Texas Supreme Court Reaffirms 'All Sums' Approach And Finds Insurer Responsible For Costs Incurred Without Insurer’s Consent: Lennar Corporation v. Markel American Insurance Company

On August 23, 2013, in a case involving coverage for a homebuilder's costs in removing an exterior insulation and finish system which resulted in serious water damage that worsens over time, and replacing the system with stucco, the Texas Supreme Court addressed the following issues: (1) was the insurer, Markel American Insurance Company ("Markel"), responsible for the costs of Lennar's remediation program, where Markel did not consent to the costs but it was not prejudiced as a result; and (2) was Markel responsible for: (i) costs incurred to determine and repair property damage, and (ii) costs to remediate damage that began before and continued after the policy period. Lennar Corporation v. Markel American Insurance Company, No. 11-0394 (Tex. August 23, 2013). The Court resolved each of these issues in favor of the homebuilder, Lennar.

As an initial matter, the Texas Supreme Court reversed the court of appeals and upheld the jury's...