(Article from Insurance Law Alert, February 2021)
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A New York federal district court ruled that a shipping company failed to establish material terms of a policy for which it located only three endorsements and therefore that coverage was unavailable. Cosmopolitan Shipping Co., Inc. v. Continental Ins. Co., 2021 WL 229661 (S.D.N.Y. Jan. 22, 2021).
Former seamen filed lawsuits against ship owners and operators, including Cosmopolitan, alleging injury caused by asbestos exposure. Cosmopolitan settled the suits and sought coverage from Continental under a Protection & Indemnity policy known as Policy C-4893. After conducting an evidentiary hearing, the court concluded that at least some of the seamen were covered by the policy, but that Cosmopolitan did not meet its burden of establishing all material terms of the policy.
The court noted that New York law is unclear as to whether the standard of proof for the existence and terms of a lost policy is preponderance of the evidence or clear and convincing evidence. Declining to resolve that uncertainty, the court held that Cosmopolitan failed to meet either standard of proof. While the record established that Continental Policy C-4893 covered at least some of the asbestos plaintiffs who worked on Cosmopolitan’s vessels, the court ruled that Cosmopolitan failed to show the material terms of the policy, most notably the per-occurrence or per-vessel limits of coverage. The court rejected Cosmopolitan’s assertion that two forms of insurance policies, submitted as examples of maritime policies issued around the coverage period, sufficiently reflected the terms of Policy C-4893. The court explained that the two sample polices were not consistent in several material terms, including policy limit, time limitation, and premium. In addition, the record did not establish that either comparator policy had any direct connection to Policy C-4893. Finally, the court emphasized that Policy C-4893 was neither a renewal policy nor a “boilerplate” policy—situations in which material terms could arguably be inferred. As such, the court ruled that the policy was unenforceable.