The contract of marine insurance represents one of the characteristic stereotypes of maritime contracts. This paper will explore the analytical components and anomalies of admiralty jurisdiction as it relates to marine insurance and will conjugate, if you will, the “irregular verb” that constitutes admiralty jurisdiction of marine insurance contracts.
Causation in marine insurance is both pervasive and perverse. It is pervasive in that the cause of a particular loss must be assessed in connection with every corresponding claim under a marine insurance policy to determine whether it is a covered risk; it is perverse in that it stubbornly resists rational analysis and hence the articulation of generally applicable principles. A consequence of causation's dual personality is the occurrence of disputes between underwriters and their insureds about the answer to a deceptively simple question: What was the cause of the loss? Some of these disputes become the subject of litigation and must be resolved by the courts. Because the event immediately preceding a loss is itself preceded, in the metaphysical sense, by innumerable other events extending back to the beginning of time, the law has required a method of dispute resolution that both limits in a rational way the spectrum of events that may be considered and facilitates the selection of certain events as relevant to the contract of insurance and thus determinative of coverage. The doctrine of proximate cause developed in response to these needs.
Practitioners who resort to reported cases, texts, and articles for guidance in resolving a particular proximate cause issue will find that surfeit, not scarcity, is the burden of their research. While these resources are of value to the extent that they provide a framework for analysis, they are unlikely, given the infinite factual variations possible from case to case, to provide a complete answer. Ultimately, therefore, the practitioner must rely on a thorough analysis of the events leading to the loss in question and the best judgment possible concerning which of those events is properly labeled as the proximate cause of the loss.
The purpose of this paper is to provide some background and a few tools to facilitate thinking about proximate cause issues. We begin with a hypothetical to illustrate how proximate cause issues arise, then briefly discuss choice of law, proceed to consider whether proximate cause is a question of fact or law, and, finally, turn to a review of some of the substantive problems involved in the determination of proximate cause.
The diversity of remedies relating to the breach of the duty of good faith represents a real challenge to the uniformity of maritime law. This paper reviews judicial decisions that focus on bad faith in the claims handling stage. First, however, the current rules controlling uniformity (or, more accurately, dictating lack of uniformity) in the interpretation of marine insurance policies will be reviewed. Second, focus will shift to the diversity of state remedies available. This diversity will be illustrated by identifying representative issues and comparing their treatment under Texas law to their treatment under the laws of California, New York, Louisiana, and other jurisdictions in which the subject matter is particularly well developed. Lastly, the question of whether maritime law should treat bad faith claims uniformly will be raised and answered.
Marine insurance encompasses many diverse risks within its basic classes of coverage. These include hull, cargo, freight, and marine liabilities. This Article will focus on the subject of cargo insurance and will explore issues concerning some of the clauses contained in typical cargo policies, courts' interpretation of the coverage provided thereunder, and various elements necessary to obtain a recovery under a cargo policy.
The title of this Paper, Coverage, Warranties, Concealment, Disclosure, Exclusions, Misrepresentations, and Bad Faith, sounds like a catalogue of the Seven Deadly Sins or something out of a Cold War spy novel. To those in the insurance industry and its supporting legal services these simple words spell “trouble.” Before looking at what form this trouble takes and what it means in the United Kingdom and the United States, some historical background is appropriate.
The Wilburn Boat decision has not had a significant impact on admiralty law in the United States. The need for uniformity in admiralty law, and the desire for harmony between the laws of the United States and England in the interpretation of marine insurance policies, therefore, remain persuasive and viable goals.
This Article examines the conflict of interest issues that frequently arise in the insurance defense practice. Upon examination it becomes clear that these issues are neither as complex nor as difficult to resolve as they appear. The source of much of the confusion in liability insurance litigation is the “dual-client” doctrine, namely, the increasingly well-entrenched rule that the insurance defense counsel is deemed to have two clients in any given case: the insurer and the insured.
Marine insurance contracts have traditionally been interpreted according to well-established contract principles. The construction of policies is said to be governed by the same principles that apply to the construction of any other contracts. Phrases such as the “intention of the parties must be discovered from the document itself,” or words to that effect, still dominate the literature on marine insurance contracts. It is the document itself, not what the parties might have intended to write, that is important. Even in considering the most common exception to this rule, usage, evidence is only admitted to demonstrate the mutual intent of the parties to the contract. This Paper examines the changing judicial attitudes toward the interpretation of insurance contracts. In particular, consideration is given to the doctrine known in the United States as “the reasonable expectations of the assured.” This doctrine has been adopted in Canada in a limited fashion to assist judges in reaching conclusions favorable to an assured. It has not yet been applied to the construction of marine insurance contracts. This paper considers such application.
It is impossible to come away from a study of the doctrine of reasonable expectations without being struck by its incongruity with traditional principles of contract interpretation. This doctrine's approach to construction is based entirely on the “expectations” of one of the parties to the contract. Stripped down to its bare bones, the doctrine represents an individual judge's view of what is fair in the circumstances of a particular case. This paper also explores the extent to which the judiciary, in its desire both to create and to apply rules to guide future conduct, has given birth to a rule that, when applied to its full extent, is the antithesis of the traditional principles of contract construction. One is forced to ask whether judicial models of contract interpretation have changed so radically that the traditional rules are at risk of being discarded. The effect of the dissolution of traditional rule-based analysis in favor of the “reasonableness” approach is another focus of this Paper. As part of its focus, this Paper also explores whether a rule-based analysis may be subject to re-evaluation by the increasing number of women in the legal profession and the judiciary.
Finally, the implications that these developments may have on the future construction of marine insurance contracts are considered. An attempt is made to provide the reader with some idea of the manner in which these developments may affect the outcome of litigation involving marine insurance policies.
The title of this paper, “Varieties, Combinations, and Coverages,” embraces virtually every significant development in marine insurance that has marked its evolution into the sophisticated industry that it is today. To aid those who must transit these sometimes difficult waters, this Article has been prepared with three primary objectives in mind. The first is to serve as a primer, informing the reader of the basic types of marine insurance coverages and explaning the more salient features of each. One coverage that is a relatively new source of indemnity to the maritime industry is the comprehensive general liability (CGL) policy. The second objective of this Article is to illuminate the significance of the CGL policy to the marine insurance business as defined by its experience in our courts.
A sophisticated insured's insurance portfolio will include a broad array of coverages designed to accommodate most foreseeable business risks. Modern coverages disputes frequently spill beyond the confines of a single policy and involve difficult considerations posed by multilayered excess and umbrella coverages and other diverse considerations. This Article seeks, as its third goal, to examine these multilayered disputes. The purpose is to provide basic guidance for those whose professional interests bring them into contact with these daunting issues.