The Alabama Supreme Court reversed and remanded a trial court’s grant of summary judgment in favor of a conservator of a sailboat owner’s estate related to a claim for a lost sailboat under an all-risk boat insurance policy. St. Paul Fire & Marine Ins. Co. v. Britt, 2016 WL 360654 (Ala. Jan. 29, 2016).

The conservator filed a claim for a lost sailboat under an all-risk policy after the sailboat and its owner disappeared. The insurer denied coverage on the grounds there was no evidence of an “accidental direct physical loss or damage” that would trigger coverage and because the disappearance fell under the policy’s mysterious disappearance exclusion. The insurer argued the claim fell within the mysterious disappearance exclusion because there was no evidence as to what happened to the sailboat. The conservator sued the insurer.

The insurer filed a motion for summary judgment on the breach of contract and bad faith claims, and the conservator filed a motion for partial summary judgment on the breach of contract claim. The trial court granted the conservator’s motion for partial summary judgment, denied the insurer’s motion for summary judgment and found the bad faith claim moot.

On appeal, the Alabama Supreme Court assumed, without deciding, that the conservator carried his burden of showing the loss was, absent an exclusion, covered and considered whether the mysterious disappearance exclusion applied. The conservator argued the exclusion is ambiguous and should therefore be strictly construed against the insurer. The Alabama Supreme Court found an ordinary person would interpret the phrase “mysterious disappearance” to mean the circumstances surrounding the disappearance are unknown, puzzling or baffling as to make the disappearance inexplicable and held the mysterious disappearance exclusion unambiguous.

The Court concluded there was no evidence to support a theory as to what happened to the sailboat and that the insurer carried its burden of showing the claim fell within the exclusion. It also considered whether the mysterious disappearance exclusion conflicted with a 30-day provision, which required the insurer to provide coverage when the boat had been lost for more than 30 days. The Court concluded the 30-day provision, when read in conjunction with the mysterious disappearance exclusion, did not render coverage illusory. The Court reversed and remanded for the trial court to enter summary judgment in favor of the insurer.