Background
Machine Tool Repair & Sales, Inc. contracted with Pride Machinery Sales, Inc. to purchase a heavy grinder. Pride arranged transportation and obtained marine cargo insurance from Tokio Marine America Insurance Company (TMAIC), naming Machine Tool as the named insured. TMAIC issued a marine open cargo policy containing a standard “warehouse to warehouse” clause, which provided that coverage “attaches from the time the goods insured leave the Warehouse at the place named in the Policy for the commencement of the transit and continues during the ordinary course of transit . . . until delivered to final warehouse at the destination.”
The certificate of insurance issued to Machine Tool contained a typewritten notation in the “additional notes” box reading: “machine sold from Caterpillar warehouse floor . . . to [Machine Tool’s] warehouse floor . . . warehouse floor to floor.” On April 18, 2019, a delivery truck arrived at Machine Tool’s warehouse. An employee operating a forklift lifted the grinder off the truck to bring it inside — and the grinder fell, sustaining irreparable damage. Machine Tool submitted a claim. TMAIC denied coverage, arguing that transit had ended when the truck arrived at Machine Tool’s location, before the forklift operation. The Supreme Court denied TMAIC’s summary judgment motion. TMAIC appealed.
The Court’s Holding
The Appellate Division modified and largely affirmed. In determining insurance coverage disputes, courts look to the specific language of the policy and give unambiguous provisions their plain meaning. The court found that the “floor to floor” typewritten notation in the certificate of insurance created a genuine issue of material fact as to whether coverage extended until the grinder was delivered to Machine Tool’s warehouse floor — beyond what the standard “warehouse to warehouse” clause might otherwise provide. Summary judgment for TMAIC on the main breach-of-contract claim was therefore properly denied; a factfinder must resolve the interplay between the policy clause and the certificate notation.
However, the court granted summary judgment dismissing Pride’s cross-claims against TMAIC (for bad faith and violations of the New York Prompt Payment Act), which lacked a viable legal basis under the facts presented.
Key Takeaways
- Typewritten notations in a certificate of insurance that specify more granular coverage terms — such as “floor to floor” delivery — can create factual disputes about the scope of coverage that defeat summary judgment even when the underlying policy contains standard language.
- Marine cargo insurers must carefully review all typewritten or manuscript additions to certificates of insurance before issuance, because those additions can expand the policy’s standard coverage terms.
- A named insured relying on certificate language to establish coverage must still establish that the certificate language is binding and reflects the parties’ intent — this question may go to trial.
Why It Matters
For New York businesses that purchase, transport, or receive heavy equipment — and for the insurance brokers and carriers who arrange their coverage — this decision is a reminder that the certificate of insurance is not merely a formality. Typewritten notations that specify the physical endpoints of coverage (“warehouse floor to floor”) can expand, or at least create interpretive uncertainty about, the standard policy clause. When a certificate says something different from the policy, that inconsistency raises factual questions that courts will not resolve on summary judgment.
Marine cargo insurers operating in New York should ensure that certificates are reviewed and approved before issuance. Manuscript notations added by brokers without carrier authorization have created significant coverage disputes in New York courts; this case illustrates that such disputes can survive well past the initial claim stage. For policyholders, it confirms that careful attention to certificate language — not just the underlying policy — is essential when structuring coverage for high-value equipment purchases.