Are We Back To The Pre-Wilburn Boat Era And The Almost Uniform Application Of General Maritime Law In The Marine Insurance Business? The Supreme Court Has Made It Clear That Wilburn Boat Should Be Limited To Inherently Local Disputes

Because most significant risks of marine loss or liability are insured, insurance law underpins a substantial portion of marine litigation.¹ It is therefore critical for maritime practitioners to understand this area of law, particularly the effects of Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310 (1955), and Great Lakes Insurance SE v. Raiders Retreat Realty Co, LLC, 601 U.S. 65 (2024).

For almost 150 years before Wilburn Boat, it was well established that marine-insurance disputes fell within admiralty jurisdiction and that courts applied general maritime law in such disputes as a result.² The United States Supreme Court and other American courts had frequently emphasized the desirability of uniformity in decisions involving the interpretation and enforcement of marine insurance contracts.³ Classic examples of uniform rules existed with respect to the doctrine of uberrimae fidei (utmost good faith) and express warranties.

For instance, prior to Wilburn Boat, and still today, an applicant for marine insurance had a duty to voluntarily disclose all facts material to the underwriter's judgment to issue a policy even if not asked. The reason for this requirement is because "the underwriter often has no practicable means of checking on either the accuracy or the sufficiency of the facts" that the insured furnishes to the insurer before the insurer accepts the risk and sets the policy's conditions and premiums.⁴ With the exception of the United States Court of Appeals for the Fifth Circuit,⁵ this duty had been recognized as part of federal admiralty law since the Supreme Court's opinion in McLanahan v. Universal Ins. Co., 26 U.S. 170, 1998 AMC 285, 295-96 (1828), and later in Sun Mutual Ins. Co., v. Ocean Insurance, 107 U.S. 485 (1882).⁶

Another example of uniformity is the "strict breach of warranty," "literal performance," or "literal compliance" rule, which applied to all express warranties in a marine contract and provided for an automatic discharge as a consequence of a breach of warranty regardless of causation. Indeed, the Supreme Court had referenced a rule of strict compliance with marine warranties since the early 1800s.⁷

Insurance carriers often face claims for the loss of cargo due to deviation. Deviation from the contract of carriage between a shipper and carrier is defined as "any variation in the conduct of a ship in the carriage of goods whereby the risk incident to the shipment will be increased."⁸ Deviation is also considered an entrenched rule, and a majority of courts have uniformly held that an unreasonable deviation abrogates the cargo contract, thereby depriving the carrier of the benefits of the $500-per-package limitation of liability contained in the Carriage of Goods by Sea Act (COGSA).⁹

Wilburn Boat disrupted uniformity in admiralty law and represented a departure from the approach that animated earlier cases involving marine insurance.¹⁰

The Wilburn Boat Decision

In Wilburn Boat, three merchants (Glenn, Frank, and Henry Wilburn) bought a small houseboat to use for commercial carriage of passengers on an artificial lake between Texas and Oklahoma.¹¹ Fireman Fund Insurance Company (Fireman) issued a policy insuring the houseboat against loss from fire and other perils. The policy contained two particular warranties – one providing that the boat could not be sold or otherwise transferred, and another providing that the boat could be used only for private pleasure purposes. The Wilburns then transferred the boat to their wholly owned corporation, the Wilburn Boat Company. While moored on the lake, the boat was destroyed by fire. In an action brought by the Wilburns and their company, Fireman denied liability because of breaches of the two warranties. The Wilburns, on the other hand, argued that Are We Back to the Pre–Wilburn Boat Era and the Almost Uniform Application of General Maritime Law in the Marine Insurance Business? The Supreme Court Has Made It Clear That Wilburn Boat Should Be Limited to Inherently Local Disputes By: Gustavo A. Martinez Tristani, J.D., LLM in Admiralty and Maritime Law 23 Benedict's Maritime Bulletin 144 Fourth Quarter 2025 the statutory law of Texas should apply and claimed that under Texas law a breach of warranty was not a policy defense unless it contributed to the loss. The District Court entered judgment for Fireman, concluding that there was an established admiralty rule that required literal fulfillment of every policy warranty and that the Wilburns' breach barred recovery even though their breach did not cause the loss. The United States Court of Appeals for the Fifth Circuit affirmed.

The Supreme Court granted certiorari to determine whether there was a judicially established federal admiralty rule that governed these warranties and, if not, whether it should fashion one. It answered both questions in the negative. It first concluded that "[w] hatever the origin of the 'literal performance' rule may be, we think it plain that it has not been judicially established as part of the body of federal admiralty law in this country." It then expressed that "[t]he whole judicial and legislative history of insurance regulation in the United States warns us against the judicial creation of admiralty rules to govern marine policy terms and warranties." The Court concluded that the so‑called literal performance rule had not been firmly established as federal admiralty law and emphasized that insurance regulation historically belonged to the states. It therefore declined to create a new admiralty rule and held that regulation of marine insurance remained with the states.

On remand in Wilburn Boat, the former Fifth Circuit read the Supreme Court's opinion to hold "that state law is to be applied in the field of maritime insurance only where 'entrenched federal precedent is lacking' with respect to a specific issue."¹² The same approach was followed by the United States Court of Appeals for the Eleventh Circuit, which interpreted Wilburn Boat as holding that "in the field of marine insurance state law should be applied where there is no established federal maritime rule governing the issue at hand."¹³ The United States Courts of Appeals for the Sixth, Seventh, and Ninth Circuits, however, construed Wilburn Boat differently, and all expressed the view that after the courts decide there is no entrenched or judicially established maritime rule, the courts should then decide whether they should create one before applying state law.¹⁴

Under the Wilburn Boat standard, in determining which state's law governs, courts look to the "state in which the policy was formed" or "the state in which the policy was issued and delivered."¹⁵ The courts also consider the state of residency of the insured.¹⁶ Between those states, the "law of the state with the greatest interest" applies.¹⁷

Post–Wilburn Boat Circuit Court of Appeals Significant Decisions

After Wilburn Boat, several United States Courts of Appeals have provided answers as to what maritime insurance rules or laws of more general application are deemed entrenched. As discussed above, with the exception of the Fifth Circuit, all federal circuit courts that have addressed the issue have concluded that marine insurance contracts are governed by the principle of uberrimae fidei. In Aguirre v. Citizens Casualty Co. of New York, 441 F.2d 141 (5th Cir. 1971), the Fifth Circuit held that the breach of an express warranty of seaworthiness voids coverage even if unrelated to the loss because "[t]he seaworthiness standard is solidly entrenched in federal maritime jurisprudence." In D.J. McDuffie, Inc. v. Old Reliable Ins. Co., 608 F.2d 145, 147 (5th Cir. 1979) – a case involving an implied warranty of seaworthiness – the Fifth Circuit applied federal admiralty law and held that a breach of the warranty voided a maritime hull insurance policy.¹⁸

In Emp'rs Ins. v. Occidental Petroleum Corp., 978 F.2d 1422 (5th Cir. 1992) the Fifth Circuit further explained that "federal maritime law implies two warranties of seaworthiness in a time hull insurance policy. The first of these warranties – the implied warranty of seaworthiness at the inception of the policy – is absolute in nature. The second one, which applies only after the policy attaches, is a modified, negative warranty, under which the insured promises not to knowingly send a vessel to sea in an unseaworthy condition. Although the second implied warranty of seaworthiness requires knowledge on the part of the insured, the first does not. The insured breaches this first warranty if the vessel is in fact unseaworthy when the policy becomes effective."¹⁹ A warranty of seaworthiness is also implied by general maritime law in voyage policies, and this warranty is absolute in nature – if the vessel is not in fact seaworthy at the inception of the policy, there can be no recovery under the policy.²⁰

In Lexington Ins. Co. v. Cooke's Seafood, 835 F.2d 1364 (11th Cir. 1988) and Hilton Oil Transport v. Jonas, 75 F.3d 627 (11th Cir. 1996), the United States Court of Appeals for the Eleventh Circuit found that there was authority for the proposition that there exists an entrenched federal maritime rule governing navigation limit warranties, and in both opinions it held that breach of these warranties bars coverage as a matter of maritime law even when the breach is unrelated to the loss.²¹ The Eleventh Circuit's expressions in Lexington Ins. Co. were broad, and there the Court said – without citing to or even acknowledging Wilburn Boat – that "admiralty 23 Benedict's Maritime Bulletin 145 Fourth Quarter 2025 law requires the strict construction of express warranties in marine insurance contracts," and that "breach of the express warranty by the insured releases the insurance company from liability even if compliance with the warranty would not have avoided the loss."²²

In Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052 (9th Cir. 2018) the United States Court of Appeals for the Ninth Circuit held that the Federal Arbitration Act is an established federal maritime law rule concerning the enforcement of arbitration provisions in insurance policies.23

In Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters LLC, 996 F.3d 1161 (11th Cir. 2021), the Eleventh Circuit, concerned that its prior decisions in Lexington Ins. Co. and Hilton Oil Transport could be construed as an attempt to eviscerate Wilburn Boat, declined to read those cases as purporting to overrule Wilburn Boat with respect to the treatment of all warranties in marine insurance policies, and made it clear that its decision in those cases was limited to navigation limit warranties. The Eleventh Circuit in Traveler Prop. Cas. Co., thus held that there are no entrenched federal maritime rules as to captain or crew warranties and concluded that state law, in that case Florida, governed the breach of those warranties.

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Originally published by Benedict's Maritime Bulletin

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