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An Allianz S.E. unit is not obligated to pay a claim for 2011 hailstorm damage to a closed Dallas hotel because it was not filed until 19 months after the storm and it was not clear when the damage occurred, an appeals court has ruled.
In July 2009, a hailstorm in Dallas allegedly caused damage to the Dallas Plaza Hotel, owned by Springfield, Missouri-based Hamilton Properties Corp., according to Thursday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Hamilton Properties et al. v. American Insurance Co. et. al.
Hamilton’s property policy with American Insurance, whose ultimate parent is Allianz, ended on Sept. 24, 2009, and required “prompt notice” of any claims.
When the hail damage occurred, the property no longer was being used as a hotel, but several people did live in the building, including a caretaker who reported to management as much as two months after the storm that damage had occurred.
But the company did not file a claim until October 2011, 19 months after the storm. The ruling did not specify the dollar amount of the damage.
In its denial letter, American Insurance said because so much time had elapsed and that there were multiple hailstorms before and after July 2009, it could not determine what caused the damage or when the claimed damage occurred, including whether it had occurred during the policy period, according to the ruling.
Hamilton sued several defendants, including American Insurance, in state court in Dallas, alleging breach of contract, among other claims. Following the case being moved to federal court in Dallas in December 2012, a judge ruled American Insurance was not obligated to provide coverage.
In its ruling Thursday, a three-judge panel of the 5th Circuit upheld the lower court’s denial of the claim, and said Hamilton provided no explanation for the 19-month delay in filing the claim.
In addition, “Hamilton points to no evidence describing or quantifying the extent of the hailstorm damage that occurred on or before Sept. 24, 2009,” when the policy expired, the appeals court panel ruled.
In March in another hailstorm case, a federal appeals court upheld a lower court ruling that QBE Insurance Corp. was justified in denying a homeowners association’s claim for hailstorm damage because it filed its claim nine months late, and failed to adequately explain the late notice.
Risk managers have to carefully weigh their options when considering whether to sue insurers over a denial of coverage, as such lawsuits can be costly and result in an even bigger loss for their companies.