Fifth Circuit Applies Narrow Interpretation Of Policy To Limit Coverage For Hurricane Harvey Loss

Landmark American Insurance Co. v. SCD Memorial Place II, L.L. C., No. 20-20389 (5th Cir. Feb. 3, 2022), involves whether an insurance policy covered flood-related damage sustained by a building during Hurricane Harvey.

The district court determined that the policy provided coverage and granted summary judgment in favor of the insured. The Fifth Circuit Court of Appeals reversed, adopting a narrower view of the policy provisions.

A difference of opinion arose between the insured and insurer on what types of perils the policy was designed to cover.

The insured took the broad view, arguing windstorm coverage encompassed damage from flooding, wind and storm surges, among other perils, provided those events were connected to a named storm like 2017’s Harvey.

The insurer argued the policy covers the specified perils of ‘Windstorm or Hail’ that are ‘associated with a Named Storm [here, Hurricane Harvey]’ but not all perils associated with a Named Storm. In other words, it is a ‘named perils’ rather than ‘all risks’ policy—it covers only the perils specified in the policy and does not need to use additional exclusionary language.