In East Coast Tender Services Inc. v. Robert T. Winzinger Inc.,1 the United States Court of Appeals for the Third Circuit held that an obligation to remove a sunken vessel, arising 11 months after the loss and 10 months after the expiration of the insurance policy, came too late for a person reasonably to expect that coverage under a P. & I. policy would extend to the removal costs.2 In reaching its decision, the court adopted the reasonable expectation test enunciated by the U.S. Court of Appeals for the Fifth Circuit3 as the standard required in determining when removal is “compulsory by law” in a P. & I. policy. This test is both equitable and practical in that it clearly sets forth the insurers’ responsibility and promotes the expeditious removal of wrecks from navigable waters.

In November 1976 Robert T. Winzinger Inc. (“Winzinger”) took possession and control of two barges owned by East Coast Tender Services Inc. under a bareboat charter agreement. Winzinger obtained a license from the New Jersey Department of Environmental Protection (DEP) to operate the barges as a temporary loading pier on the Delaware River. The Utah Home Fire Insurance Company, the Great Atlantic Insurance Company and various other insurance underwriters (“the underwriters”) issued hull insurance and protection and indemnity insurance (P. & I.) naming East Coast and Winzinger as insureds. The policy was in effect from 1 April 1978 to 31 March 1979.4

In February 1979 a solid wall of ice broke loose, travelled downstream and struck the barges, causing the backs of both barges to break. Although both barges were gradually sinking, Winzinger continued to operate them for profit up to 11 September 1979.5 On 3 January 1980 Winzinger cancelled its license with DEP and on 29 April 1980 Winzinger received formal notice from the DEP to remove the barges.6

Winzinger brought suit against the underwriters for a declaratory judgment as to the underwriters’ obligations under a wreck removal provision in the P. & I. policy to pay for the cost of removing the barges. The policy provided for costs or expenses of or incidental to the removal of the wreck of the vessel when such removal is “compulsory by law”. Additionally, East Coast and Winzinger asserted claims for compensatory damages on the grounds that, as a result of the ice storm, the barges became constructive total losses in February 1979 when the insurance policy was still in force.