Hunton Insurance Recovery Blog

Policies sold through Lloyd’s of London present distinct jurisdictional challenges. Unlike policies sold by a single insurance company, Lloyd’s policies are sold through a marketplace in which risks are underwritten by syndicates composed of individual investors known as “Names.” A single syndicate may include dozens—or even more than a thousand—Names.

That structure matters because a syndicate generally has no separate legal identity, and each Name is severally liable for its share of the risk. As a result, policyholders seeking recovery under a Lloyd’s policy may face threshold jurisdictional questions about whom to sue and whether a particular coverage dispute may proceed in federal court.

As a recent Sixth Circuit opinion shows, courts may raise those issues on their own before reaching the merits of the parties’ coverage dispute. Engaging coverage counsel early—either during underwriting and placement or before filing suit—can help reduce the risk of remand, dismissal, added motion practice, delay, and waste of precious resources.

Background

In Halbower v. Hiscox Syndicate 33, No. 25-1152 (6th Cir. May 29, 2026), the Sixth Circuit, sua sponte, assessed the citizenship of the Names in a Lloyd’s syndicate for purposes of diversity jurisdiction without reaching the merits of the lower court’s coverage decision. Halbower arose from a June 2022 fire at a Michigan residence that destroyed several works of art insured under a Lloyd’s policy underwritten by Hiscox Syndicate 33. The policyholder claimed that the destroyed works were worth tens of millions of dollars. Four of the five items were identified in the insurance records as works by Claude Monet and Francis Picabia; the fifth was not listed on any insurance schedule. Hiscox acknowledged coverage for three of the five works but denied coverage for the remaining two on the ground that they were not included on the schedule maintained by the Lloyd’s broker.

After the partial coverage denial, the policyholder sued Hiscox in state court. Hiscox later removed the case to federal court. The Western District of Michigan dismissed the case on the merits, finding no coverage under the Lloyd’s policy for two of the five paintings destroyed in the fire because those paintings were not listed on the insurance schedule maintained by the Lloyd’s broker. The policyholder appealed.

On appeal, the Sixth Circuit did not reach the merits. Instead, it focused on whether the district court had properly exercised jurisdiction over the coverage dispute. Applying the Supreme Court’s rule in Carden v. Arkoma Associates, 494 U.S. 185, 197 (1990), that an unincorporated association’s citizenship is determined by the citizenship of each of its members, the court treated the Lloyd’s syndicate as an unincorporated association, and held that the citizenship of each Name must be considered in assessing diversity jurisdiction.

The court concluded that the court below was best positioned to determine the citizenship of each Name of Hiscox Syndicate 33 and that doing so was necessary to determine diversity jurisdiction. As a result, the court remanded the case so the district court could resolve those jurisdictional questions before the case proceeded on the merits.

Halbower is significant because establishing jurisdiction at the front end of the process—including determining the citizenship of each Name of the relevant syndicate—is necessary to avoid wasting resources and causing delay before a court can reach the merits of a dispute.

Key Takeaways for Policyholders

• Assess Citizenship Before Filing Suit. Halbower underscores that disputes involving Lloyd’s policies may become mired in threshold jurisdictional questions before a court reaches the merits of the parties’ dispute. As a result, policyholders should consider working with experienced coverage counsel before filing suit to assess jurisdictional issues early.
• Revisit Jurisdiction Early in the Case. Policyholders already involved in coverage litigation under a Lloyd’s policy should not assume that jurisdiction is settled simply because the case is underway. Halbower shows that jurisdictional issues may surface later, either at the trial court or on appeal, if the citizenship of each Name has not been addressed. In Halbower, the parties incurred significant costs while litigating in state court, removing the case to federal court, and appealing to the Sixth Circuit before those threshold jurisdictional issues were addressed.

To avoid similar results, policyholders already in litigation should assess whether the jurisdictional record is sufficient and whether further investigation or jurisdictional discovery is needed to avoid disruption later in the case.

Conclusion

Halbower is a reminder that Lloyd’s policies can create threshold procedural issues that shape coverage litigation from the outset. Hunton has substantial experience advising policyholders on the procedural and strategic challenges that can arise under Lloyd’s policies across a range of claims, including fine-art claims.