Marine Insurance Coverage—The Uberrimae Fidei Defense and Reliance as a Necessary Factor

On August 20, 2015, the U.S. Court of Appeals for the Eighth Circuit ruled that demonstrating reliance is required to void a marine insurance policy under the uberrimae fidei defense. In doing so, the court reversed the United States District Court for the District of Minnesota-Minneapolis’ summary judgment award in favor of the marine insurer, St. Paul Fire & Marine Insurance Company (“SPF&M”), being able to void a marine insurance policy under the uberrimae fidei defense. St. Paul. Fire & Marine Ins. Co. v. Abhe & Svoboda, Inc., 798 F.3d 715, 2015 U.S. App. LEXIS 14671 (8th Cir. Aug. 20, 2015). In this case, Abhe & Svoboda, Inc. (“Abhe”), an industrial painting contractor, leased a “dumb” barge, used as a stationary platform, to complete work on a bridge in Rhode Island. Abhe was required by the leasing company to have a professional surveyor assess the barge’s condition. A surveyor required by the barge leasing company indicated the existence of pinholes in the deck and that the barge’s under-deck tanks were not watertight from one another. After the survey, Abhe anchored the barge, loaded equipment, and began the several month project. Also, Abhe applied for and obtained a marine policy from SPF&M. Instead of SPF&M requesting that Abhe complete an application for insurance, it accepted an application Abhe had used for a different insurance application from May 2010. Abhe did not send SPF&M a copy of the barge’s survey, and SPF&M did not survey any of Abhe’s marine equipment, although it was entitled to do so under the marine insurance policy.