Blog Archives

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

New York Court: Broadly-Worded Flood Limit “Meaningless” Unless it Applies to Any Kind of Loss Caused by Flood

Yesterday in El-Ad West LLC v. Zurich American Ins. Co., 2015 WL 4078762, 2015 N.Y. App. Div. LEXIS 5753 (N.Y.App.Div., Jul. 7, 2015), a unanimous panel of New York’s intermediate level appellate court held that a flood sub-limit capped all loss caused by flood, without regard to whether it was physical damage to property or a “downstream” financial loss such as delay in completion.  In the words of the opinion, reading the contract of insurance in such a way as to find that the flood sub-limit did not apply to delay in completion losses “would render the flood limit meaningless with respect to that coverage.”  The panel thereby affirmed a Superstorm Sandy decision that we reported on in July of

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Posted in Builders' Risk, Delay in Completion, Flood, Superstorm Sandy

Ninth Circuit: Under Arizona Law Mudslide Can Be Covered as the Direct Result of Fire

Last Friday, a unanimous panel of the Ninth Circuit held that loss from the excluded peril of mudslide occurring one month after a wildfire could be covered as the “direct” result of the blaze.  In Stankova v. Metropolitan Prop. & Cas. Ins. Co., 2015 WL 3429395, 2015 U.S. App. LEXIS 8935 (9th Cir., May 29, 2015),  it reached that result even though Arizona has not adopted the efficient proximate cause rule, saying that it did not need to apply that doctrine to determine that the mudslide “could have been directly and proximately caused by the wildfire.” It also blithely ignored anti-concurrent causation (ACC) language, which is given effect in Arizona, as “inconsistent with Arizona’s standard fire insurance policy, which insures

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Posted in Anti-Concurrent Causation, Causation, Direct Physical Loss or Damage, Efficient Proximate Cause, Exclusions, Flood, Mudslide, Wildfire

Iowa Court: Anti-Concurrent Causation Language Mandates That the Jury Determine Whether an Excluded Peril Was One Cause of the Loss

Last month, we discussed a recent Texas Supreme Court decision that enforced an anti-concurrent causation (ACC) clause.  The month of April also saw a unanimous panel on Iowa’s intermediate level appellate court do the same thing.  In Salem United Methodist Church v. Church Mut. Ins. Co., 2015 WL 1546431, 2015 Iowa App. LEXIS 308 (Iowa Ct. App., Apr. 8, 2015), the judges held that ACC provisions unambiguously exclude loss caused by a concurrent combination of excluded perils and included perils and that the question of whether an excluded peril played any causative role must therefore be put to the finder of fact. The policyholder had a church in Cedar Rapids.  On June 11-12, 2008, the Cedar River overflowed its banks,

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Posted in Anti-Concurrent Causation, Flood, Water

Texas Supreme Court Enforces Anti-Concurrent Causation, Bars Coverage Where Wind and Flood Combine to Cause the Loss

Last Friday, Texas’ highest court unanimously endorsed lower court and federal court decisions giving effect to anti-concurrent causation (ACC) clauses and held that such provisions bar coverage where a combination of an excluded peril and an included peril operate together to cause the loss.  In JAW The Pointe, LLC v. Lexington Ins. Co., 2015 WL 1870054, 2015 Tex. LEXIS 343 (Tex., Apr. 24, 2015), that meant that the insured could not recover where flood and wind damage triggered the enforcement of city ordinances even though the covered wind damage component was arguably sufficient in and of itself to cause the loss. The policyholder owned The Pointe Apartments – a complex in Galveston, Texas that was heavily damaged when Hurricane Ike

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Posted in Anti-Concurrent Causation, Causation, Flood, Hurricane, Hurricane Ike, Ordinance or Law, Windstorm

Order of Civil Authority Claim for Superstorm Sandy Barred by Flooding Exclusion in New York

On Thursday of last week, a federal court in New York City tossed an Order of Civil Authority (OCA) claim by a New York City law firm in Bamundo, Zwal & Schermerhorn, LLP v. Sentinel Ins. Co., 2015 WL 1408873, 2015 U.S. Dist. LEXIS 39409 (S.D.N.Y., Mar. 26, 2016).  The policy extended coverage to loss of business income caused by an OCA issued “as the result of a Covered Cause of Loss,” but it excluded flooding from the definition of that term. The insured was a law firm with offices on John Street in lower Manhattan.  On October 28, 2012, the Mayor of New York City issued an executive order evacuating all homes and business located in the area.  Superstorm

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Posted in Bad Faith, Flood, Order of Civil Authority, Superstorm Sandy

New Jersey Trial Court Holds Storm Surge Not Subject to Flood Sublimit Where Policy Expressly Includes “Ensuing Storm Surge” in Named Windstorm Coverage

In recent years, many courts have held that storm surge is a species of excluded flood loss; we reported on a New York example in July.  This week, in Public Serv. Enter. Group, v. ACE Amer. Ins. Co., 2015 WL 1428370, Unpub. LEXIS 620 (N.J.Super., Mar. 23, 2015), a New Jersey trial court granted summary judgment to Public Service Electric & Gas (PSEG) and held that the flood sublimit did not apply to a claim for Superstorm Sandy loss from storm surge where the contracts of insurance specifically recited that coverage for a “named windstorm” – which was not subject to any sublimit  –  included “ensuing storm surge.” Eight large PSEG generating stations and a number of smaller distribution facilities

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Posted in Causation, Efficient Proximate Cause, Ensuing Loss, Flood, Superstorm Sandy, Windstorm

Iowa’s Highest Court: Damage by Rainwater is Damage by Rain

Last July, we posted that an intermediate level appellate court in Iowa had held that a policy excluding loss “caused by rain” did not bar coverage for loss occasioned by the non-excluded peril of “rainwater.”  On Friday, the state’s highest court threw cold water on such nonsense, holding that there was no distinction between rain and rainwater for coverage purposes.  No justice disagreed, though the court split 4-3 on another issue.  The decision can be found at Amish Connection, Inc. v. State Farm Fire & Cas. Co., 2015 WL 1260085, 2015 Iowa Sup. LEXIS 32 (Iowa, Mar. 20, 2015). The insured operated the Amish Connection Store in Crossroads Shopping Mall in Waterloo, Iowa.  Rooftop drains discharged into a 4” cast-iron

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Posted in Anti-Concurrent Causation, Corrosion, Ensuing Loss, Flood, Water
About The Property Insurance Law Observer
For more than four 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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