This Policy’s Ambiguous, So Let’s Have a Trial. On Second Thought …
Summary: A severe flood struck Cedar Rapids, Iowa in 2008, damaging the insured’s manufacturing facility and impacting its business operations, leading to claims of property damages exceeding $35 million and business interruption losses exceeding $26 million. Two insurers equally shared responsibility for payment of claims under the same insurance policy. They paid only $20 million, contending the policy’s flood sublimits had been reached. The insured then filed a first-party claim for breach of contract and bad faith. After the insured rested its case at trial, the U.S. District Court for the Northern District of Iowa directed a verdict against the insured on the bad faith claim. Then after the insurers rested their case, they won a directed verdict on the breach of contract claim. The Eighth Circuit affirmed.