Eleventh Circuit Clarifies “New-for-Old” Clause: Insurer’s Liability in Marine Hull Policies Is Capped at the Lesser of Repair Cost or Reasonable Value

1. Introduction

In Certain Underwriters at Lloyd’s of London v. Empress Marine Ventures, Ltd., No. 23-12567 (11th Cir. 2025), the Court of Appeals for the Eleventh Circuit confronted two recurring issues in marine insurance litigation:

Whether an insurer may rely on an unpleaded policy warranty at the summary-judgment stage to avoid coverage; and
How to interpret a typical “new-for-old” clause that limits the insurer’s hull-loss liability to “the cost of repair or a reasonable value.”

A 130-foot yacht, the Never Say Never, suffered extensive damage after grounding off the Dominican Republic in 2016. Lloyd’s paid partial repair advances but later sued for declaratory relief seeking to: (i) disclaim all coverage and (ii) limit any liability to the “fair and reasonable” cost of repair. The district court granted Empress Marine partial summary judgment for the full actual repair cost of roughly USD 9.7 million.

On appeal, the Eleventh Circuit:

Asserted interlocutory jurisdiction under 28 U.S.C. § 1292(a)(3) despite an unresolved counterclaim;
Affirmed the district court on the insurer’s coverage defence, holding that Lloyd’s could not introduce a new navigation-limit warranty theory for the first time at summary judgment; but
Vacated the damages ruling, holding that the “new-for-old” clause caps Lloyd’s liability at the lesser of actual repair cost or the “reasonable value” of the damage.

2. Summary of the Judgment

Jurisdiction. The Court held that § 1292(a)(3) confers appellate jurisdiction over interlocutory admiralty orders that determine “rights and liabilities” even where a counterclaim remains pending, reaffirming Walter E. Heller & Co. v. O/S Sonny V.

Coverage. Lloyd’s pled only a breach of the “compliance warranty” (requiring adherence to laws and regulations). Its summary-judgment argument based on the distinct “navigation-limit warranty” was not in the pleadings. Because a new claim cannot be raised for the first time on summary judgment, Empress Marine was entitled to coverage.

Quantum. Interpreting New York law (the governing substantive law under Wilburn Boat), the Court held that the “new-for-old” clause is unambiguous: liability is capped at “no more than the cost of repair or a reasonable value.” The disjunctive “or” and the phrase “no more than” create a ceiling, not a floor; hence the insurer may show that reasonable value is lower than actual cost.

Disposition. Partial summary judgment affirmed on coverage, vacated on damages, and remanded for further proceedings to determine the reasonable value cap and to resolve the pending counterclaim.

3. Analysis

3.1 Precedents Cited and Their Influence

Walter E. Heller & Co. v. O/S Sonny V., 595 F.2d 968 (5th Cir. 1979) & Bradford Marine, Inc. v. M/V Sea Falcon, 64 F.3d 585 (11th Cir. 1995): both upheld § 1292(a)(3) jurisdiction where admiralty claims were decided but counterclaims remained. The panel relied heavily on these to override contrary dicta in Beluga Holding, Ltd. v. Commerce Capital Corp., 212 F.3d 1199 (11th Cir. 2000).
Gilmour v. Gates, McDonald & Co., 382 F.3d 1312 (11th Cir. 2004) & White v. Beltram Edge Tool Supply, 789 F.3d 1188 (11th Cir. 2015): establish that new claims cannot be introduced at summary judgment without amending the complaint—central to rejecting Lloyd’s navigation-limit defence.
Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310 (1955): directs courts to apply state law when no federal maritime rule exists. The panel thus used New York contract-interpretation principles.
New York cases Lockheed Martin Corp. v. Retail Holdings, 639 F.3d 63 (2d Cir. 2011) and Olin Corp. v. American Home Assurance, 704 F.3d 89 (2d Cir. 2012): supply the “plain-meaning” approach to contract construction, guiding the reading of the “new-for-old” clause.

3.2 The Court’s Legal Reasoning

3.2.1 Interlocutory Jurisdiction

The panel performed a careful reconciliation of seemingly conflicting Eleventh Circuit precedents. It reaffirmed the “earliest panel rule,” explaining that Heller controls over Beluga because it was first in time; therefore, an order disposing of an insurer’s claims in admiralty suffices for an immediate appeal, even if a counterclaim persists.

3.2.2 Pleading versus Proof

Because Lloyd’s complaint referenced only the compliance warranty, its invocation of the navigation-limit warranty at summary judgment was an impermissible new theory. Federal Rule 8 requires notice of the grounds of relief; Rule 56 does not authorize expansion of the pleadings. Result: Empress Marine wins on coverage.

3.2.3 Contract Construction of the “New-for-Old” Clause

Textual focus. “No more than” signals a maximum; “or” is disjunctive, providing alternatives.
Business purpose. The clause prevents an insured from profiting from a loss—a classic indemnity principle in marine insurance. Paying whichever figure is lower (repair cost or reasonable value) accomplishes that goal.
Rejection of surplusage argument. The district court’s reading rendered “reasonable value” meaningless whenever actual costs exist. The appellate court insisted every word be given effect.

3.3 Expected Impact

Industry drafting. Marine hull underwriters routinely include similar language. The decision provides judicial clarity that such clauses impose an upper limit and that insurers may litigate “reasonable value” even after repairs are complete.
Litigation strategy. Insurers must plead all warranty-based defences early; insureds should anticipate motion practice aimed at limiting quantum under “reasonable value.”
Appellate practice. The ruling revitalises § 1292(a)(3) as a vehicle for immediate review and narrows reliance on Beluga for jurisdictional challenges.
Choice-of-law clarity. Unless a federal admiralty rule exists, state law—here, New York—governs policy interpretation. Practitioners must therefore master relevant state precedents.

4. Complex Concepts Simplified

4.1 “New-for-Old” Clause

Historically, insurers deducted depreciation when replacing old parts with new (so the insured received “old for old”). A “new-for-old” clause removes depreciation but, as here, limits payment to the cost of repair or the asset’s reasonable value—preventing economic betterment.

4.2 Express Warranties

Marine policies often contain “express warranties,” strict conditions precedent to coverage (e.g., geographical limits, crew requirements). Breach voids coverage even absent causal connection, a harsher regime than typical property policies.

4.3 28 U.S.C. § 1292(a)(3)

This statute gives immediate appellate review of “interlocutory decrees . . . determining the rights and liabilities of the parties” in admiralty. It’s a limited exception to the rule delaying appeals until a final judgment.

4.4 Rule 8 vs. Rule 56

Rule 8 requires the complaint to state each claim. Rule 56 governs summary-judgment evidence but cannot expand the pleadings. New theories must be introduced via Rule 15 amendment.

5. Conclusion

The Eleventh Circuit’s decision in Underwriters at Lloyd’s v. Empress Marine delivers three pivotal lessons:

Appellate jurisdiction exists under § 1292(a)(3) once the district court establishes admiralty rights and liabilities, despite unresolved counterclaims.
An insurer must plead every warranty-based defence; new theories cannot surface at summary judgment.
Where a “new-for-old” clause states liability is limited to “the cost of repair or reasonable value,” the insurer is only bound to pay the lower figure—reinforcing indemnity principles and giving operative effect to all contractual language.

Going forward, marine insurers may confidently invoke “reasonable value” caps, while insureds must prepare to substantiate why actual costs are themselves “reasonable.” Equally, maritime litigators must scrutinise pleadings to ensure all policy defences are preserved from the outset. The judgment thus harmonises contract text with commercial expectations and clarifies a recurring quantum dispute in marine hull insurance.