus defense costs is a significant expense. It’s important to consider a case like this when recommending coverage to your recreational boat manufacturer clients. How much coverage would your client need in this case? Further, if your carrier does not exclude punitive damages, and the law of the state of the suit allows punitive to be insured, should you recommend higher limits to allow for punitive? 

Ian Greenway