Most insurance lawyers don’t see this type of coverage, but for those who do, here is a little information.
Ocean marine insurance insures overseas shipments by vessel or aircraft. Ocean marine coverage can also be provided on a vessel to insure against any loss or destruction to the boat, barge, or other vessel. This is explained some in the 1965, Southern District of Texas opinion styled, Gulf Coast Trawlers, Inc. v. Resolute Insurance Co.
Coverage on the vessel usually insures against “perils of the sea” or any “marine peril.” The sinking of a vessel that occurred due to an open valve in calm waters while the vessel was docked was not a “peril of the sea” according to the 1972, Southern District of Texas opinion styled, Commercial Union Insurance of New York v. Daniels. One court explained the phrase “perils of the sea” within marine policy includes “all kinds of marine casualties” involving the sea and are distinguished from the mere act of being on the sea. This case was the 1963, Southern District of Texas opinion styled, U.S. National Bank of Galveston v. Maryland National Insurance Co.
Cargo policies may be issued on either an “all risk” basis or for specific named perils. Under federal maritime law, an insured under an all risk cargo policy bears the burden of proof that the cargo loss first manifested itself during a period of time covered by a marine policy. This burden or proof requirement is discussed in the 1993 5th Circuit opinion styled, New Hampshire Insurance Co. v. Martech USA, Inc. An insured’s burden of proof cannot be satisfied by merely showing that the loss “more likely than not occurred within the policy period.” Because marine policies can and should be interpreted in accordance with principles of general maritime law, the case law from states or countries other than Texas may apply.
Most ocean marine policies contain an exclusion for losses caused by the “unseaworthiness” of the vessel. Under this exclusion, in order to be seaworthy the vessel and her equipment must be “reasonably fit for their intended purpose” and generally means the vessel is able “to withstand ordinary stress of wind, waves and other weather which the vessel might normally be expected to encounter. This language is from the 1979, Corpus Christi Court of Appeals opinion styled, Miles v. Royal Indemnity Co.
A 1965, Houston Court of Appeals opinion decided that damage to a yacht sustained when the insured’s automobile struck a bridge abutment causing the yacht to fall from the trailer did not result from any “marine peril” within a yacht policy.