The U.S. Supreme Court Wednesday unanimously ruled for a Munich Reinsurance Co. unit in a dispute over coverage for damage to a yacht, finding a choice-of-law provision in a marine policy is enforceable.

The high court overturned a federal appeals court ruling in the case, which in turn had overturned a trial court ruling for the insurer.

The justices said in Great Lakes Insurance SE v. Raiders Retreat Realty Co. that New York law applied to the parties’ disagreement rather than Pennsylvania, where Raiders Retreat Realty Co. is located.

Raiders Retreat first obtained maritime coverage from Great Lakes in 2007. The policy included a choice-of-law provision that said New York law would govern any dispute, court records say.

After the vessel was damaged when it ran aground in 2019, Raiders Retreat sought coverage from Great Lakes, which denied the claim because the boat’s fire-suppression system was not properly maintained, even though it played no role in the damage, court papers say.

The Great Lakes unit sued Raiders Retreat in Pennsylvania federal court saying the policyholder’s breach of contract under New York law allowed it to deny coverage. Raiders Retreat argued that Pennsylvania law applied to the dispute, but the federal judge sided with Great Lakes. Raiders Retreat appealed to the 3rd U.S. Circuit Court of Appeals, which reversed the ruling.

The Supreme Court granted Great Lakes’ petition to review the decision in March 2023.

Raiders Retreat contended that the law of Pennsylvania should apply because it is the forum where Great Lakes decided to file suit.

Justice Brett Kavanaugh, who authored the opinion for the court, wrote that, “[l]ongstanding precedent establishes a federal maritime rule: Choice-of-law provisions in maritime contracts are presumptively enforceable.”

Justice Clarence Thomas wrote a concurring opinion.

The American Institute of Marine Underwriters, which submitted a brief in support of Great Lakes, said in a statement that it was “thrilled” with the decision.

“As well stated in the court’s opinion, this decision will enable marine insurers to better assess risk. By enforcing an insurance policy’s choice-of-law provisions in jurisdictions that are well developed, known, and regarded, the court recognizes that insurers can lower the price and expand the availability of marine insurance,” AIMU president John Miklus said in the statement.

Newark, New Jersey-based policyholder attorney Anthony Bartell, a partner at McCarter & English LLP, said in a statement that while it is significant that the nation’s high court addressed an insurance issue, the justices looked only at boilerplate policy language that was drafted by the industry and not negotiated with Raiders Retreat.

“The Great Lakes opinion deals specifically and only with a tiny subset of marine insurance policies.  The opinion’s reasoning, therefore, extends only to such policies and impacts no other insurance policies or coverage disputes,” he said.

Representatives for the parties did not respond to requests for comment.