Business insurance

RSUI unit unhooked to cover Hurricane Harvey damage

A federal appeals court overturned a lower court ruling and ruled that a unit of RSUI Group Inc. was not obligated to pay for water damage caused by 2017 Hurricane Harvey under the terms of his policy.

In 2016, Houston-based SCD Memorial Place II LLC purchased a “franchise buyout policy,” which covers significant franchises from the RSUI Landmark Insurance Co. unit, according to the 5th U.S. Circuit Court’s decision on Thursday. of Apparels in New Orleans in Landmark American Insurance Co. v SCD Memorial Place II, LLC.

His primary policy was with the Lexington Insurance Co. unit of American International Group Inc., which is not a party to the litigation.

The insurance clause of the Landmark policy stated: “Perils covered: windstorm or hail associated with a named storm”.

In August 2017, Hurricane Harvey made landfall and caused massive damage to one of SCD’s insured properties when Buffalo Bayou overflowed its shores and water flowed over the property. There was no damage or wind or hail.

Insurers and SCD disagreed on whether the policy covered water damage. Landmark sued in the US District Court in Houston seeking a declaration that CPC’s policy did not apply to the loss suffered.

The district court ruled in favor of the SCD, but was overturned by a unanimous three-judge panel of the appeals court.

“Landmark argues that the policy covers specified perils of ‘windstorm or hailstorm’ that are ‘associated with a named storm (here, Hurricane Harvey)’ but not all perils associated with a named storm,” the ruling said.

The SCD cites an earlier decision saying that under 5th Circuit law, “Hurricane Harvey was a ‘windstorm,’ and therefore the police cover all perils associated with it,” a- he declared.

“We agree with Landmark because its interpretation aligns with the plain meaning of the text of the policy,” the ruling said. “Landmark’s interpretation, unlike SCD’s, gives meaning to the framing phrase ‘Perils Covered’.”

“This framework defines ‘Windstorm’ and ‘Hail’ as specific perils that can be associated with a number of weather events rather than as weather events that encompass a number of perils,” the decision said, reversing the decision of the lower court and issuing a judgment in favor of Landmark.

Renowned attorney Jay W. Brown, a partner at Shackelford Brown McKinley & Norton LLP in Houston, said while wind is the hazard most likely to cause hurricane damage in the region, it wasn’t. the case with Hurricane Harvey.

“It seemed like the insured was very sophisticated in the coverage he purchased, but ultimately he wanted coverage he wasn’t paying for,” Mr Brown said.

SCD’s attorneys did not respond to a request for comment.

In March 2021, the 5th Circuit upheld a lower court ruling in favor of a Texas condominium association, finding it was entitled to damages for boat slips destroyed in Hurricane Harvey .