Breadth of the Flood Exclusion: A Flood is a Flood Including Storm Surge

Tred Eyerly’s article critiques the Fifth Circuit’s post-Hurricane Rita decision in Arctic Slope Regional Corp. v. Affiliated FM Ins. Co. The case involved insurance coverage for damage caused by storm surge to a construction yard.

The precise issue was whether storm surge damage was the result of wind, a covered peril, or flood, an uncovered peril. The lower court determined the damage was caused by flood, eliminating coverage.

The Fifth Circuit affirmed, but relied on the anti-concurrent causation clause. This clause states there is no insurance coverage if a covered peril and non-covered peril strike at the same time and cause the same damage. The article suggests it was inappropriate for the Fifth Circuit to rely on the anti-concurrent causation clause. There was only one cause of damage, i.e., storm surge.

The article was prepare for the Hot Topics portion of the ABA, Section of Litigation, Insurance Coverage Litigation Committee’s website.

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