Matson Navigation Company v. Underwriters at Lloyd’s London
For years, insurers who issued the maritime equivalent of CGL policies — protection and indemnity or “P&I” policies — have refused to reimburse their insureds for “all sums” when a continuing covered loss was suffered. They agreed among themselves that each would instead only pay to any insured its own “allocable share” of any loss, rather than “all such losses” (the P&I equivalent of the CGL policies’ “all sums” language) as promised in the policies. This forced the insured — as regards any single loss – – to simultaneously pursue many separate claims against a multitude of different insurers, each of which would apply a separate deductible. This sometimes made it impractical to pursue coverage at all.
The recent victory occurred when, in a lengthy and persuasive written opinion, a court in San Francisco held — in a matter of “first impression” (never before decided) — that there is no basis for distinguishing P&I policies from CGL policies in this regard. That is, the selected P&I insurer — like a CGL insurer — must reimburse the insured for its entire continuing loss (up to policy limits), not just an allocable portion of that loss. This victory has established an important precedent for the shipping company and other insureds under maritime liability policies.