Arctic Slope Regional Corp. v. Affiliated FM Insurance Co. concerns the oft-litigated question of coverage for property damage resulting from a hurricane. 564 F.3d 707 (5th Cir. 2009). In September 2005, Hurricane Rita’s storm surge flooded Arctic Slope’s office and construction yard in Iberia Parish, Louisiana. Arctic Slope sought coverage under an all-risk property-insurance policy issued by Affiliated. Affiliated denied coverage, interposing the policy’s flood exclusion.
The Affiliated policy provided coverage for “all risk of direct physical loss or damage to insured property,” extending coverage to losses from both “flood” and “wind and hail.” Coverage was subject to specific sub-limits, restrictions, and exclusions. Of proximate consideration, the policy defined “flood” to encompass storm surge damage. The policy included a flood exclusion that excluded losses in any flood zone or area designated by the Federal Emergency Management Agency.
The policy provided Arctic Slope with coverage for losses caused by wind and/or hail, which the policy broadly defined to encompass “all loss or damage resulting therefrom whether caused by wind, by hail, or by any other peril . . . including . . . loss or damage caused when water . . . is carried, blown, driven, or otherwise transported by wind onto or into said location.” Finally, the policy contained an anti-concurrent clause (“ACC”), which provided that “Loss or damages excluded regardless of any other cause or event whether or not insured under this policy that contributes concurrently or in any sequence to the loss or damage.” Id. at 710-11.
Arctic Slope contended that its loss was covered by the wind/hail coverage because the storm surge consisted of water driven by wind onto or into its property. What is more, Arctic Slope contended that the policy was ambiguous because it excluded coverage for the storm-surge damage within the flood definition while authorizing coverage for the same damage in the wind/hail coverage. Id. at 711. The court found it unnecessary to address this argument “because even if a hurricane storm surge falls within the definitions of both an excluded peril (flood at [the] site) and a covered peril (wind/hail), the policy is not ambiguous.” Id. In the court’s view, the policy, read as a whole, was not ambiguous. The “exclusion of storm surge as a flood event cannot be reversed by its possible inclusion as a wind/hail event.” Id.
Arctic Slope further contended that the ACC clause was ambiguous because there had been one cause of damage – storm surge – rather than separate causes defined as separate perils in the policy. This argument did not withstand analysis. Rather, the court concluded that the “ACC clause is unequivocal and unyielding,” excluding “insurance against loss or damage caused by or resulting from any of the listed causes, including flood (as defined by the policy).” From this view, the court held that “storm surge flood occasioned by Hurricane Rita ‘whether driven by wind or not’ is not covered by this policy.” Id. The ACC clause “eliminates application of an efficient-proximate-cause rule, whereby a jury may be called upon to determine the relative contribution of the covered and the excluded perils, by excluding coverage altogether.” Id. at 712.
The court further rejected Arctic Slope’s contention that the description of a flood peril excluded by the ACC clause is itself ambiguous. The description is “simply a microcosm of the general scope of policy coverage, that is, certain perils are covered as defined and limited in the policy and subject to the policy’s express exclusions.” Id. “There is no ambiguity; instead, coverage has been carefully apportioned under the policy to certain flood losses.” Id.
