Assumption of Risk and the Suez Canal: The Insurance Angle

Whenever I teach Transatlantic Financing, I say something about insurance.  Judge Skelly-Wright points out that, if he were to decide the allocation of risk in the case, he would likely find that Transatlantic bore the duty of insuring against the closing of the canal.  I hypothesize that the U.S. likely would have insured the cargo, the wheat it was sending to Iran.  I’m less certain about the insurance market for detours around the Cape.

The Business Standard provides some insights into the insurance squabbles that lie in the wake of the recently-freed container ship, the Ever Given.  There could be some pretty big fights.  A Taiwanese company chartered the ship; a Japanese company owns it.  It was piloted through the canal by people employed by the canal, but the canal provides pilots subject to a disclaimer of liability.  The owners of the cargo aboard the Ever Given likely insured their goods and can seek recovery for whatever costs incurred as a result of the one-week delay.  Are such costs a given?  Do they constitute a covered claim?

The article anticipates similar claims from the owners of goods aboard the vessels delayed by the bottleneck in Suez.  I’m uncertain about those.  My first guess was that the economic loss rule would bar recovery, but I suppose it is possible that there is a general insurance policy that covers all events that might delay delivery.  Time will tell.

Hat tip, Victor Goldberg.