Insurers on an excess marine insurance policy must receive notice of a claim for the duty of coverage to be triggered, but not all insurers under the policy must receive such notice for coverage to be triggered for any individual underwriter, the 5th U.S. Circuit Court of Appeals has ruled.

According to Wednesday's ruling by the New Orleans appeals court in Insurance Co. of North America v. Board of Commissioners of the Port of New Orleans, St. Paul Fire & Marine Insurance Co.'s duty of coverage under an excess marine policy was not triggered because it did not receive notice similar to other underwriters.

The dispute arose in connection with a $2.6 million judgment against the Port of New Orleans for injuries sustained in 2001 by John Morella on port property. The port did not notify its insurers of Mr. Morella's claim until 2007.

The insurers — St. Paul, Insurance Co. of America and American Assurance Co. — had issued an excess marine insurance policy to the port in 2001 providing coverage above the $1 million limits of its underlying policies. St. Paul and Insurance Co. of America were liable for 40% of the policy apiece, and American Assurance for 20%.

The insurers in 2007 sought a declaratory judgment that they were not required to pay under the policy because the port did not provide timely notice of Mr. Morella's claims, according to court documents.

A U.S. District Court judge in 2009 found the notice was untimely, but also concluded that “loss summaries” detailing the incident provided to Insurance Co. and American Assurance could have been timely notice under the policies. The district judge approved summary judgment in favor of St. Paul because it did not receive the loss summaries.

The other insurers then also sought summary judgment, arguing that because St. Paul did not receive notice, they also were not required to provide coverage. The District Court agreed and dismissed the port’s claims.

On appeal, the port argued that any underwriter who receives notice is liable for providing coverage regardless of whether its co-underwriters received notice.

On Thursday, a three-judge appeals court panel disagreed and ruled unanimously that the District Court’s summary judgment “was a misapplication of our holding.”

“All of the subscribing insurers must receive notice for the duty of coverage to be triggered for all three underwriters. More specifically, the duty of coverage is triggered for each underwriter who receives notice under the policy,” the appeals court said overturning the lower court.

“In other words, we do not hold that all underwriters under the policy must receive notice as a condition precedent to a duty of coverage being triggered for any individual underwriter under the policy,” the appeals court ruled in remanding the case for a determination of whether Insurance Co. received notice under the excess marine policy at issue.