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The insurer wins the flood protection



Damage caused by a flood disruption that coincided with a flood is subject to a flood limit under an "anti-simultaneous causal" clause in the property policy, a federal appellate court said Thursday and ruled in favor of an insurer in a coverage dispute.

On July 30, 2016, Ellicott City, Maryland, experienced a "1,000-year rainfall", with four and a half inches of rain falling in an hour and the storm falling more than six and a half inches of rain before it took end, according to the judgment of the 4th U.S. Circuit Court of Appeals in Richmond in David S. Brown Enterprises Ltd; 8227 Main Street LLC; 8231 Main Street LLC v. Affiliated FM Insurance Co.

The torrential rain caused nearby rivers to flood and their contents flowed into the city. At the same time, an underground water supply network in the downtown area broke, which sprayed water into the sky and increased the overall water level.

Two buildings in the center were damaged by water as a result. David S. Brown Enterprises sought compensation for the damage from Bellevue, Washington-based Affiliated FM Insurance Co., which said the company was only entitled to $ 50,000 in coverage according to its policy flood limit.

DSB brought an action, claiming that the sublime applicable and that it was entitled to $ 2 million in coverage, or $ 1

million for each building. The U.S. District Court ruled in favor of the insurer.

This was confirmed by a three-judge panel of judges. The Court of Appeal referred to the coverage clause on anti-competitor causation, which it said is common in the industry and clarifies "an insurer's obligation when several causes (eg both flood waters and strong winds) contribute to the damage underlying a claim." [19659002] The judgment referred to the March 2019 judgment of the U.S. District Court in New York in New York University v. Factory Mutual Insurance Co. which ruled that a flood limit of $ 40 million was applicable to damages caused by the 2012 Superstorm Sandy.

"We find the analysis of the anti-competitor causal clause in New York University convincing," said the 4th Circuit. "DSB claims that a broken water main damaged the main street properties, just as NYU claimed that incorrect construction damaged its facilities. But the policy contains an anti-competitor causal clause like the one in New York University ", it said. it happened at the same time as a flood, whatever water damage caused by the water main interruption is flood damage for the purpose s of the policy flood limit ", it was stated in the judgment, when it ruled that" the policy's limitation restricts DSB's recovery "and confirmed decision.

The plaintiffs in the case did not. respond to requests for comment.


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