CITGO scored a $54 million win after a US appeals court ruled its insurers must cover oil losses tied to Venezuela’s political upheaval.
The dispute traces back to early 2019, when CITGO Petroleum Corporation arranged for the shipment of nearly a million barrels of crude oil from Venezuela to Aruba. The oil was loaded onto the vessel M/T Gerd Knutsen, but Venezuela’s deepening political crisis quickly derailed the delivery. As Nicolás Maduro’s government clashed with opposition leader Juan Guaidó, Venezuelan authorities refused to grant the vessel clearance to leave. The cargo remained stranded for months, and after a standoff, representatives from PDVSA and the Venezuelan military boarded the ship and ordered the oil returned to state oil company PDVSA.
CITGO, anticipating potential risks, had secured a marine cargo insurance policy from a syndicate of major reinsurers, including several Lloyd’s syndicates. The policy, effective from June 2018 to June 2019, provided up to $100 million in coverage and specifically included the “Institute War Clauses (Cargo).” These clauses covered losses resulting from “war civil war revolution rebellion insurrection, or civil strife arising therefrom,” as well as “capture seizure arrest restraint or detainment, arising from risks covered under 1.1 above, and the consequences thereof or attempt thereat”.
After the seizure, CITGO submitted a claim under the policy, arguing that the political turmoil and government actions in Venezuela constituted an “insurrection” as defined by the policy. The reinsurers denied coverage, maintaining that the circumstances did not meet the policy’s requirements for insurrection.
The dispute moved to the United States District Court for the Southern District of New York. On cross-motions for summary judgment, the court sided with CITGO. The judge found that the term “insurrection” was not defined in the policy and was ambiguous. Under New York law, ambiguities in insurance contracts are resolved in favor of the insured. The court applied the definition from Pan American World Airways, Inc. v. Aetna Casualty & Surety Co., which describes insurrection as “a violent uprising by a group or movement acting for the specific purpose of overthrowing the constituted government and seizing its powers.” The court concluded that the actions of the Maduro regime, including the use of force and political repression, met this definition.
The case then proceeded to trial on the issues of causation and damages. After a five-day trial, the jury found in favor of CITGO on most issues, awarding $54,235,187.24 plus interest for the loss of the cargo and related expenses. The reinsurers appealed, challenging the district court’s summary judgment decision, its handling of judicial notice, and the instructions given to the jury on causation.
On October 28, 2025, the Second Circuit affirmed the district court’s judgment in all respects. The appellate court agreed that the policy term “insurrection” was ambiguous and that, under the doctrine of contra proferentem, such ambiguities should be resolved in favor of coverage for the insured. The court also upheld the district court’s approach to judicial notice and its instruction to the jury that the policy’s “arising from” language required only a but-for causal relationship between the insurrection and the loss.
The CITGO case highlights the significance of clear policy wording and the challenges of underwriting political risk in unstable regions. The outcome underscores the potential exposure for insurers and reinsurers operating in politically unstable regions and highlights the need for careful drafting and review of policy terms. As global instability continues to pose challenges, this decision is likely to serve as a reference point for future disputes over war and political risk coverage. Insurers and reinsurers may want to take a closer look at how they define and price political risk coverage for clients operating in high-risk markets.
