Major Lloyd’s syndicates are asking a New York federal court to rule they owe nothing on a multimillion-dollar wheat cargo loss, citing tough policy exclusions.
A coalition of Lloyd’s underwriters and global insurers has filed a complaint in the Southern District of New York, seeking a declaratory judgment that their marine cargo and stock throughput insurance policy does not provide coverage for losses claimed by Eurocereali S.R.L., Santacroce Giovanni S.P.A., and Ruggeri Agricoltura di Ruggeri Mario & C. S.A.S. The case centers on the language of the policy and whether exclusions for government action apply to a disputed claim involving a rejected wheat shipment.
The dispute arises from a 21,600-metric-ton shipment of US No. 1 hard amber durum wheat, purchased at a contract price of $395 per metric ton, with a total value of $8,464,344.76. The wheat was shipped from Duluth, Minnesota, to Livorno and Bari, Italy, under two consignments. Insurance certificates were issued for both consignments, with the buyers named as certificate holders.
According to the complaint, the defendants submitted a claim under the policy on Sept. 24, 2024, after Italian authorities refused permission for the import of the cargo in Bari, Italy, on or about Sept. 13, 2024. The refusal was based on alleged detection of Tilletia indica, or karnal bunt, a plant disease. The insurers allege that subsequent investigation and expert opinion suggested the testing in Bari returned a false positive. In a letter dated April 11, 2025, the defendants admitted the false positive resulted from an error by Italian authorities and/or the government laboratory in Rome.
The cargo was subsequently sold in Morocco for $270 per metric ton, which the complaint alleges resulted in a loss of approximately $1,984,215.88. The total loss now claimed is approximately $2,479,097.44 plus interest and legal costs.
The policy at issue covers goods in transit and includes a Civil Authority Clause and a Customs and/or Immigration Authority Inspection(s) clause, which provide coverage for physical loss or damage arising from government or customs actions. However, the insurers highlight that the policy expressly excludes coverage for “seizure or destruction under quarantine or Customs regulations, confiscation by order of any government or public authority, or risks of contraband or illegal transport or trade.” The complaint alleges that no physical loss or damage occurred and that the rejection by Italian authorities is excluded from coverage under the policy terms.
The insurers are seeking a judicial determination that the policy exclusions and warranties preclude coverage for the insurance claim and that they owe no duty to indemnify the defendants.
The case is at the complaint stage, and no decision has been made.
This case underscores the importance of policy wording and exclusions in marine cargo insurance, particularly when government actions and contamination allegations are involved. The outcome could have significant implications for how insurers handle similar claims in the future.
