## Facts

- Great Lakes Turnings, Ltd. operated a business collecting and shipping oil-soaked steel “turnings,” a highly flammable cargo.
- Great Lakes obtained a one-year marine “open” policy from St. Paul Insurance Company of Illinois covering chartered voyages between the United States and Spain, requiring voyage-by-voyage declarations and premiums.
- From 1987 to 1990, Great Lakes chartered about 37 voyages but declared and paid premiums for only five.
- In February 1990, Great Lakes chartered the M/V *Star I* to carry turnings from Louisiana to Spain, did not declare the voyage, and did not pay a premium for it.
- A fire occurred at the Spanish discharge port, damaging the *Star I*, and the shipowner asserted claims against Great Lakes related to the fire.
- After learning of the loss and the pattern of non-declarations, St. Paul sought to avoid the policy and deny any duty to defend or indemnify Great Lakes.

## Issues

1. Whether federal maritime law, including the doctrine of *uberrimae fidei*, governed the parties’ marine insurance dispute rather than Illinois insurance law.
2. Whether Great Lakes’ failure to declare most voyages and its related misrepresentations or nondisclosures were material breaches of *uberrimae fidei* permitting St. Paul to void the policy and deny coverage for the *Star I* loss.

## Decision

- The court held the policy was a marine insurance contract within admiralty jurisdiction and applied federal maritime law, not Illinois insurance law.
- The court held Great Lakes breached the duty of utmost good faith by materially misrepresenting and failing to disclose voyage information required under the open policy.
- The court ruled St. Paul was entitled to void the policy ab initio, and Great Lakes could not recover for the *Star I* fire-related loss.
- As a consequence, St. Paul had no coverage obligations tied to the avoided policy for the underlying claims arising from the fire.

## Legal Principles

- Marine insurance contracts are governed by federal maritime law in admiralty, absent a controlling federal statute directing otherwise.
- Under *uberrimae fidei*, the assured must disclose all material facts and must not misrepresent material information affecting the insurer’s risk or premium.
- In an open marine policy, accurate and complete voyage declarations are material because they determine the scope of risk undertaken and the premiums owed.
- A material nondisclosure or misrepresentation permits the marine insurer to avoid the policy ab initio, even when the loss occurs on an undisclosed voyage.

## Conclusion

The court applied federal maritime *uberrimae fidei* to a marine open policy and held that Great Lakes’ material nondisclosure and misrepresentation of voyage activity allowed St. Paul to void the policy and deny coverage for liabilities arising from the *Star I* fire.


St. Paul Ins. Co. of Ill. v. Great Lakes Turnings, Ltd., 829 F. Supp. 982 (N.D. Ill. 1993)