Oral arguments on appeal were recently heard on one of the first verdicts handed down in a Katrina-related insurance trial. Arguments on the appeal of Leonard v. Nationwide Mutual Insurance Company were heard on August 6 before the Fifth Circuit Court of Appeals. The appeal follows an August 2006 verdict in which the court ruled that the water exclusion in Nationwide's policy was valid and enforceable, thereby excluding coverage for storm surge. Accordingly, the Leonards were only allowed to recover damages caused by wind or objects propelled by wind, with an award totaling $1,228, in addition to the $1,661 previously paid by Nationwide. The total amount of the loss was over $130,000. However, the court also ruled that the anti-concurrent causation provision in the policy was ambiguous and could not be enforced. The anti-concurrent causation provision provides that if a loss arises from a combination of covered and non-covered perils, the loss is not covered.
Nationwide appealed the trial court's decision in November 2006. According to a Nationwide spokesperson, the appeal asks the court to reconsider technical portions of the ruling, and does not challenge the monetary award. The Leonards filed a cross-appeal a few weeks later. In July 2006, the Leonards dropped their appeal. Nationwide, however, chose to continue with the appeal of the finding on the anti-concurrent causation provision.
Nationwide, as well as many other insurers, has taken the position that their homeowners policies cover wind damage, but not where the damage arose from a combination of wind and water. In many of the Katrina-related cases, it is difficult to determine what damage was caused by wind versus water. Accordingly, whatever the court’s decision may be, the decision is likely to impact other Katrina claims.
For additional information on the trial court decision and related discussion, please click here.