Appeals court rules for policyholder in Travelers cargo claim

A marine cargo policy issued by a unit of Travelers Insurance Cos. Inc. was ambiguous in its description of approved storage locations, therefore, the insurer should pay the full limit to its policyholder, whose goods were destroyed in a warehouse fire, a federal appeals court ruled last week.

According to the ruling in Ezrasons Inc. v. Travelers Indemnity Co. by the 2nd U.S. Circuit Court of Appeals in New York, which overturned a trial court’s summary judgment in favor of Travelers, neither side proved that its interpretation of what was an “approved location” covered by the policy was correct.

The claim stemmed from a 2019 fire that destroyed more than $600,000 worth of apparel manufacturer Ezrasons’ goods stored in a warehouse owned by Chamad Warehouse Inc. in Marion, North Carolina.

Under the terms of the policy, Travelers agreed to pay $600,000 for goods destroyed in an approved location listed on the policy but only $250,000 for goods stored at an unapproved location.

Travelers argued that the goods were stored in a Chamad warehouse with an address that was different from that listed in the policy and that the destroyed building had a separate address from the building that was covered. Ezrasons argued that Chamad had three warehouses on the same parcel of land and the address on the policy covered all three.

“Neither side, however, has submitted evidence that effectively rebuts the other side’s documentary evidence. Addresses do not necessarily denote only a single building and can be ambiguous in that an address can both describe a single building and a larger plot containing multiple buildings, all of which can have the same address,” the court ruled.

Under New York law, ambiguous policy wordings are interpreted in favor of the policyholder.

Travelers did not immediately respond to a request for comment.