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Scraping the Bottom of the Baggage Exclusion |
| A dispute over policy language wound up in a Texas federal court in a claim where the insured was retained by a consortium of oil companies to inspect an under-seas petroleum pipeline in the Gulf of Mexico following Hurricane Ivan. Using a remotely controlled underwater vehicle known as an ROV, the insured followed the pipeline and came across a large object that turned out to be an old shipwreck. The ROV damaged some small items on the wreck and the insured pulled some artifacts from the wreck aboard their vessel. Most of these items were tossed back into the Gulf.
The oil companies had obtained their right-of-way on the sea floor from the U.S. Department of Interior Minerals Management Service. When the government found out about the encounter with the shipwreck it threatened to sue the insured inspection service for civil and criminal liability for disturbing a protected archeological site. The insured had two policies, a primary form covering its "special operations" and an excess policy that had an exclusion for valuable or rare objects that were "baggage, or baggage-like" that might be encountered for the first time in open water.
When the insured agreed with the government to pay $4.87 million to Texas A&M University as a settlement of the claim, the primary insurer agreed to pay their $1 million limit. The excess insurer, however, argued that the loss was not "property damage" within the intent of the coverage, and also cited the exclusion, denying payment.
The insured sued in federal court, arguing that the excess insurer should "follow form" with the primary insurer. The court sided with the excess insurer, noting that while reinsurance may follow form, excess insurance does not necessarily do so. Further, the excess insurer argued, there was no demonstrable proprietary interest or "property rights" in terms of property damage aspects of the coverage as no one held title to the artifacts. On this point the court sided with the insured, finding that the government did have a legal interest in the wreck. The court then addressed the baggage exclusion, disagreeing with the excess insurer, and finding that what it was intended to exclude was baggage, and effects that might be damaged by marine risks. The antiquities in this case did not qualify as baggage.
Figuring out the nuances of each claim is the combination of art, craft and science taught in all the courses at Crawford Educational Services (CES). For complete course listings, visit our website. |
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This is a one-week intense program targeting the experienced commercial property adjuster to upgrade their knowledge base on the challenge of handling business interruption losses
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Basic Casualty
April 27-May 1
This course combines
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Take Note! is a marketing tool of Crawford Educational Services, the training division of Crawford & Company. The contents and any referenced external materials are not intended to and should not be construed as legal or other professional advice, nor is such information intended to be nor should it be used as a substitute for legal or professional counsel. These materials merely convey general information about claims and claims related situations often encountered by claims professionals. While an effort is made to be accurate, Crawford & Company does not represent, warrant, promise, or imply that this information is current, accurate, thorough, or adequate.
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