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When Better Late Than Never Isn’t Good Enough: Florida Federal Court Grants Summary Judgment For Insurer In Late-Reported Hurricane Claim

On September 27, 2021, Judge Jose Martinez of the U.S. District Court for the Southern District of Florida granted summary judgment in favor of Scottsdale Insurance Company in LMP Holdings Inc. v. Scottsdale Ins. Co., case no. 20-24099. The case arose out of a Hurricane Irma claim reported more than two years after the storm. The insured, LMP Holdings, Inc., owned a commercial property located in Miami. The insured claimed the property sustained damage from Hurricane Irma, which struck South Florida on September 10, 2017. The insured’s handyman and one of the insured’s officers inspected the property the day after the storm. The handyman noticed punctures on the roof, which he patched, and a panel from one of the air

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Posted in Catastrophes

Louisiana Federal Court Upholds Applicability of Anti-Concurrent Causation Exclusion for Hurricane Damage

In a timely reaffirmation of the Fifth Circuit’s 2007 ruling in Leonard v. Nationwide Mut. Ins. Co., a Louisiana federal court recently upheld the application of an insurance policy’s Anti-Concurrent Causation Clause (“ACC”) in precluding coverage for property damage caused by a combination of storm winds and flooding.  In Chad Little, et al. v. Aegis Security Insurance Co., Case No. 2:21-CV-00997 (W.D.La. July 9, 2021), the Western District of Louisiana granted defendant-insurer’s motion for summary judgment holding that the defendant-insurer proved that both a covered peril (storm winds) and an excluded peril (flooding) contributed to the losses claimed by the plaintiffs-insureds, and that as a result of the application of the policy’s ACC, all coverage was precluded.  About The Authors

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Posted in Catastrophes, Water

New Hurricane Harvey Opinion Provides a Roadmap to Defeating Common Policyholder Attorney Tactics

Policyholders attorneys often try to skip the threshold steps of bringing their client’s claim within coverage and allocating between covered and non-covered causes of loss.  Instead, the policyholder attorney would have the insurer first disprove coverage, or at least first justify its coverage position.  These tactics unfold in a familiar way. The policyholder attorney will engage a consultant to write up an Xactimate estimate.  Or, perhaps a public adjuster already wrote up the estimate and then brought the claim to the attorney.  Everything that is wrong with the structure will go into the estimate.  Every water-stained ceiling tile, bent AC condenser fin, and dent on the siding will go into the estimate regardless of causation.  The bigger estimate, the better

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Posted in Catastrophes, Coverage, Hurricane

Correlation or Causation for Coronavirus-Related Business Income Losses

In the wake of the Coronavirus (COVID-19) pandemic, countless businesses have reduced or closed operations—some permanently. Flights have been canceled, hotels and restaurants have closed, and employees have been told to stay home. Naturally, businesses will seek to offset their financial losses during this period. Some businesses may file insurance claims under their Business Income coverage. Common Business Income (and Extra Expense) Coverage Forms might state: “We will pay for the actual loss of Business Income you sustain due to the necessary ‘suspension’ of your ‘operations’ during the ‘period of restoration’. The ‘suspension’ must be caused by direct physical loss of or damage to [covered] property ….” There has been much discussion of what constitutes “physical loss” and of policy

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Posted in Hurricane Ike, Uncategorized

Texas Federal Court Holds that Named Storm Deductible Applies Even in the Absence of Wind Damage

Judge Nancy Atlas of the Southern District of Texas cut through competing arguments to resolve a high-profile dispute involving a Hurricane Harvey claim through Contract Interpretation 101. Lexington Insurance Company issued a policy to Pan Am Equities, Inc. (Pan Am) covering a property development in downtown Houston, Texas.  The development sustained more than $6.7 million in flood damage due to Hurricane Harvey, a disaster that flooded homes and buildings across the city, but often left the structures undamaged by wind.  This was the case with Pan Am’s downtown property development. The policy contained several different deductibles.  As an exception to the general deductible, the policy had a $100,000.00 per occurrence Windstorm Deductible.  The Windstorm Deductible was itself subject to an

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Posted in Catastrophes

Texas Court Holds That Unpaid Appraisal Award Does Not Conclusively Establish Causation or Damages in Hurricane Ike Insurance Dispute

While Hurricane Ike made landfall in Texas almost ten years ago, the resulting litigation is alive and well as evidenced by the recent decision in Texas Windstorm Insurance Association v. Dickinson Independent School District, 14-16-00474-CV, 2018 WL 2436924 (Tex. App.—Houston [14th Dist.] May 31, 2018, no pet. h.). In that case, Houston’s Fourteenth District Court of Appeals addressed whether an unpaid appraisal award established an insurance company’s liability under a named-peril insurance policy as a matter of law.  In analyzing and applying the Supreme Court of Texas’s decision in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), the court held that the appraisal award, by itself, did not conclusively establish liability for purposes of the policyholder’s motion for

Posted in Arbitration and Appraisal, Hurricane, Hurricane Ike

Fifth Circuit: Total Loss Amount Caps Insured’s Recovery Even Under Multiple Policies Covering Different Risks

We don’t usually cover cases dealing with Standard Flood Insurance Policies (SFIPs) issued pursuant to the National Flood Insurance Program, but a Texas case decided by the federal Court of Appeals earlier this month addresses a broader issue – where the policyholder has multiple policies covering the same property against mutually exclusive risks, such as an SFIP covering flood and a homeowner’s policy covering wind, can his or her recovery ever exceed the total loss amount.  In Lowery v. Fidelity Nat’l. Prop. & Cas. Ins. Co., 2015 WL 6848323, 2015 U.S. App. LEXIS 19443 (5th Cir., Nov. 6, 2015), a unanimous panel of the Fifth Circuit answered no, in reliance on the insurance principle that bars a double recovery. The

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Posted in Actual Cash Value, Depreciation, Flood, Homeowners Coverage, Hurricane, Hurricane Ike, Replacement Cost, Valuation, Water, Windstorm

New Jersey Court Rejects Theory of Spoliation By Encouragement

Three years out, Superstorm Sandy litigation continues to wend its way through New Jersey’s courts.  Last weekend, a federal judge in the state handed a victory to the insurer in Stiso v. State Farm Fire & Cas. Co., 2015 U.S. Dist. LEXIS 155762, 2015 WL 7296081 (D.N.J., Nov. 18, 2015).  In doing so, the court reaffirmed the enforceability of what it called anti-concurrent causation (ACC) “lead-in” language.  It also rejected the doctrine of “spoliation based on encouragement” – the policyholders had argued that they could not meet the burden of showing that all of their loss was caused by a covered peril because the carrier had “actively encouraged” them to begin repair early on and thereby “persuaded” them to destroy

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Posted in Anti-Concurrent Causation, Flood, Sewer Backup, Spoliation, Superstorm Sandy, Water

New Jersey Panel: If a Flood Is Excluded, So Are the Unhealthy Water-Borne Substances that It Leaves Behind

Yesterday, a unanimous panel of New Jersey’s intermediate level appellate court rejected policyholder arguments that even though flood was excluded, the proximate cause of their Superstorm Sandy loss was the non-excluded peril of damage from “unhealthy water-borne substances” left behind by the receding water.  In Riccio v. Allstate N.J. Ins. Co., 2015 WL 6181466, 2015 N.J. Super. LEXIS 2417 (N.J. App., Oct. 22, 2015), the judges recognized that to hold otherwise would render the flood exclusions in homeowner’s policies meaningless. The insureds owned a home in Little Silver that was inundated by 20”-36” of water when a creek behind their property overflowed its banks during Superstorm Sandy on October 29, 2012.  They initially attempted to clean the house themselves, removing

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Posted in Contamination, Flood, Homeowners Coverage, Microorganisma, Superstorm Sandy, Water

Florida to Decide What Test Applies When Concurrent Multiple Perils Cause a Loss

For years, Florida courts have been seesawing between two different doctrines to determine whether there is coverage under a property policy when two perils – one excluded and one included — combine to cause a loss.  Two districts of the state’s intermediate level appellate court have applied one test and a third has applied another, with the most recent decision being American Home Assur. Co. v. Sebo, 141 So.3d 195 (Fla.Ct.App., Sep. 18, 2013).  On October 7th of last year, the state’s highest court accepted review in the Sebo matter, and oral argument was conducted on September 2, 2015.  Some clarity will finally emerge in the Sunshine State with respect to this issue. When multiple perils combine to cause a

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Posted in Anti-Concurrent Causation, Efficient Proximate Cause, Faulty Workmanship or Design, Homeowners Coverage, Hurricane Wilma, Water
About The Property Insurance Law Observer

For more than five decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.

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