Ala. Federal Judge Finds for Munich Re in Reinsurance Dispute with Municipal Insurer

MONTGOMERY, Ala. — A federal judge has sided with Munich Reinsurance Corp. in a dispute over how much it owes a municipal insurer for the settlement of claims filed against the town of Spanish Fort, Ala., finding the underlying policy clearly caps the insurer’s coverage obligations to costs the town was legally obligated to pay for property damage that actually occurred during the policy period.

In a Feb. 21 order, Judge Myron H. Thompson of the U.S. District Court for the Middle District of Alabama noted the Alabama Supreme Court has consistently ruled that where a policy explicitly restricts coverage …