Author: Stephen M. Calder, Robert T. Lemon, II
Date: July 1, 2001
MARINE INSURANCE AND GENERAL AVERAGE
STEPHEN M. CALDER
ROBERT T. LEMON, II
LIMIT OF AMOUNT INSURED:
ANY ONE ACCIDENT OR OCCURRENCE
Liability hereunder in respect of any one accident or
occurrence is limited to the amount hereby insured.
Pursuant to charterer's instructions to load only cargo for which clean bills of
lading could be issued, vessel master refused to load contaminated cargo, and charterer
sought coverage for its resulting losses and arbitration expenses under marine policy that
covered an"accident involving the vessel;" held, charterer's losses did not result from an
"accident" because charterer had prior knowledge that cargo was contaminated. Continental
Grain Co. v. Fireman's Fund Ins. Co, 1997 U.S. Dist, LEXIS 2005,1997 A.M.C. 2663
The issue of what constitutes "one accident or occurrence" typically arises in
one of three situations: (1) when injury or loss is suffered by several victims; (2) when
damage or loss occurs to several items of property owned by the same party; and (3) when
several acts of the same nature each cause damage to a party or his property. See generally
Annot., "Liability Policy - Each Accident," 64 A.L.R. 4th 668 (1988); Parks, 2 The Law and
Practice of Marine Insurance and Average 1025 (Cornell Maritime Press, 1987).
Where P&I insurer agreed to settle plaintiffs death claims against its insured
for "maximum coverage under the policy," the P&I insurer's liability is the policy's maximum
limit less the reasonable attorney's fees and expenses incurred by the underwriter in
defending the action. Darville v. Rahming Shipping Ltd., 1988 AMC 1782 (S.D. Fla. 1987)
Louisiana Direct Action Statute recognizes the validity of "policy limits"
contained in P&I policy; Louisiana Direct Action Statute limits the amount that third-party
claimants can recover from insurers to amounts which the insurer is liable "within the terms
and limits of the policy," citing L.R.S. §22:655. Albany Ins, Co. v. Bengal Marine, Inc., 857
F.2d 250, 256 (5th Cir. 1988).
P&I underwriter which had agreed to insure 60% part of shipowner's 100%
coverage up to $500,000.00 limit is liable only for 60% of assured's settlement of personal
injury claim. Under Louisiana law in solido liability doctrine, underwriter has not
responsibility for the remaining 40% share of the risk when the separate underwriter covering
that share became insolvent. The P&I policy, in which underwriter limits its total exposure
to "60% p/o 100%," limited underwriters liability to 60% of each claim regardless of amount
of claim. P&I underwriter which limited its liability to 60% of any claim was not liable in
solido with underwriter which was responsible for the other 40% of claim. P&I underwriter
is only liable up to the amount of its policy limit. American Marine Underwriters, Inc. v.
Holloway, 826 F.2d 1454 (5th Cir. 1987).
II. INJURY TO OR LOSS OF SEVERAL VICTIMS
Where the grounding of a tugboat and subsequent salvage operations destroyed
oyster beds, the claim of each lessee of the oyster beds constituted a separate occurrence
under a protection and indemnity policy providing coverage "in respect of any one accident
or occurrence." Tesvich v. 3-A's Towing Co., 547 So. 2d 1106 (La. App. 4th Cir. 1989), cert.
denied, 552 So. 2d 383 and 552 So. 2d 384.
Where a protection and indemnity policy provided coverage "in respect of loss,
damage, costs, fees, expenses or claims arising out of or in consequence of any one
occurrence," and stated that "a series of claims hereunder arising from the same occurrence
shall be treated as due to that occurrence," five deaths resulting from the capsizing of a utility
vessel were held to be a single occurrence. Albany Ins. Co. v. Blain, 1987 A.M.C. 1469 (N.D.
Cal, 1987) (applying California law).
Under a policy that provided $300,000 coverage for a ferry as to "claims
arising out of or in consequence of any one occurrence, " the insurer's liability as to a
collision between the ferry and a tanker was limited to $300,000 for all claims arising out of
the collision. While the policy covered "such sums as the assured ... shall have become
legally obligated to pay and shall have paid on account of - costs and expenses ... of
investigating and/or defending" claims, the expenses incurred by the insurer in defending
claimants' direct action against the insurer and prosecuting an interpleader action were not
included in the $300,000 limits. McKeithen v. S.S. Frosta, 430 F.Supp. 899 (E.D. La. 1977).
In a declaratory judgment action to determine coverage for asbestos claims, the
assured was held obligated to pay, as to each vessel insured under the policy, a single
deductible for all claims arising out of the presence of asbestos on board that vessel. Skinner
Corp. v. Fireman's Fund Ins. Co., 1996 U.S.Dist.LEXIS 9321, 1996 AMC 15 17 (W.D.
Wash. 1996) (applying Washington law).
III. INJURY TO OR LOSS OF SEVERAL ITEMS OF PROPERTY
Where leased cargo containers were abandoned by a lessee carrier upon
carrier's insolvency, the occurrence of the bankruptcy was held not to constitute a triggering
incident for purposes of clause applying policy limits to losses from "any one vessel or by
any one usual connecting conveyance or at any one place at any one time. " The court
reserved its decision as to the proper application of the $10,000 deductible for each
occurrence. Interpool Ltd. v. U.S. Fire Ins. Co, 553 F. Supp. 385 (S.D.N.Y. 1983).
IV. SEVERAL ACTIONS OF THE SAME NATURE
Where a stevedore's grab buckets inflicted multiple holes and dents in a vessel's
tanktops by repeated contact during discharge operations, the entire incident was deemed to
be one accident subject to a single application of the $10,000 deductible. Michaels v. Mutual
Marine Office, Inc., 472 F.Supp. 26 (S.D.N.Y. 1979) (applying New York law).