This past weekend had beautiful blue skies and Tall Ships in Chicago. An event sponsored by Tall Ships America, thousands of visitors descended upon the City of Chicago to see the grand, picturesque sailing vessels. And while the weather cooperated for both the sightseers and the tall ships, it got me thinking, what if weather did not cooperate? What if there was a loss to one of these magnificent vessels?

Such a situation arose recently in the matter of Lakeshore Sail Charters, LLC v. Acadia Insurance Company.1 Lakeshore brought suit against its insurer for breach of its contract to insure the sailing vessel, the Hailie & Matthew, and against any resulting lost earnings. As a participant in the 2013 tall ships festivities, the Hailie & Matthew would have the opportunity to sell tickets for various scheduled excursions. In preparation for the event, Lakeshore purchased an insurance policy covering both damage to the vessel while voyaging to the Great Lakes and related losses due to interruption in business from damage to the ship.

While the Hailie & Matthew was en route to the Great Lakes it encountered bad weather and sustained significant damage to its bowsprit which required immediate repairs. As a result, the Hailie & Matthew missed most of the tall ship events, causing a substantial financial loss. In addition to repair costs for the ship itself, Lakeshore also submitted a claim for lost profits. Acadia paid a portion of the repair costs and completely denied the lost profits claim contending that the Loss of Earnings Endorsement was not in effect at the time of the accident because a new certificate of inspection from the Coast Guard in the Great Lakes.

Following the filing of suit, both parties moved for summary judgment. In relevant part, Lakeshore asserted that Acadia breached the insurance contract by failing to pay it under the Loss of Earnings Endorsement. The court in reviewing the language of the endorsement determined that it was unambiguous and not a limitation on the Loss of Earnings Endorsement. The court further determined that the interruption of business was not a result of the suspension or termination. Specifically, the court noted while the ship was required to get a new certificate of inspection from the Coast Guard once it arrived in the Great Lakes, the requirement could not be understood as a suspension or termination of the vessel’s authority to do business, and granted summary judgment with respect to the loss of earnings claim in Lakeshore’s favor.

1 Lakeshore Sail Charters v. Acadia Ins. Co., 2016 WL 861218 (N.D. Ill. Mar. 7, 2016).