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American Samoa Government v. Affiliated FM Insurance
Cyclone Val 1991.jpg
Severe Tropical Cyclone Val


During October 1991, after the Samoan Islands had been affected by Cyclone Tusi in 1987 and Cyclone Ofa during February 1990, the Government of American Samoa purchased an "all risk" insurance policy from Affiliated FM insurance.[1][2] The policy provided $US45 million in coverage for government property and included a US$25 thousand deductible for most hazards, US$100 thousand deductible for flood damage and a US$10 million deductible for damage from the wind and tropical cyclones.[2] Severe Tropical Cyclone Val subsequently affected the Samoan Islands for four days, during December 1991 and caused over US$50 million in damage to Government property.[2][3] After Val had moved away from the Islands Affiliated informed the Government, that its hurricane policy did not cover damage caused by "wind-driven water" and that the policy covered only some government properties.[1][4] As a result the firm would only pay $US61 million for the damages.[1][4] It was later discovered that the insurance company, without the American Samoa government's knowledge, had switched a key form in the policy to delete coverage of damage from "wind-driven water."[1]

It was later uncovered that


During the trial William Shernoff, argued that the American Samoan Government had not agreed to the change in Afilliateds while @Affiliated’s policy modification contained the phrase “understood and agreed,"" American Samoa in fact had not agreed to it, as they were not even informed of the change in coverage until four days after Hurricane Val.

of good faith and fair dealing, fraud and for an accounting.

The Court ruled before the trial that the policy covered damage from wind driven water and waves.

Plaintiffs contended that the balance of the policy limit 28.9 million was due that defendants


In the immediate aftermath of the verdict William Shernoff was quoted as saying that this "maybe the first time and is almost surely the largest punitive award ever won by a government entity in a civil lawsuit".

After the verdict Affilated decided to appeal the verdict because they felt that the trial judge Henry W. Shatford, had made several erroneous rulings.[5] As an example Affilated alleged that the judge had ruled that a substantial amount of Samoan government property excluded from coverage in the policy such as wharves, roadway and pavement, ought to have been covered.[5] As a result they felt that a lot of the property accounted for much of the actual damage verdict.[5]


At the end of the fiscal year 2002-03, the governor of American Samoa, Togiola Tulafono, was quoted as saying that the territorial government had done so well during the year, that it did not need to use any of the US$16 million received from the law suit.[6]

The revenues of American Samoa for the fiscal year 2002-03, which had been showing a downward trend, registered a substantial increase whch was attributed to the insurance settlement of claims made to cover the damages caused by Cyclone Val. This resulted in a fiscal surpluses with the United States national deficit of US$23.1 million at the start of 2001 changed to a surplus of US$43.2 million by end of 2003.[7]


  1. ^ a b c d "Jury Awards $86.7 Million to American Samoa Government for Breach of Hurricane Insurance Policy". PR Newswire. September 26, 1995. Archived from the original on September 18, 2012. Retrieved January 21, 2014. 
  2. ^ a b c Raymond, E N. "American Samoa Government et al v. Affiliated FM Insurance". Jury Verdicts Weekly. p. 19. Retrieved 4 May 2014. 
  3. ^ Pandaram, Sudha; Prasad, Rajendra (July 7, 1992). Tropical Cyclone Val, December 4 - 13, 1991 (PDF) (Tropical Cyclone Report 91/2). Fiji Meteorological Service. Archived from the original on September 23, 2013. Retrieved October 18, 2013. 
  4. ^ a b "Representing An Entire Country: American Samoa Government v. Affiliated FM Insurance". Shernoff Bidart Echeverria Bentley. 2013. Retrieved January 22, 2014. 
  5. ^ a b c
  6. ^ "American Samoa government pleased with budget position". Radio New Zealand International. October 7, 2003. Retrieved January 21, 2014. 
  7. ^ U.S. Insular Areas: Economic, Fiscal, & Financial Accountability Challenges. DIANE Publishing. p. 23. ISBN 1-4223-1153-8. Retrieved December 17, 2010.