A latest opinion in Atlantic Enterprise Company d/b/a ABO Prescribed drugs v. RLI Insurance coverage Firm 1 supplies a lesson that in property insurance coverage legislation, a single phrase might be the hinge between hundreds of thousands in protection and a complete denial of a declare.
The case arose from a cargo of blood plasma paste, a fragile and extremely temperature-sensitive cargo, bought by ABO Prescribed drugs from a fractionator in Mexico. Packed into fiber drums with some dry ice and “thermal blankets,” the plasma was meant to be flown by FedEx to New York after which onward to a South African purchaser. ABO insured the cargo underneath RLI’s Marine Open Cargo coverage.
Issues went fallacious virtually instantly. FedEx refused to load the pallets as packed as a result of the quantity of dry ice violated flight security rules. The cargo was repacked and finally flown out, however as soon as in Memphis, the plasma confronted one other hurdle brought on by a regulatory maintain by the FDA. That meant the plasma sat an additional twenty-four hours in FedEx’s facility.
The issue? The cargo had not been booked underneath FedEx’s “Temperature Managed Service.” It was booked as “Worldwide Precedence Freight,” which offered no obligation to watch or preserve temperature. By the point the product reached New York on June 18, it had exceeded allowable temperature thresholds. The plasma was declared spoiled and nugatory for its supposed use.
ABO promptly filed a declare underneath the RLI coverage, pointing to the endorsement that promised protection for deterioration or spoilage “from any trigger” throughout transit. To ABO, the protection was easy: the plasma spoiled in transit, so the coverage ought to pay.
RLI disagreed, citing three separate warranties: the Delay Guarantee, the Temperature Guarantee, and the Packing Guarantee. After months of investigation, RLI formally denied protection, and litigation ensued.
The district courtroom sided with RLI, and the Eleventh Circuit Courtroom of Appeals affirmed. The appellate opinion pressured that underneath Georgia contract legislation, when coverage phrases are clear and unambiguous, courts should implement them as written. “From any trigger” sounds sweeping, however it didn’t particularly discuss with, not to mention expressly assume, the danger of delay. The courtroom discovered that the Delay Guarantee was “paramount” and trumped the endorsement’s broader phrasing, seemingly indicating all causes of loss.
When studying the policyholder’s arguments for protection, ABO’s legal professionals pressed a number of inventive arguments. They recommended that the “threat” excluded by the Delay Guarantee was not delay itself however deterioration of cargo, with delay as merely a trigger. Additionally they leaned on testimony from Bennett Worldwide Transport, the freight forwarder, calling it RLI’s “approved agent” who allegedly anticipated delay losses to be lined.
The courtroom brushed these apart. The coverage’s phrases, not subjective expectations of the events nor post-loss recollections, ruled the contract evaluation.
That is true in relation to courtroom interpretation of coverage language. Perhaps RLI ought to warn its clients and those that select to cope with RLI that its commercials of broad protection could also be challenged by fine-print contract phrases limiting protection. That is what RLI advertises about its Marine Cargo Coverage:
RLI’s ocean cargo marine coverage presents safety for items shipped by water or air, safeguarding in opposition to bodily loss or harm. This protection begins on the warehouse of cargo, extends to the warehouse of vacation spot, and consists of all intermediate transit by rail or truck. It’s tailor-made to satisfy clients’ particular enterprise necessities and sometimes consists of protection for struggle threat, strikes and riot exposures, in addition to warehouse storage, home transit, exhibitions, and extra.
RLI ought to present examples of what it and its legal professionals will declare as not lined to be honest to potential clients. Perhaps this can be a good thought for all insurance coverage firms, however I’m not holding my breath that this may ever occur.
For claims professionals, the lesson is sensible. One should look at not solely what protection grants, but in addition what warranties and exclusions silently take away protection. For policyholders, it’s a warning to not assume that broad-sounding protection swallows exclusions and make sure you buy insurance coverage from firms actually offering broad grants of protection reasonably than shopping for on worth with insurance policies containing extra limitations.
Ultimately, ABO’s plasma sat spoiled and uninsured as a result of the phrase “from any trigger” was trumped by “delay means no protection.” Phrases matter in relation to insurance coverage contract interpretation.
Thought For The Day
“Phrases are, in fact, essentially the most highly effective drug utilized by mankind.”
—Rudyard Kipling
1 Atlantic Enterprise Corp. v. RLI Ins. Co., No. 24-13244, 2025 WL 2674583 (11th Cir. Sept. 18, 2025). (See additionally, ABO preliminary temporary, and RLI reply temporary)
