The Fifth Circuit Court of Appeals issued a decision January 30, 2026, in *H5R, L.L.C. v. Scottsdale Insurance Company*, addressing a dispute over property insurance coverage that highlights the complexities of weather-related damage exclusions in commercial property policies.
H5R, L.L.C. became the owner of a house in 2016 and subsequently obtained an insurance policy on the property from Scottsdale Insurance Company on December 18, 2018. The company renewed this policy annually for one-year periods through December 18, 2021, maintaining continuous coverage for three years.
The insurance policy at the center of the dispute covered "direct physical loss of or damage to Covered Property . . . caused by or resulting from any Covered Cause of Loss." The policy's coverage provisions included windstorm or hail as covered perils, but contained specific exclusions that became central to the litigation.
Under the policy's "Covered Causes of Loss" section, windstorm or hail were covered perils, but the policy included several important exclusions. The policy specifically excluded coverage for frost or cold weather, ice other than hail, and snow or sleet, whether driven by wind or not. Additionally, the policy contained exclusions for loss or damage to building interiors caused by rain, snow, sand or dust, whether driven by wind.
These exclusions reflect common insurance industry practices designed to distinguish between different types of weather-related damage and limit insurers' exposure to certain perils that may be considered preventable or result from poor maintenance rather than sudden, accidental events.
The case originated in the U.S. District Court for the Northern District of Texas under case number 3:23-CV-1197. The district court's ruling prompted H5R to appeal to the Fifth Circuit, indicating the company was unsuccessful at the trial court level in its coverage claim against Scottsdale.
The Fifth Circuit panel hearing the case consisted of Circuit Judges Richman, Engelhardt, and Wilson, who issued a per curiam opinion. The court's decision not to designate the opinion for publication, as noted in the opinion, suggests the panel viewed the case as applying established legal principles rather than breaking new ground in insurance coverage law.
Property insurance disputes involving weather-related damage have become increasingly common as extreme weather events affect more properties across the United States. Courts frequently grapple with the interpretation of policy language that distinguishes between covered windstorm damage and excluded water damage, particularly when both elements are present in a single weather event.
The specific exclusions in the H5R policy reflect industry-standard language designed to address the challenges insurers face when multiple perils contribute to property damage. The distinction between covered windstorm damage and excluded water intrusion often becomes crucial in determining coverage, as wind may cause openings in a building that subsequently allow water to enter and cause additional damage.
For property owners, this case underscores the importance of carefully reviewing insurance policy exclusions and understanding the specific circumstances under which coverage applies. The detailed nature of weather-related exclusions in modern property policies requires policyholders to maintain clear documentation of damage causes and sequence of events when filing claims.
The insurance industry closely monitors such decisions as they help establish precedents for interpreting standard policy language. While this opinion was not designated for publication, it still provides guidance for how courts approach the analysis of weather-related coverage disputes under similar policy provisions.
The timing of the decision, coming in early 2026, reflects the ongoing evolution of property insurance law as courts continue to interpret policy language in light of changing weather patterns and increasing property values. Insurance companies and policyholders alike benefit from clear judicial guidance on the scope of coverage exclusions.
For practitioners in the insurance coverage field, the case illustrates the continued importance of precise policy language and the courts' willingness to enforce exclusions as written. The decision reinforces that coverage disputes often turn on the specific wording of policy provisions and the factual circumstances surrounding the claimed loss.
The case also highlights the significance of the appeals process in insurance coverage litigation, as property owners who believe their claims have been wrongfully denied often seek relief in federal appellate courts when district court decisions favor insurers. The Fifth Circuit's jurisdiction over Texas, Louisiana, and Mississippi makes its insurance coverage decisions particularly influential in states prone to weather-related property damage.