Court rules in insurer’s favor in case involving hotel damage’s cause

A federal appeals court on Thursday affirmed a lower court ruling in favor of an RLI Group Inc. unit, in a case where a hotel allegedly twice tried to get coverage for roof damage caused by wear and tear, which is excluded by the insurance policy.

In 2019, Shree Rama LLC, which owns a hotel in Brownsville, Texas, submitted a claim for roof damage to its insurer, Mt. Hawley Insurance Co., an RLI Corp. unit, according to the ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Shree Rama LLC v. Mt. Hawley Insurance Co.

The insurer denied the claim after an adjuster traced the loss to wear and tear alone, the ruling said.

Shree Rama filed another claim for roof damage in July 2020 after Hurricane Hanna devastated Brownsville, requesting the insurer cover the cost of a new roof.

The insurer forwarded the request to an adjuster who recognized the roof damage attributed to the hurricane was identical to the damage the company claimed in 2019.

After the insurer denied the claim, Shree Rama sued it for breach of contract. The U.S. District Court in Brownsville granted the insurer summary judgment and was affirmed by a three-judge appeals court panel.

“Viewing the facts in the light most favorable to Shree Rama, it is possible that some damage to the hotel roof came from Hurricane Hanna and some from wear and tear.

“But the concurrent causation doctrine requires Shree Rama to provide the jury with ‘a reasonable basis’ for allocating the damage between wind and wear and tear” and it has “provided no reasonable basis” to do so, the ruling said, in affirming the lower court ruling.

Attorneys in the case did not respond to requests for comment.