Contract analysis

I. Introduction and Purpose This letter constitutes Ironclad Indemnity Corporation's ("Ironclad") formal coverage determination regarding the above-referenced claim submitted by Verimark Hospitality Group Inc. ("VHG" or the "Insured") for business-interruption losses arising out of Hurricane Callista, which made landfall in the State of Florida on September 18, 2022. This determination is rendered under All-Risk Prop

II. Background and Factual Summary A. The Policy The Policy at issue is the All-Risk Property and Business Interruption Insurance Policy No. IIC-PRP-2022-07541, issued by Ironclad to VHG for the policy period commencing at 12:01 a.m. Eastern Daylight Time on July 1, 2022, and ending at 12:01 a.m. Eastern Daylight Time on July 1, 2023. The Policy provides coverage on an "all risks" basis for direct physical loss of or

III. Bases for Denial Based upon Ironclad's thorough investigation and careful review of the Policy, Ironclad hereby denies VHG's claim for business-interruption coverage in its entirety for the following four independent grounds. Each ground stated below is sufficient, standing alone, to support the denial of the claim as presented. The statement of any one ground does not limit or qualify the applicability of any o

Section V.B.2 of the Policy defines the "Period of Restoration" as follows: "The period of time that: (a) begins at the time of direct physical loss of or damage to Covered Property caused by or resulting from a Covered Cause of Loss at the described premises; and (b) ends on the earlier of: (i) the date when the property at the described premises should be repaired, rebuilt, or replaced with reasonable speed and sim

Section IV.C.7 of the Policy (the "Flood Exclusion") provides, in pertinent part: "This Policy does not cover loss or damage caused by or resulting from flood, including but not limited to storm surge, tidal water, tidal wave, overflow of streams or other bodies of water, or release of water held by any natural or man-made dam, levee, or similar barrier, regardless of any other cause or event that contributes concurr

Section IV.A of the Policy (the "Anti-Concurrent Causation Clause") further provides: "The exclusions set forth in this Section IV apply regardless of any other cause or event, whether or not insured, that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or whether other causes of loss acted concurrently or in any sequence with

Section VIII.D of the Policy provides, in pertinent part: "In the event of loss or damage to Covered Property, the Insured shall take all reasonable steps to: (a) protect the Covered Property from further loss or damage; (b) minimize and mitigate any business-interruption loss, including but not limited to the use of other available property, temporary or alternative facilities, and expedited restoration efforts; and

IV. Reservation of Additional Defenses Ironclad expressly reserves all rights, remedies, and defenses available to it under the Policy and applicable law, including but not limited to any rights, remedies, or defenses not specifically set forth in this letter. The denial of coverage set forth herein is without prejudice to Ironclad's right to assert additional grounds for denial, reduction, or limitation of the claim

V. Impact on Excess Layers For completeness, Ironclad notes that VHG's insurance program for the 2022–2023 policy year includes excess layers of coverage above Ironclad's primary layer, specifically: • First Excess Layer: Pinnacle Surplus Lines Inc., Policy No. PSL-XS1-2022-3390, providing $15,000,000 excess of $25,000,000 (attaching at $25,000,000); • Second Excess Layer: Montclair Assurance Company, Policy No. MAC-

VI. VHG's Right to Dispute Ironclad acknowledges and advises VHG that it has the right to dispute this coverage determination. In this regard, Ironclad draws VHG's attention to the following: (1) Appraisal Provision. Section XI.B of the Policy contains an appraisal provision that permits either party to demand an appraisal of the amount of loss in the event of a dispute regarding the value of the loss. VHG should not

VII. Conclusion For the foregoing reasons, Ironclad Indemnity Corporation respectfully denies VHG's claim for business-interruption coverage under Policy No. IIC-PRP-2022-07541 in connection with Hurricane Callista in its entirety. The denial is based upon four independent grounds: (A) the Named Windstorm Sub-Limit caps VHG's maximum potential recovery at $15,000,000, well below the claimed $60,000,000; (B) VHG's cla

1. Copy of Policy No. IIC-PRP-2022-07541, Named Windstorm Sub-Limit Endorsement (Endorsement No. IIC-NWS-2022-004)

2. Copy of Policy No. IIC-PRP-2022-07541, Flood Exclusion and Anti-Concurrent Causation Clause (Sections IV.A and IV.C.7)

3. Ironclad Indemnity Corporation Reservation of Rights Letter dated October 12, 2022