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Court Orders Chubb Subsidiary to Pay for Merchandise Lost in Warehouse Bankruptcy
Chubb’s Federal Insurance Co. must pay more than $2 million to a fabric company that lost 22 trailer loads of merchandise when the Mississippi warehouse company that stored it, filed for bankruptcy, sold the goods and pocketed the proceeds.
A panel of the 2nd Circuit Court of Appeals rejected the insurer’s arguments that coverage was barred by a dishonest acts exclusion in the ocean cargo policy it issued, and also that the coverage applied only to shipments from one location owned by the insured to another. The panel affirmed a decision by the U.S. District Court in New York City that found that coverage was owed under an ocean cargo policy issued to Fabrique Innovations Inc.