An insurance broker pays the price for failing to place excess liability coverage requested by his client, who sought to cover his new 70 foot yacht.
The yacht for which coverage was sought was purchased in South Carolina and the brokerage firm involved was from New Jersey. The plaintiff, a victim of a boating accident involving the yacht, was a citizen of South Carolina.
While the plaintiff, his son and son’s friends were enjoying an afternoon on the Intracoastal Waterway on several small boats when the yacht sped by. The wake from the passing yacht was so great that it caused the plaintiff’s boat to flip. The plaintiff was struck by his capsized boat and held underwater. The injuries resulting from the accident caused serious neurological and physical defects rendering the plaintiff unable to work or care for himself.
The broker’s failure to place the excess insurance policy requested by the customer left very little liability coverage, which was the plaintiff’s initial claim. As part of the settlement of that initial claim, the boat owner accepted a larger negotiated judgment and assigned that claim for the plaintiff to pursue against the negligent brokers. The arbitration resulted in a $5,000,000 award.