FEDERAL DISTRICT COURT GRANTS SUMMARY JUDGMENT FINDING NO COVERAGE FOR FLOOD DAMAGE TO VEHICLES

August 8, 2011

Last week, in Gemini Ins. Co. v. Hayssam Allaov, C.A. No. H–10–3413, 2011 WL 3323120 (S.D. Tex. Aug. 2, 2011) (Rosenthal, J.), U.S. District Court Judge Lee  Rosenthal granted summary judgment in favor of Gemini Insurance Company in a declaratory judgment action brought against Gemini’s insured, Hayssam Allaou d/b/a American Auto Center (“AAC”). 

Gemini sought a declaratory judgment on the basis that the insurance policy it issued did not cover hurricane-related flood damage to certain vehicles.  Specifically, AAC had submitted a claim to Gemini under the policy for $183,000 for flood damage during Hurricane Ike that destroyed 23 vehicles awaiting export at the Port of Galveston in September 2008. Gemini denied coverage on the grounds that the incident took place on the dock of either the Port of Houston or Galveston; the vehicles were not owned by AAC; and/or that the vehicles were not in AAC’s care, custody or control.

In reviewing the policy, the court found that it contained three coverage parts: Liability, Garagekeepers Comprehensive Coverage, and Garagekeepers Collision Coverage.  The court examined the policy and determined it only afforded liability coverage, which it noted applies to claims by third parties against the insured, not to claims in which the insured seeks coverage for damage to its own property.  Allaou responded to Gemini’s arguments by offering an affidavit in which he asserted he had entered into an insurance policy that allowed for recovery for vehicle loss within a 300 mile radius of AAC’s central business location.  Finding no coverage, the court granted the motion for summary judgment.