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In JAW The Point, LLC v. Lexington Ins. Co., 2015 Tex. LEXIS 343 (Tex. 2015), the Texas Supreme Court held an anti-concurrent-causation clause in the insured’s policy precluded coverage for increased rebuilding costs following Hurricane Ike.

JAW The Pointe, LLC (JAW) owned an apartment complex in Galveston, Texas. Hurricane Ike caused substantial damage (equal to or exceeding 50% of market value) to the apartment complex. JAW submitted a first-party property claim to its insurer, Lexington Insurance Company (Lexington). While Lexington paid for damages that were caused by wind, it denied coverage for the increased building costs associated with an ordinance requiring the property to be elevated.

The Lexington policy excluded loss or damage “caused directly or indirectly” by any of the policy exclusions. Specifically, the policy provided that loss or damage is excluded “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Among the exclusions was one for loss or damage caused directly or indirectly by the enforcement of any ordinance or ordinance law.

Having determined that JAW’s costs to elevate the property were caused at least in part by flooding, an excluded cause of loss, the Texas Supreme Court affirmed the intermediate appellate court’s ruling in favor of Lexington. On a matter of first impression for this court, it held that the wind damage and flood damage combined to cause the city to enforce the ordinances against JAW. The anti-concurrent-causation clause excluded coverage under the Lexington policy for losses JAW incurred in complying with the city’s ordinances.