Insurance Law Section
Lynd Decision Upholds Longstanding Canons of Policy Construction Favoring Insureds
by Tae Andrews

Casenote: RSUI Indem. Co. v. Lynd Co (Tex. May 8, 2015).

A recent Supreme Court of Texas decision reemphasized well-established rules of insurance policy interpretation that benefit policyholders. In 2005, the Lynd Company purchased two layers of insurance to cover various properties. Westchester Fire Insurance Company provided primary coverage up to $20 million per occurrence.  RSUI Indemnity Company provided excess coverage for losses exceeding $20 million, up to $480 million per occurrence. 

One such “occurrence”—Hurricane Rita—struck in September 2005.  The storm damaged fifteen of Lynd’s properties. The parties agreed that a single “occurrence” caused all of the damage and that Lynd’s losses totaled just over $24.5 million.  After Westchester paid its $20 million limit, RSUI refused to pay the remaining $4.5 million and instead paid Lynd $750,000. 

RSUI cited the excess policy’s “Scheduled Limit of Liability” endorsement as the basis for its denial of coverage. Lynd sued RSUI to recover the difference between its $24.5 million in losses and the $20,750,000 Westchester and RSUI paid out under the policies. As a result, the question of whether coverage existed under the excess policy depended on the interpretation of ...(Continue)

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