The Fifth Circuit Court of Appeals, applying Texas law, recently affirmed summary judgment for an insurer in a case where the insured provided no explanation for its 19-month delay in reporting a hail damage claim, and the insurer disclaimed coverage for an inability to determine what damage occurred during its policy period (Hamilton Properties et al. v. American Insurance Company et al., Case No. 15-10382, -- Fed. Appx. -- (5th Cir. Apr. 14, 2016)). The court held, as a matter of law, the insured failed to satisfy the “prompt notice” provision of the policy, and that the delay prejudiced the insurer’s ability to investigate the claim to determine what damages might have occurred during its policy period. The court further stated that even if the delay did not prejudice the insurer, the insured’s claim that the insurer breached the policy by disclaiming coverage must fail because the insured provided no evidence segregating covered damages occurring within the policy period from non-covered damages occurring outside the policy period. The court further held that because there was no breach of the policy, the insured’s extra-contractual claims also failed.
From February 16, 2009 until September 24, 2009, a hotel owned by Hamilton Properties was insured under an American Insurance Company (AIC) policy providing coverage for hail damage. On July 8, 2009, a hailstorm allegedly damaged the hotel. The hotel’s caretaker testified that on multiple occasions within two months of the storm he reported to Hamilton that the building was damaged. Hamilton took no action to address the storm damage until hiring an inspector in November 2010. Even later, in February 2011, Hamilton attempted to contact its AIC agent about the storm damage. The agent told Hamilton he could not accept or report the claim as he was no longer its broker of record. Ultimately Hamilton properly filed its claim for the alleged damage from the July 2009 storm in October 2011. After investigating the claim, AIC disclaimed coverage, indicating that several storms occurred before and after July 2009, and AIC could not determine the cause of the damage or whether it occurred during the AIC policy period.