Citation:  FEMA-1909-DR-TN, Nashville Metropolitan Transit Authority (Applicant), Insurance – Para-transit Bus Replacement, PW 5538

Cross-
Reference:  Insurance; Duplication of Benefits

Summary:   The Applicant sustained the loss of 41 Para-transit vans (shuttle buses) at the 130 Nestor Street service terminal as a result of flooding from severe storms during the period of April 30 through May 4, 2010.  FEMA prepared PW 5538 in the amount of $1,097,196 to cover the total cost to replace 41shuttle buses damaged at the Nestor Street location. 

A provision of the Applicant’s insurance policy, Endorsement 004 Limit of Liability, provides $10,000,000 in flood coverage on a per occurrence basis for vehicles specifically listed on the policy.  The policy exception to the $10,000,000 per occurrence flood coverage states, “Flood $10,000,000: except 130 Nestor Street, $10,000,000 ‘annual aggregate’ Nashville, TN.”  FEMA determined that the policy exception changes the coverage at the Nestor Street location from $10,000,000 for each and every occurrence to an annual aggregate policy limit amount of $10,000,000 for the Nestor Street location.  As a result, FEMA reduced the estimated cost of shuttle bus replacement for PW 5538 to account for anticipated insurance proceeds in the amount of $1,097,196.

The Applicant submitted its second appeal on June 21, 2012, which the State transmitted to FEMA on August 13, 2012.  The Applicant reiterates its position from the first appeal that the shuttle buses damaged at the 130 Nestor Street location were not covered for flood damage.  The Applicant filed a lawsuit against the insurance company in the Chancery Court of Davidson County seeking a declaratory judgment as to whether the insurance policy excludes flood damage and proposes that FEMA not take action on the second appeal until after the court ruling.  The Court granted the Applicant’s motion for summary judgment and found that the Applicant’s insurance policy does not provide flood coverage for any property or contents located at 130 Nestor Street.  

Issues:  Did the Applicant demonstrate that flood is not a covered peril under the provisions of the insurance policy?
 
Findings:  Yes.
 
Rationale:  Section 312(a), Duplication of Benefits; 44 CFR §206.250(c), General