“Manufacturer-Rated Horsepower” Controls Vermont Watercraft Exclusions:
A Comprehensive Commentary on Northern Security Insurance Company, Inc. v. Raymond Walker (Vt. 2025)

Introduction

The Vermont Supreme Court’s Entry Order in Northern Security Insurance Company, Inc. v. Walker, No. 24-AP-349 (June 6, 2025) marks the Court’s first direct pronouncement on how horsepower-based watercraft exclusions in homeowner’s insurance policies are to be interpreted. At stake was coverage for catastrophic injuries sustained by a minor when struck by the propeller of a pontoon boat owned by Raymond Walker and Humbert Hernandez on Joe’s Pond, West Danville. The boat’s outboard motor bore a 40-horsepower (“HP”) rating, yet defendants insisted that its actual output at the time of the accident was below 25 HP due to age and mechanical degradation.

Appellant Ashley Moreau (as parent and next friend to the injured child) argued that the policy’s exception for boats “powered by … outboard engines or motors with 25 total horsepower or less” was ambiguous and should be measured by real-world output, not by manufacturer rating. Both the trial court and the Supreme Court rejected that contention, granting summary judgment to the insurer.

Beyond resolving this case, the Court established a clear rule: for homeowner policies using horsepower thresholds, the determinative measure is the engine’s manufacturer-certified horsepower at the time of sale, not its moment-to-moment operating capacity. This commentary dissects the decision, its legal underpinnings, and its anticipated effects on Vermont insurance law.

Summary of the Judgment

1. The homeowner’s policy unambiguously excluded liability for accidents involving watercraft “principally designed to be propelled by engine power,” except boats powered by outboard engines “with 25 total horsepower or less.”
2. The pontoon boat carried its original 40 HP Yamaha motor, a fact admitted by the insureds when reporting the loss.
3. The phrase “with 25 total horsepower or less” refers to the engine’s rated horsepower; therefore, the watercraft falls outside the exception and within the exclusion.
4. Because the exclusion applies, Northern Security owed no duty to defend or indemnify the insureds against the underlying tort claim.
5. Limited discovery into the engine’s current performance or the parties’ subjective expectations was unwarranted, as the contract language was plain.

Result: Affirmance of summary judgment for the insurer; no coverage available.

Analysis

Precedents Cited

• Safeco Insurance Co. of America v. Robertson, 994 P.2d 488 (Colo. App. 1999) – The leading out-of-state authority rejecting post-accident horsepower testing. The Vermont Court borrowed Safeco’s logic almost verbatim.
• Gallipo v. City of Rutland, 178 Vt. 244 (2005) – Standard for summary judgment and rule that new issues cannot be raised for the first time on reply.
• State Farm Mut. Auto. Ins. Co. v. Colby, 194 Vt. 532 (2013) – Contract interpretation principles: plain meaning governs.
• Commercial Construction Endeavors, Inc. v. Ohio Security Ins. Co., 211 Vt. 286 (2019) – Ambiguity determinations and contra proferentem doctrine.
• Samplid Enterprises, Inc. v. First Vermont Bank, 165 Vt. 22 (1996) – Non-movant entitled to reasonable inferences on summary judgment.

While Vermont lacked on-point precedent, Safeco supplied a persuasive blueprint. The Court also reaffirmed general Vermont contract-interpretation rules articulated in Colby and Commercial Construction.

Legal Reasoning

1. Plain Meaning Test: The Court began with the text: “outboard engines or motors with 25 total horsepower or less.” Using ordinary English, a watercraft either is or is not equipped with an engine so labeled. No reasonable policyholder, the Court said, would expect to drag the insurer into horsepower forensics months or years later.

2. Workability and Predictability: Borrowing from Safeco, the Court stressed practical difficulties: horsepower fluctuates with altitude, tuning, fuel quality, and engine age. Coverage could swing retroactively after a crash, undermining informed risk assessment by both parties.

3. Reasonable Expectations Doctrine: Even if Vermont’s “reasonable expectations” doctrine applies, a consumer could not reasonably expect coverage for a boat plainly labeled 40 HP when the policy exempts only those 25 HP or below.

4. No Genuine Dispute of Material Fact: The only “fact” appellant sought to contest was the motor’s output. But that fact was legally irrelevant once the Court fixed the meaning of “25 total horsepower” as the manufacturer rating.

5. Discovery Discretion: Because proposed discovery (expert dynamometer testing, subjective expectation evidence) could not create a triable issue, the denial of additional discovery was within the trial court’s discretion.

Impact of the Decision

• Clarifies Policy Interpretation in Vermont: The Court supplies a bright-line rule for horsepower-based exclusions, reducing litigation over boating injuries.
• Insurer Drafting Practices: Underwriters can cite this case to support policy language without elaborating “as rated by manufacturer.” Conversely, insureds seeking broader protection must schedule higher-horsepower boats or purchase separate watercraft endorsements.
• Tort Litigation Strategy: Plaintiffs’ counsel cannot rely on post-accident engine testing to trigger coverage. Early investigation should instead focus on declarations pages and motor labeling.
• Potential Regulatory Response: The decision may prompt the Vermont Department of Financial Regulation to issue consumer advisories clarifying that homeowner’s policies rarely cover motorboats above 25 HP.
• Persuasive Authority Nationwide: While Safeco existed, a New England state’s adoption strengthens the weight of the “manufacturer-rating” rule in jurisdictions still undecided.

Complex Concepts Simplified

• Homeowner’s Policy Watercraft Exclusion: Most standard homeowner policies exclude liability for motorized boats, but carve back limited coverage for very small engines (commonly ≤25 HP).
• Declaratory Judgment Action: A lawsuit filed primarily to have a court declare the parties’ rights—in this case, whether the insurer owed coverage—before or during related tort litigation.
• Ambiguity Doctrine / Contra Proferentem: If policy language is genuinely susceptible to more than one reasonable meaning, courts construe it against the drafter (the insurer). The Vermont Court found no such ambiguity here.
• Summary Judgment (V.R.C.P. 56): A procedural device to resolve cases without trial when no material facts are disputed and one party is entitled to judgment as a matter of law.
• Horsepower Rating vs. Output: “Rated horsepower” is the manufacturer’s certification under standardized conditions. “Actual output” varies with wear, maintenance, altitude, etc. The Court chose the former for certainty.

Conclusion

Northern Security v. Walker crystallizes Vermont’s approach to interpreting horsepower-based boating exclusions in homeowner policies. By anchoring the analysis to the manufacturer-rated horsepower, the Court advances predictability, honors plain contractual language, and aligns Vermont with the majority trend exemplified by Colorado’s Safeco decision. Policyholders must therefore pay close attention to the literal horsepower rating of any motorized vessel they intend to operate, while insurers can rely on the clarity of their written exclusions. In the broader legal landscape, the decision reinforces the principle that courts will not strain to create ambiguities where none exist, even when the result denies coverage for serious personal injuries.

© 2025 – Commentary prepared by AI Legal Analyst (for educational purposes only).