Insurers Launch Federal Fight to Void $2 Million Yacht Insurance Policy
In a significant legal battle, Accelerant Specialty Insurance Company, Texas Insurance Company, and Certain Underwriters at Lloyd’s of London have filed a complaint in the U.S. District Court for the Middle District of Florida to void a $2 million commercial yacht insurance policy issued to policyholder Robert Sechan. The insurers are seeking a court declaration that they owe no coverage, defense, or indemnity for a personal injury claim stemming from a December 31, 2023, incident involving Sechan’s 2022 46-foot Riviera yacht. The case highlights critical issues in marine insurance, including policy compliance and timely claim reporting, and reflects broader challenges in the yacht insurance market.
Case Details
The dispute centers on an injury sustained by Carlos Henao, who was allegedly hurt while pulling on a rope thrown from Sechan’s yacht during a docking maneuver in Fort Lauderdale, Florida. Henao’s personal injury claim prompted Sechan to seek defense and indemnity under the yacht’s insurance policy (CSRYP/229801), effective from December 1, 2023, to December 1, 2024, which provides $2 million in third-party liability coverage with a $500 deductible per claim.
The insurers argue that Sechan breached two key policy conditions, justifying their attempt to void the policy from inception:
- Late Notice of Claim: The policy requires written notification of any loss within 30 days as a condition precedent to liability. The insurers allege Sechan failed to report the incident within this timeframe, potentially compromising their ability to investigate or mitigate the claim.
- Named Operator Warranty Breach: The policy stipulates that only “Covered Persons”—the insured or individuals listed and approved in writing as operators—may operate the yacht. The insurers claim the vessel was operated by an unapproved individual at the time of the incident, violating the warranty.
The insurers are requesting a judicial ruling that the policy does not cover Henao’s claims, is void from the outset, and imposes no duty to defend or indemnify Sechan.
Legal and Industry Context
This case emerges amid heightened scrutiny of marine insurance practices, particularly in Florida, where strict anti-technicality laws prevent insurers from denying claims based on inconsequential breaches of policy terms. A 2023 case, Travelers Property Casualty Co. of America v. Ocean Reef Charters LLC, saw a Florida federal judge rule that Travelers must cover a $2 million yacht loss from Hurricane Irma, as the policyholder’s failure to employ a full-time captain was deemed a technicality under Florida law. Similarly, in a 2021 case involving a $66 million arbitration award after a fatal boat crash, Florida courts emphasized that denials based on unapproved operators must materially affect the claim’s outcome.
The Sechan case differs, as the insurers argue that the breaches—late notice and an unapproved operator—directly undermine the policy’s terms and their ability to assess liability. However, Florida’s legal framework may challenge their position, especially if the court finds the breaches immaterial to Henao’s injury.
Broader Implications
The yacht insurance market is facing increasing pressures, with premiums rising four to five times in recent years due to hurricane losses and severe weather events, as seen in the $150 million insurance cost for the sunken superyacht Bayesian off Sicily in August 2024. Insurers are tightening underwriting guidelines, reducing coverage limits, and closely scrutinizing policy compliance to mitigate risks. The Sechan case underscores these trends, as insurers seek to enforce strict policy terms to limit exposure to high-value claims.
The outcome of this case could set a precedent for how courts interpret notice requirements and operator warranties in marine insurance policies. A ruling in favor of the insurers could embolden carriers to pursue similar voidance actions, while a decision upholding coverage might reinforce Florida’s anti-technicality stance, prioritizing policyholder protections.
Current Status
The case, newly filed as of August 2025, awaits judicial review, with no findings yet made. The insurers’ claims are based on their interpretation of policy terms and the incident’s circumstances, while Sechan’s response and potential counterclaims remain pending. Given Florida’s legal precedent and the complexities of maritime law, the court’s decision will likely hinge on whether the alleged breaches materially impacted the claim and whether federal maritime law or Florida’s state laws govern the dispute.
Disclaimer: Information is based on recent reports and may evolve as the case progresses.