Insurer wins judgment on flood safety | Enterprise insurance – business insurance

Damage caused by a water pipe rupture that coincided with a flood is subject to a flood floor under an "anti-concurrent cause" clause in the real estate policy, a federal appeals court said Thursday that ruled in an insurance dispute in favor of an insurer.

On July 30, 2016, Ellicott City, Maryland experienced a "1000 year rainfall" that fell four and a half inches of rain in one hour and the storm fell more than six and a half inches of rain before the end, according to the judgment of the 4th. US Court of Appeals in Richmond at David S. Brown Enterprises Ltd; 8227 Main Street LLC; 8231 Main Street LLC versus affiliated FM Insurance Co.

The downpour caused nearby rivers to flood and their contents to enter the city. At the same time, an underground aqueduct broke in the city center, splashing water into the sky and raising the total water level.

Two buildings in the city center suffered water damage. David S. Brown Enterprises filed for coverage for the damage with Bellevue, Washington, Affiliated FM Insurance Co., which said the company was only eligible for $ 50,000 coverage under the flood floor of its policy.

DSB filed a lawsuit, arguing that the sublimit was inapplicable and that it was entitled to $ 2 million or $ 1 million of coverage for each building. The US District Court ruled in favor of the insurer.

This was confirmed by a three-person appeals court. The appeals court cited the anti-concurrent cause clause of the coverage, which is common across the industry and “clarifies an insurer's obligation when multiple causes (e.g. floods and strong winds) contribute to the damage underlying a claim ".

The ruling cited the New York University District Court's March 2019 ruling against Factory Mutual Insurance Co., which found a $ 40 million flood floor applicable to damage caused by Superstorm Sandy Year 2012.

"We find the analysis of New York University's anti-concurrent cause clause convincing," said the 4th District. “DSB claims that a broken water main damaged the properties on Main Street, just as NYU claims that bad workmanship damaged their facilities. But the policy contains an anti-concurrent cause clause like that of New York University, ”it said.

“Since it happened at the same time as a flood, the water damage caused by the interruption in the water main is deliberate flood damageS. of the flood of policy sublimits ", the judgment says," the simple language of the policy limits the DSB's reclaim "and confirms the decision of the lower court.

The lawyers on the case did not respond to requests for comment.

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