Opinion ID: 1402737
Heading Depth: 3
Heading Rank: 2

Heading: vessel pollution insurance as marine insurance

Text: We next address whether marine insurance includes vessel pollution insurance and this policy in particular. Marine insurance is, simply, insurance against the losses incident to the marine adventure. SCHOENBAUM § 17-1 (quoting the British Marine Insurance Act, Edw. 7, ch. 41 § 1); see also Dunham, 78 U.S. at 30. Marine insurance generally has three central conceptual elements: (1) it is a contract of indemnity against loss; (2) the indemnity . . . is only triggered by an accident or fortuity; and (3) the `adventure' or peril insured against must be specifically maritime in character. SCHOENBAUM § 17-2. One type of insurance typifying marine insurance is protection and indemnity (P & I) insurance, which insures the shipowner against claims by third parties. Id. P & I insurance historically included pollution liability, but the expansion of such liability by modern statutes led many P & I insurers to exclude coverage for pollution damages and the Coast Guard to demand more insurance than P & I policies can provide. 9A COUCH ON INSURANCE 3D § 137:101 (Lee R. Russ & Thomas F. Segalla eds., 2005) (1995); Robert T. Lemon, Allocation of Marine Risks: An Overview of the Marine Insurance Package, 81 TUL. L. REV. 1467, 1486 (2007). Vessel pollution policies mirror P & I policies in their general terms, but cover liability under the OPA and other environmental statutes. Id. at 1486-87. That vessel pollution insurance covers new statutory liabilities, occasioned by modern environmental legislation, does not alter the fact that the risks of incurring that liability stem from the same vagaries of marine life that have shaped maritime insurance law for centuries. Like traditional P & I insurance, vessel pollution insurance, or at least the policy in this case, covers vessel owners' liabilities to third parties for marine incidents, namely pollution. Finally, it bears noting that vessel pollution insurance fits well within the general conception of marine insurance, as it is a contract of indemnity triggered by an event that is maritime in character. The policy language in this case best illustrates the maritime nature of the coverage. Coverage under the policy extends to [l]iability . . . [under the OPA, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), and similar statutes] for a discharge of oil . . . into or upon the navigable waters or adjoining shorelines . . . of the United States, provided that the discharge, substantial threat of discharge, or release . . . was [among other requirements] sudden and was unintended and unexpected by the Assured. . . . Inlet attempts to distinguish vessel pollution insurance from marine insurance by reference to Port of Portland v. WQIS, 796 F.2d 1188 (9th Cir.1986). That case dealt with whether a policy offering coverage tailored to liabilities created by the Federal Water Pollution Control Act (FWPCA), 33 U.S.C. §§ 1251-1376 (1982), qualified as wet marine or general marine insurance under an Oregon statute. Port of Portland, 796 F.2d at 1191, 1195-96. Although the categories overlap, generally speaking, wet marine insurance relates to marine vessels, whereas general marine insurance, as defined in the statute and despite its name, covers losses associated with transportation generally, whether over land or water. Id. at 1196; see also OR. REV. STAT. § 731.194 (1985); OR. REV. STAT. § 731.174 (1985). Inlet's argument fails for two reasons. Significantly, our case does not concern the statutory classification of vessel pollution insurance under state law. Rather, the issue here is whether vessel pollution insurance falls within the boundaries of marine insurance in federal admiralty law, a question not resolved by reference to a state statutory scheme. Second, the policy Inlet purchased is very different from the one at issue in Port of Portland, where we made a point of distinguishing the specific policy from traditional P & I insurance, noting that [t]raditional P & I policies cover oil pollution damage to third persons. [This] policy contains that coverage but the Port did not purchase it. Port of Portland, 796 F.2d at 1196, n. 4. That distinction is not, of course, an issue in Inlet's coverage. For purposes of applying uberrimae fidei, we hold that the vessel pollution insurance policy issued to Inlet is appropriately characterized as marine insurance.