A recent opinion in Atlantic Business Corporation d/b/a ABO Pharmaceuticals v. RLI Insurance Company 1 provides a lesson that in property insurance law, a single word can be the hinge between millions in coverage and a total denial of a claim.
The case arose from a shipment of blood plasma paste, a fragile and highly temperature-sensitive cargo, purchased by ABO Pharmaceuticals from a fractionator in Mexico. Packed into fiber drums with some dry ice and “thermal blankets,” the plasma was meant to be flown by FedEx to New York and then onward to a South African buyer. ABO insured the shipment under RLI’s Marine Open Cargo policy.
Things went wrong almost immediately. FedEx refused to load the pallets as packed because the amount of dry ice violated flight safety regulations. The cargo was repacked and eventually flown out, but once in Memphis, the plasma faced another hurdle caused by a regulatory hold by the FDA. That meant the plasma sat an extra twenty-four hours in FedEx’s facility.
The problem? The shipment had not been booked under FedEx’s “Temperature Controlled Service.” It was booked as “International Priority Freight,” which provided no obligation to monitor or maintain temperature. By the time the product reached New York on June 18, it had exceeded allowable temperature thresholds. The plasma was declared spoiled and worthless for its intended use.
ABO promptly filed a claim under the RLI policy, pointing to the endorsement that promised coverage for deterioration or spoilage “from any cause” during transit. To ABO, the coverage was straightforward: the plasma spoiled in transit, so the policy should pay.
RLI disagreed, citing three separate warranties: the Delay Warranty, the Temperature Warranty, and the Packing Warranty. After months of investigation, RLI formally denied coverage, and litigation ensued.
The district court sided with RLI, and the Eleventh Circuit Court of Appeals affirmed. The appellate opinion stressed that under Georgia contract law, when policy terms are clear and unambiguous, courts must enforce them as written. “From any cause” sounds sweeping, but it did not specifically refer to, let alone expressly assume, the risk of delay. The court found that the Delay Warranty was “paramount” and trumped the endorsement’s broader phrasing, seemingly indicating all causes of loss.
When reading the policyholder’s arguments for coverage, ABO’s lawyers pressed several creative arguments. They suggested that the “risk” excluded by the Delay Warranty was not delay itself but deterioration of cargo, with delay as merely a cause. They also leaned on testimony from Bennett International Transport, the freight forwarder, calling it RLI’s “authorized agent” who allegedly expected delay losses to be covered.
The court brushed these aside. The policy’s words, not subjective expectations of the parties nor post-loss recollections, governed the contract analysis.
This is true when it comes to court interpretation of policy language. Maybe RLI should warn its customers and those who choose to deal with RLI that its advertisements of broad coverage may be challenged by fine-print contract terms limiting coverage. This is what RLI advertises about its Marine Cargo Policy:
RLI’s ocean cargo marine policy offers protection for goods shipped by water or air, safeguarding against physical loss or damage. This coverage begins at the warehouse of shipment, extends to the warehouse of destination, and includes all intermediate transit by rail or truck. It is tailored to meet customers’ specific business requirements and typically includes coverage for war risk, strikes and riot exposures, as well as warehouse storage, domestic transit, exhibitions, and more.
RLI should provide examples of what it and its lawyers will claim as not covered to be fair to potential customers. Maybe this is a good idea for all insurance companies, but I am not holding my breath that this will ever happen.
For claims professionals, the lesson is practical. One must examine not only what coverage grants, but also what warranties and exclusions silently take away coverage. For policyholders, it is a warning not to assume that broad-sounding coverage swallows exclusions and make certain you purchase insurance from companies truly providing broad grants of coverage rather than buying on price with policies containing more limitations.
In the end, ABO’s plasma sat spoiled and uninsured because the phrase “from any cause” was trumped by “delay means no coverage.” Words matter when it comes to insurance contract interpretation.
Thought For The Day
“Words are, of course, the most powerful drug used by mankind.”
—Rudyard Kipling
1 Atlantic Business Corp. v. RLI Ins. Co., No. 24-13244, 2025 WL 2674583 (11th Cir. Sept. 18, 2025). (See also, ABO initial brief, and RLI answer brief)