Insureds Survive Summary Judgment on Coverage for Hurricane Loss

    The magistrate judge recommended that the insurer’s motion for summary judgment be denied, finding a material issue of fact regard the cause of loss after Hurricanes Laura and Delta. Armstrong v. Amguard Ins Co., 2023 U.S. Dist. LEXIS 76869 (E.D. Texas, April 14, 2023). 

    The policy excluded damage caused by wear and tear, differential foundation movement, as-built deficiencies, manual damage, and pre-existing conditions. Texas applied the doctrine of concurrence causes, meaning if damages were due to both covered and non-covered causes of loss, the insureds had to segregate the damage caused by covered causes of loss from the damage caused by non-covered causes of loss. Coverage was denied and the insureds filed suit.

    The insurer moved for summary judgment arguing that either (1) the property damage was not due to a covered cause of loss or (2) the insureds could not separate the damage that was due to covered causes of loss from the damage that was due to non-covered causes of loss. 

    The insurer’s inspector found that the damage was due to non-covered causes of loss. The insured’s expert’s report found “outlines the wind, wind-debris, and interior water damages” to the property that he opioned were the result of covered causes of loss.

    The magistrate judge found that the insureds met their burden of demonstrating there was a genuine issue of fact as to whether the property damage was due to covered causes of loss. The insureds’ expert’s report consisted of an estimate of covered damages and segregated the damages by cause of loss. This satisfied the insureds’ burden on summary judgment to differentiate between covered and non-covered damages under the concurrent causation doctrine.

    The court also denied the insurer’s motion regarding the insureds’ bad faith claim. The insurer could not insulate itself from bad faith liability by investigating a claim in a manner calculated to construct a pre textual basis for denial. The insureds could demonstrate a genuine issue fact on the issue if there was evidence that reports prepared by the insurer’s engineers were not objectively prepared or the insurer’s reliance on the reports was unreasonable.