The Fifth Circuit Court of Appeals heard arguments Monday in a complex insurance coverage dispute between the Police Jury of Calcasieu Parish and eight major insurance companies over claims stemming from Hurricanes Laura and Delta in 2020.
The case, *Police Jury of Calcasieu Parish v. Indian Harbor Insurance Company*, involves a unique surplus line insurance arrangement where multiple foreign and domestic insurers signed a single policy to provide coverage for the Louisiana parish. The defendants include Indian Harbor Insurance Company, Lexington Insurance Company, QBE Specialty Insurance Company, Steadfast Insurance Company, United Specialty Insurance Company, General Security Indemnity Company of Arizona, Old Republic Union Insurance Company, and Safety Specialty Insurance Company.
Circuit Judge Stephen A. Higginson, writing for the three-judge panel that includes Circuit Judges Southwick and Wilson, outlined the complex procedural history that has seen the case move back and forth between state and federal court multiple times. The dispute centers on whether the insurance companies properly compensated the parish for hurricane damage claims filed in 2020.
The insurance arrangement at the heart of the dispute featured a Contract Allocation Endorsement that specified the agreement "shall be construed as a separate contract between the Insured and each of the Underwriters," despite all insurers signing a single policy document. This provision has become central to the jurisdictional and coverage disputes that followed.
After Hurricanes Laura and Delta struck Louisiana in 2020, the Police Jury of Calcasieu Parish filed claims with all insurers under the surplus line policy. When the insurers allegedly failed to provide adequate compensation, the parish initiated litigation in state court against all parties.
However, the case took an unusual procedural turn when the parish moved to dismiss with prejudice all foreign insurers from the lawsuit, leaving only the domestic insurance companies as defendants. The remaining domestic insurers then successfully removed the case to the U.S. District Court for the Western District of Louisiana.
The procedural complexity continued as the case bounced between state and federal jurisdictions over several years. Court documents indicate that questions were certified to and answered by various courts, though the specific nature of these certified questions was not detailed in the available portions of the Fifth Circuit opinion.
The case represents a significant test of how surplus line insurance arrangements operate when coverage disputes arise. Surplus line insurance typically involves coverage from non-admitted insurers for risks that cannot be placed with standard admitted insurers. These arrangements often involve multiple insurers sharing risk under complex allocation formulas.
The jurisdictional questions in the case highlight the challenges that arise when insurance policies involve both foreign and domestic insurers. The parish's decision to dismiss foreign insurers while pursuing claims against domestic insurers appears to have been a strategic move to maintain the case in federal court, where removal by the domestic insurers was possible.
The Fifth Circuit's review will likely address fundamental questions about how multi-insurer surplus line policies should be interpreted and whether the Contract Allocation Endorsement creates truly separate contracts or merely allocates responsibility under a single agreement. The court's decision could have implications for how similar insurance arrangements are structured and litigated in the future.
The case also demonstrates the ongoing challenges Louisiana municipalities face in securing adequate insurance coverage for hurricane damage. Calcasieu Parish, located in southwest Louisiana, has been particularly vulnerable to hurricane activity in recent years. Hurricanes Laura and Delta both made landfall in the area within weeks of each other in 2020, causing extensive damage to public infrastructure and facilities.
Insurance coverage disputes following major hurricanes have become increasingly common as insurers seek to limit their exposure to catastrophic weather events. The complexity of surplus line arrangements can create additional layers of dispute when coverage questions arise, as demonstrated by the multi-year litigation in this case.
The Fifth Circuit's decision will determine whether the district court properly handled the jurisdictional and coverage issues in the case. The appeals court's ruling could provide important guidance for other municipalities seeking to navigate similar insurance coverage disputes following natural disasters.
The case highlights the evolving nature of municipal insurance coverage in hurricane-prone areas and the legal challenges that arise when complex multi-insurer arrangements are tested by major weather events. The outcome may influence how similar surplus line policies are structured and litigated in the future, particularly in jurisdictions frequently affected by hurricanes and other natural disasters.