burden is on the insured to prove a covered loss
How later courts described this case
- burden is on the insured to prove a covered loss
- insured has the burden to prove coverage
Written by the judges who cited it.
The opinion
BRYSON, J.,
specially concurring.
Plaintiffs are the owners of a 21-year-old 46.4 foot pleasure boat, the Manatee. The boat was insured with defendant under the terms of a “Yacht Policy” which contained an “Inchmaree clause” and provided in part:
“Perils. Touching the adventures and perils which the Company is content to bear and does take upon itself, they are of the seas,, rivers, lakes and/or other inland waters, fire, assailing thieves, jettisons, barratry of the Master and Mariners, and of all other like perils, losses and misfortunes, that have or shall come to the hurt, detriment or damage of said Yacht or any part thereof.
“This insurance also specially to cover loss of or damage to hull or machinery directly caused by the following:
CCft «8 # * *
“5. Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull (excluding, however, the cost and expense of repairing or renewing the defective part);
ÉÉ# * * & J?
The boat sank at its covered moorage on the Columbia River. Plaintiffs contend the boat sank by reason of a “latent defect,” as set forth in the Inchmaree clause. No one knew the reason for the sinking, but an expert marine repairman testified that it was not common for a boat of this age to sink under the circumstances of this case. In other words, once a wooden hull has absorbed water in its planks for twenty-one years and developed no dry rot, it becomes *322 a sound hull. There was testimony that there was no dry rot in the hull.
The defendant contends “that the ‘perils of the sea’ clause in Mr. Lewis’ insurance policy, of which the Inchmaree clause is a subparagraph, does not create ‘all risk’ insurance. * * * The plaintiffs must prove that the loss was caused by some risk expressed in the policy” and “that the sinking of the ‘MANATEE’ was caused by a latent defect.”
The Inchmaree clause was first used in the year 1889 by British hull underwriters in an attempt to adapt the traditional sailing ship policy to new risks introduced to the maritime shipping industry by steam power. See Tetreault, The Hull Policy: The “Inchmaree” Clause, 41 Tul L Rev 325, 325-28 (1967). In view of the profound changes which have occurred in the marine insurance, shipping, and boating industries since 1889, we should examine the traditional rules of interpretation applied to the Inchmaree clause when included in a pleasure craft “Yacht Policy.”
In 1889 only commercial vessels plying the seas were covered by hull insurance. Today there are 5,539,600 licensed or documented pleasure craft in the United States, most of which are covered by marine insurance policies. Ninety-eight thousand one hundred of those are licensed or documented in Oregon pursuant to ORS 488.715 to 488.805.
Today, when the typical owner of a pleasure craft seeks marine protection and indemnity insurance (ORS 731.174(2)), his objective is financial protection from all or most of the risks which reasonably flow from ownership and operation of his craft. In this respect, he is not markedly different from the purchaser of automobile liability and property insurance. He bar *323 gains with the salesman about little concerning his coverage, pays his premium, and receives a printed policy. The policy itself is seldom read, and almost never understood, because the content is complicated and filled with confusing legal terminology. Nevertheless, the boat owner believes that when the contract is executed and the premiums are paid he is “covered.” He may be wholly unaware of the exact type or extent of coverage, or any qualifications or exceptions to the policy coverage about which he has not been warned. See Keeton, Insurance Law Rights at Variance With Policy Provisions, 83 Harv L Rev 961, 966-69 (1970).
These policies frequently end up in court as the subject matter of litigation. To avoid harsh results, courts often strain policy language to provide coverage. The Inchmaree clause in this case is an example of a policy provision which could lead to an unjust result were it not given a very broad interpretation.
Technically, the insured peril in this case was a latent defect in the Manatee’s hull, and, under Shaver Co. v. Eagle Star Ins. Co., 172 Or 91, 139 P2d 769 (1943), the insured must prove that such a defect caused the loss. The majority opinion holds that there was no direct evidence of a latent defect in the case but that circumstantial evidence created an inference of such a defect sufficiently strong to allow the jury to consider the question.
The difficulty is with the term “latent defect.” In this case, the term is stretched to embrace an unknown, unexplained something that caused the Manatee to sink at its mooring. This interpretation does violence to the language but justice to the case. The phrase may have served a proper function in 1889 but today it only confuses courts and policyholders and frustrates *324 •the reasonable expectations of the insured, a result which courts have historically disfavored. See Keeton, supra, 83 Harv L Rev at 967. We would reach an unreasonable result if we denied the plaintiff policyholders the coverage which they reasonably assumed they - had purchased because they cannot explain an inexplainable sinking.
. “When members of the public purchase policies of insurance .they are entitled to the broad measure of protection necessary to fulfill their reasonable expectations. * * * Where particular provisions, if read literally, would largely nullify the insurance, they will be severely- restricted só as to enable fair fulfillment, of the. stated policy objective. * .* *” Kievit v. Loyal Protect. Life Ins. Co., 34 NJ 475, 482-83, 170 A2d 22, 26 (1961).
In the light • of changed circumstances, the Inchmaree clause should be interpreted according to the rule in Kievit. Accordingly, I concur in the result of the majority opinion. .
McAllister, J., joins in this opinion.