In the case of Wilburn Boat Co. et al. v. Fireman's Fund Insurance Co., 1954, the U.S Supreme Court was tasked with deciding whether federal maritime law or state law should apply in a dispute over an insurance policy for a boat that caught fire on a lake within Texas borders. The owners of Wilburn Boat Company had taken out an insurance policy from Fireman's Fund Insurance Company to cover their commercial barge, but when it burned down and they attempted to claim damages, the insurer refused payment due to alleged breaches of warranty (conditions) in the contract by Wilburn Boat Co., such as using uncertified crew members and not having proper firefighting equipment onboard. The court held that there was no established federal rule regarding marine insurance warranties; thus, absent legislation from Congress stating otherwise, state laws could be applied in this context even though it involved navigable waters traditionally under admiralty jurisdiction. This decision marked one of few instances where non-maritime local laws were allowed precedence over general maritime law.

In the dissenting opinion for Wilburn Boat Co. v. Fireman's Fund Insurance Co., Justice Reed argued that federal admiralty law should govern marine insurance contracts, not state law as the majority ruled. He contended that a uniform national standard was necessary to avoid confusion and inconsistency in maritime commerce, which often crosses state lines and international borders. Furthermore, he believed that Congress had implicitly authorized courts to develop federal common law in this area by enacting legislation on related subjects such as ship mortgages and maritime liens. Therefore, he would have held that the insurer could deny coverage based on a breach of warranty under established principles of federal admirality law.