Legal Definitions - American clause

An American clause is a specific provision found in some marine insurance policies. It states that if an insured person or company purchases a second insurance policy *after* the first one, covering the same marine risk, the original insurer *cannot* demand that the second insurer contribute to any claim payment. Essentially, the first insurer must pay its share of the loss as if the later-purchased policy did not exist, simplifying the claims process for the insured and preventing the first insurer from shifting part of its responsibility to a subsequent policy.

Here are some examples to illustrate how an American clause works:

• Example 1: Shipping Company and Cargo Insurance
  "Global Shipping Co." insures a valuable consignment of automotive parts with "Oceanic Underwriters" for a transatlantic journey. Their policy includes an American clause. Due to a new financing agreement, Global Shipping Co. later purchases a *second*, separate insurance policy from "Seaborne Risk Solutions" to cover the *same cargo* for the *same voyage*. During the voyage, a severe storm causes significant damage to the cargo. When Global Shipping Co. files a claim with Oceanic Underwriters, the American clause in their policy prevents Oceanic Underwriters from demanding that Seaborne Risk Solutions contribute to the payout, even though Seaborne Risk Solutions' policy also covered the loss. Oceanic Underwriters must pay its full agreed-upon share of the claim independently.

• Example 2: Private Yacht Owner and Hull Coverage
  Ms. Chen owns a luxury yacht and has it insured against hull damage with "Coastal Marine Insurance." Her policy contains an American clause. A few months later, she decides to participate in a special regatta and, as a condition of entry, is required to take out an *additional* temporary hull insurance policy with "Harbor Guard Insurers" for the duration of the event, which overlaps with her existing coverage. During the regatta, her yacht sustains damage from a minor collision. When Ms. Chen files a claim with Coastal Marine Insurance, the American clause ensures that Coastal Marine Insurance cannot seek contribution from Harbor Guard Insurers, despite the overlapping coverage. Coastal Marine Insurance is solely responsible for its portion of the claim.

• Example 3: Port Authority and Equipment Insurance
  "Portside Logistics," a port operating company, insures its fleet of specialized dockside cranes with "Maritime Asset Protection." This policy includes an American clause. Later, to cover a new expansion project, Portside Logistics procures a *subsequent* blanket insurance policy from "Global Port Solutions" that, due to its broad terms, inadvertently also covers some of the existing cranes for a specific period. One of the original cranes suffers a major mechanical failure, leading to extensive damage. When Portside Logistics files a claim with Maritime Asset Protection, the American clause prevents Maritime Asset Protection from requiring Global Port Solutions to contribute to the repair costs, even though Global Port Solutions' policy technically provided overlapping coverage. Maritime Asset Protection must fulfill its obligations under its policy without involving the later-purchased insurance.