THIS IS WHY YOUR BOATING INSURANCE CLAIM IS NOT GETTING PAID

Potential clients call our maritime law office and complain to us that they suffered a boating damage claim which appears should be covered by their boat insurer but the boat insurer denied the claim. Here is why this is happening. The insurance companies don’t fear denying your claim because they do not believe you will be able to fight back against them.

And here is why they believe that. In March 2023 the Florida legislature passed a bill which eliminated your ability to get attorneys’ fees paid by them if you had to sue your own insurer to force them to do what they should have done in paying your claim. In March 2023, the governor signed that law. It may be easy to think “Who cannot get on board with limiting how much money attorneys can make on a case?”. However, what that means to you today is you will be hard-pressed to find an attorney who will take your boating damage case that has been denied by your insurance company. The reason: the math is not going to work.

Consider the following hypothetical scenario. A potential client calls and says he had damage to his vessel caused by a strike to the engines while the vessel was underway. This caused $50,000 in damage to the vessel. However, the client’s insurance company denies the claim—and the stated reason: this is a manufacturer’s defect. Of course when the potential client contacts the motor manufacturer, the manufacturer will say: You struck something with the vessel that caused damage to the motors, and that is not a manufacturer defect.

We would decline to take on the case because the math would not work. It would not work for the client. Even if the recovery was the full $50,000, the client would get only part of the $50,000, because attorneys’ fees are now no longer paid by the insurance company—they must be borne by the insured person. When the Florida legislature passed this law and the governor signed it, it has and will continue to save insurers millions of dollars. Those savings to insurance companies and those cases where the denied claimant cannot find an attorney will hurt insured customers with legitimate claims, but who cannot find an attorney to take their case. The insurance companies know this. In our view, and we have only represented claimants, this was a great investment for insurance companies to contribute to the campaigns of the politicians in Tallahassee who passed this law, but it is a law which is costing and will continue to cost individual claimants who have legitimate claims.

One other piece of advice given to such a potential client is to avoid paying an attorney by the hour to work on that case. Why? An attorney working on a per hour basis—maybe at $500 per hour or more—will request a retainer of perhaps $10,000. This means for every letter written by that attorney, every phone call received or initiated, every email sent or received, those will be billed at an hourly rate. “Billing” on a case is different than “resolving” a case. “Billing” a case benefits the attorney. “Resolving” a case benefits the client. Attorneys who handle cases on contingency—like this law firm—get paid only when the client gets paid. Attorneys who handle cases by the hour get paid regardless of whether the case is ever resolved or not. What’s worse is that if an attorney takes an insurance denial case on an hourly fee basis, they may ask you for several retainers. One should not presume that an initial $10,000 retainer, for instance, will be enough to get the case resolved. The customer may be asked to renew that retainer several times. Worse still, if the client asked the attorney when the case will be done, many times the hourly attorney cannot say.

In sum, what this means is: 1. The reason the insurance company denied your boating damage claim may be because they can do it. 2. The insurance company does not fear that you will try to get an attorney because the insurance company in most cases is not going to pay for the attorney, you are. 3. If an attorney takes your case on contingency you will not get back 100% of your money because the contingency fee will consume a percentage of the recovery—and expert witnesses may have to be hired, depending upon the facts of your case.

This is also the same reason why many hurricane claims from the 2024 hurricanes that hit Florida remain unpaid and denied. The insurance companies are not worried about you fighting them because they know they do not have to pay your attorney fees like they had to do before March 2023. The insurers can just deny even very legitimate claims and wait to see what you do about it. What the insurers know is that the money they gave the politicians in Tallahassee is paying off big in the insurers not having to pay attorneys’ fees on claims they should have paid.

Thank the politicians in Tallahassee who wrote this law for the benefit of insurance companies and the detriment of individual consumers.

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