Protective Safeguards Endorsement is a Condition Precedent
Barry Zalma
Mar 13, 2024
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Kinsale Insurance Company (“Kinsale”) sought declaratory relief against Sea Brook Harbor and Marine, et al (collectively “Seabrook”) arguing that Seabrook failed to comply with a condition precedent in the insurance policy it issued to Seabrook and that consequently there was no coverage for a fire occurring at Seabrook’s facility.In Kinsale Insurance Company v. Sea Brook Marine, L.L.C.; et al. v. Central Monitoring, Incorporated et ap, No. 23-30436, United States Court of Appeals, Fifth Circuit (March 7, 2024) the Fifth Circuit explained the importance of a condition requiring protective safeguards.
BACKGROUND – THE POLICY
The insurance policy contained a “Protective Safeguards Endorsement,” requiring that Seabrook maintain an “Automatic Fire Alarm, protecting the entire building, that is: a. Connected to a central station; or b. Reporting to a public or private fire alarm station.”
The district court determined that Seabrook’s maintenance of a centrally monitored, automatic fire alarm was a condition precedent to insurance coverage under the policy. It granted summary judgment in favor of Kinsale that the insurance policy it issued to Seabrook provided no coverage for the fire occurring at Seabrook’s facility.
DISCUSSION
Under Louisiana law an insurance policy is a contract and is construed using the general principles for contract interpretation.
The policy provisions at issue in this case are not ambiguous. The Protective Safeguards Endorsement clearly provides a condition of the policy.
It is undisputed that Seabrook did not have a centrally monitored fire alarm at the time of the fire. As the district court found, the absence of such an alarm undoubtedly increased the physical hazard under the policy.
ZALMA OPINION
Protective Safeguards endorsements are not suggestions they are conditions precedent. As a result, failure to provide the protective safeguard required by the policy deprives the insured of coverage for a loss under the policy even if the alarm system would have been irrelevant to the effect of the condition. Every person acquiring insurance with such a protective safeguard endorsement must comply fully with the endorsement or agree it has paid for an insurance policy that provides no coverage for a loss.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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