Marine Insurance

The following are digests and case links to Circuit Court Admiralty
Cases that have as an issue marine insurance:

Underwriters at Lloyd's v. Labarca

First Circuit Court of Appeals
August 2, 2001

Marine Insurance: Since the vessel was unseaworthy at the time

she sank (because hoses that supplied sea water to air
conditioning units were left unsealed after repair work) and this
unseaworthy condition was the cause of the sinking, the
underwriters were relieved of any obligation under the hull
insurance policy.

Uffner v. La Reunion Francaise

First Circuit Court of Appeals
March 26, 2001

Procedure/Marine Insurance: In a suit based on diversity

jurisdiction against an insurance company to recover for losses
resulting from a vessel casualty, the place where that loss
occurred is "substantial" for venue purposes under 28 U.S.C.
1391(a), which provides that venue is appropriate in "a judicial
district in which a substantial part of the events or omissions
giving rise to the claim occurred," thus venue was proper in
Puerto Rico where plaintiff's sailing yacht sank.

New York Marine & General Insurance Co. v. Tradeline

Second Circuit Court of Appeals
September 28, 2001
Marine Insurance: The policyholder and cargo seller had been
authorized by the cargo underwriter to issue certificates of
insurance to its customers under an open cargo policy, thus it
acted as the underwriter's agent in issuing the certificates. The
prediction of severe rainy weather at the discharge port was a
material fact that would have affected the underwriter's decision
whether to issue extended coverage under the policy for rainwater
damage and thus had to be disclosed under the doctrine of
uberrimae fidae. The buyer's disclosure of that weather prediction
to the policyholder/cargo seller (but not to the underwriter) before
coverage was extended was sufficient since the policy
holder/cargo seller was the underwriter's agent, thus the extended
coverage was not void based on the doctrine of uberrimaefidae.
Damages: The buyer could not recover under the extended
coverage for cargo that had been deposited from lightering
barges onto the shore area and was washed away as a result of
rising tides and tidal waves and for other cargo that was damaged
by the cyclone on shore because coverage terminated once the
cargo had been delivered to "any other warehouse of place of
storage" and was no longer in the "ordinary course of transit."
Clause 12 of the Institute Cargo Clauses (C)did not cover the
extra charges incurred in unloading, storing and forwarding the
cargo to its destination since this resulted from the closing of the
discharge port, which was not a risk covered under the policy.
The district court properly refused to award attorneys' fees to the
assureds because the underwriter did not act in bad faith in
denying the claim or in instituting the declaratory action. The
district court did not abuse its broad discretion with respect to
prejudgment interest by applying the United States Treasury Bill
rate, rather than the 17% rate urged by cargo interests.
Centennial Insurance v. Lithotech Sales
Third Circuit Court of Appeals
February 26, 2002

Marine Insurance: Under Wilburn Boat Co. v. Fireman's Fund

Ins. Co., 348 U.S. 310 (1955), New Jersey law governs the open
cargo policy, which was drafted, signed, and delivered between
New Jersey corporations within New Jersey. In New Jersey, the
terms of an insurance policy, absent ambiguity, should be given
"their plain ordinary meaning." The clause at issue, which
provided coverage for damages resulting from the issuance of
fraudulent bills of lading, was clear and unambiguous, and, since
there are no facts which even suggest that the bill of lading was
fraudulent or that its acceptance caused the harm, plaintiff failed
to articulate facts sufficient to invoke coverage under the the
clause.

Fernandez v. Haynie
Fourth Circuit Court of Appeals
March 25, 2002

Marine Insurance/Admiralty Jurisdiction: A fishing vessel

owner's contract claim against its broker for failure to place his
insurance with an "A" rated domestic insurer was within the
court's admiralty jurisdiction.

Norfolk Shipbuilding & Drydock Co. v. Seabulk Marine

Fifth Circuit Court of Appeals
November 26, 2001

Marine Insurance: The "General Third Party Liabilities" clause of

builder's risk policy did not cover claims between the two principal
assureds under the policy and the cross liabilities clause of the
policy did not transform them into third-party claims, thus the
underwriter was not responsible for the defense costs in a suit
between the principal assureds arising out of a dispute related to
the construction of a ship.

Adams v. Unione Mediterranea di Sicurta

Fifth Circuit Court of Appeals
August 14, 2000

Salvage: The law of salvage, rather than the law of finds, is

applicable absent clear and convincing evidence that the owner of
the sunken steel cargo made an express declaration abandoning
title, thus where owner had not expressly abandoned cargo, but
had assigned rights in the cargo to its underwriters, the
underwriters retained title to the sunken steel cargo. Since the
steel cargo had not been abandoned, the salvors through their
salvage efforts did not become owners of the cargo and by selling
the cargo were liable for negligent conversion. Salvors were,
however, entitled to an offset for a salvage award since they had
not acted in bad faith in salvaging the cargo. Marine Insurance:
The negligent conversion was not an "accident" and thus the
salvors' liability was not covered under the relevant general
liability policy.

M/G Transporter Services v. Water Quality Insurance

Syndicate
Sixth Circuit Court of Appeals
December 12, 2000

Marine Insurance: The underwriter had no obligation to defend

or indemnify the assured for liability arising from claims against it
under the False Claims Act (FCA) since the underlying complaint
simply did not assert a Clean Water Act violation and because the
policy excluded intentional conduct, which had been pleaded in
connection with the FCA violations.

Assicurazioni Generali v. Black & Veatch

Eighth Circuit Court of Appeals
March 26, 2004

Marine Insurance: On July 20, 2000, a ship carrying the

assureds' plant construction components departed Japan for the
United States. No survey was conducted at loading. On July 24,
2000, the ship was caught in a typhoon, which caused severe
damage to most of the components on board. The manufacturer
replaced the damaged components at no cost, but they did not
arrive until approximately six months after the originally scheduled
delivery date. This delay resulted in additional costs of $38 million
for the assureds. Marine cargo underwriters sought judgment
declaring no coverage because of a failure to comply with the
policy' s survey requirement. The district court properly found that
no survey was required and that the claim was covered under the
policy's consequential loss provision. The policy failed to list the
critical items that were subject to the survey requirement, nor
were they properly added by a subsequent endorsement that
lacked consideration.

Yu v. Albany Insurance Co.

Ninth Circuit Court of Appeals
February 7, 2002

Marine Insurance: Since the assured owner did not notify the
underwriter before the vessel' s captain was replaced, thus
breaching the hull policy's "Captain Warranty" (which provided
that the policy would be suspended when the vessel's captain
was replaced unless the underwriter had approved the new
captain in advance), the owner's claim under the policy for the
total loss of the fishing vessel due to sinking was properly denied.

La Reunion Francaise v. Barnes

Ninth Circuit Court of Appeals
May 3, 2001

Marine Insurance/Admiralty Jurisdiction: A federal court has

admiralty jurisdiction over a marine insurance policy that, besides
covering damage to a boat while on the water, requires the
policyholder to store his boat on land for half the year, insures
against theft while on land, and limits navigation of the boat to
inland waters of California.

Pacific Fisheries v. HIH Casualty & General Insurance

Ninth Circuit Court of Appeals
February 9, 2001

Marine Insurance: Under California law, a breach of even an

immaterial warranty will void a policy where the policy expressly
declares that it shall avoid it, thus the vessel's P & I and Hull
policies were void since the vessel was in breach of the policies'
trading warranties at the time of the losses, although the losses
were not caused by such breach; Jury Trials: The district court
correctly denied plaintiff's untimely demand for a jury trial
pursuant to Federal Rule of Civil Procedure 39(b).
Quigg Brothers-Schermer Inc. v. Commercial Union
Ninth Circuit Court of Appeals
September 5, 2000

Marine Insurance: A barge owner's expenses in recovering

construction barges that had broken away from their moorings
during a storm qualified as sue and labor, which were excluded
from the owner's P & I policy as expenses recoverable under hull
insurance, thus there was no coverage under the P & I policy for
such expenses.

Commercial Union Insurance v. Sea Harvest Seafood Co.

Tenth Circuit Court of Appeals
June 11, 2001

Marine Insurance/Admiralty Jurisdiction: A claim under an

open marine cargo insurance policy covering a shipment of frozen
shrimp from Bangkok, Thailand to Philadelphia via California and
Chicago was within the court's admiralty jurisdiction although the
loss did occur during the Chicago to Philadelphia overland portion
of the shipment. The cargo owner's claim of loss under the policy
was properly denied by the district court under admiralty law since
the loss resulted from a failure to attach a generator to the
refrigerated container, which was not a loss due to "derangement
or breakdown of the refrigerating machinery," as the term is used
in marine insurance policies.

Transamerica Leasing v. Institute of London Underwriters

Eleventh Circuit Court of Appeals
October 4, 2001
Marine Insurance: Based on the facts, the jury, not the district
court on a motion for summary judgment, must determine whether
Transamerica is an additional assured, a loss payee, or both. If
the jury finds that Transamerica is an additional assured, or both
an additional assured and a loss payee, then the primary
assured's alleged non-disclosure does not affect Transamerica's
coverage because the Policy is severable. If the jury finds that
Transamerica is merely a loss payee, then the jury must decide
whether the primary assured's alleged non-disclosure violates the
doctrine of uberrimae fidei, thus voiding the Policy altogether.

Fireman's Fund Insurance v. Tropical Shipping

Eleventh Circuit Court of Appeals
June 19, 2001

Carriage of Goods by Sea Act ("COGSA"): To invoke COGSA's

package limitation, the carrier must satisfy two preconditions: first,
the carrier must give the shipper adequate notice of the
$500 limitation by including a "clause paramount" in the bill of
lading that expressly adopts the provisions of COGSA; and
second, the carrier must give the shipper a fair opportunity to
avoid COGSA section 4(5)'s limitation by declaring excess value.
Since the bill of lading provided sufficient notice of the limitation of
liability and provided an opportunity to declare excess value,
COGSA's package limitation applied to the shipment. The district
court correctly defined a mobile television stage as the relevant
COGSA package and applied the $500 package limitation to a
claim for its total destruction since the bill of lading legibly and
clearly described the stage as "one unit" or "package" and the
shipper did not declare the value of the stage on the bill of lading.
Marine Insurance: Florida law applies in resolving the inusurers
"other insurance" dispute. When two insurance policies contain
"other insurance" clauses, the clauses are deemed mutually
repugnant and both insurers share the loss on a pro rata basis in
accordance with their policy limits.

HIH Marine Services, Inc. v. Fraser

Eleventh Circuit Court of Appeals
May 19, 2000

Marine Insurance: Under the doctrine of uberrimae fidei, a

material misrepresentation on an application for marine insurance
is grounds for voiding the policy. The insured's misrepresentation
that the insured yacht was in its custody pursuant to a charter
party was considered material since it might have had a bearing
on the risk to be assumed by the insurer, thus the policy was void
and the insurer had no obligation to pay a total loss claim. Choice
of Law: American and Jamaican law on this marine insurance
issue are largely congruent, thus the district court's decision to
apply American law will not be addressed.