Appeals Court Upholds $8.5 Million of First Solar’s Zurich Verdict

The 11th U.S. Circuit Court of Appeals left Zurich American facing about $8.5 million of a $12.2 million verdict in a dispute over storm damage at a Georgia solar project. The ruling turns on how the insurer handled three claims early in the process: after paying advances under the policy’s lower water-damage deductible, Zurich couldn’t later reclassify those losses as floods and apply a much higher deductible. The decision makes the timing and consistency of the insurer’s claim handling central to the outcome.

First Solar Electric, a unit of Tempe, Arizona-based First Solar, was building the plant when five heavy rain events hit between December 2019 and April 2020. Its builders risk policy set a $100,000 deductible per water-damage event and a $2.5 million deductible per flood event. That gap gave the classification real financial weight: the same physical damage could produce sharply different payment obligations depending on which policy definition applied.

An adjuster initially recorded the losses as water damage. In June 2020, Zurich American approved three $200,000 advance payments for the first three events without reserving a right to change that classification. The insurer first raised the possibility of flood damage in an August 2020 status update. By 2021, it argued that no payment was due because losses from each event fell below the flood deductible. That reversal framed the dispute: whether the insurer could change its position after its earlier claim decisions had led the insured to understand the losses were being handled as water damage.

Policy definitions and the court’s reasoning

The policy defined flood to include the “unusual and rapid accumulation or runoff of surface waters from any source,” as well as the temporary inundation of normally dry land. Water damage covered damage caused by water, regardless of source, except damage otherwise defined as flood or resulting from a named storm. Those definitions made the policy wording important, but the appeals court’s decision also turned on what Zurich American did after the claims were reported.

In Zurich American Insurance Company v. First Solar Electric LLC, the appeals court rejected Zurich American’s argument that Georgia law barred it from waiving the flood deductible. Its August 2020 reservation of rights came too late for the first three claims, the panel found. As the opinion put it: “Golfers get mulligans. But in this case, the insurance company does not.” The line is pointed, but the reasoning is practical: a reservation made after the insurer has acted on a claim may not undo the consequences of that earlier conduct.

The court also rejected Zurich American’s position on a policy clause governing when lawsuits may be filed. It agreed that the flood deductible would apply if the insurer had not waived it. The panel pointed to the absence of testimony from the adjuster, who was never deposed, and said Zurich American offered no evidence explaining its change in position. That missing account mattered because the sequence of decisions was central to whether the insurer had preserved its right to rely on the flood classification.

Two claims return to the trial court

The 11th Circuit upheld damages and prejudgment interest for the first three events, which accounted for about $8.5 million of the jury’s award. It vacated the awards tied to the final two events and sent them back for a jury to decide whether Zurich American’s conduct before the August 2020 update waived the flood deductible. The split outcome reflects a distinction between the claims: the first three had advance payments and an earlier classification history, while the final two still require a fact finder to assess the insurer’s conduct.

The case began in the U.S. District Court for the Middle District of Georgia, which ruled before trial that Zurich American had waived its right to apply the higher deductible. After a five-day trial limited to damages, a jury returned the $12.2 million verdict in 2025. The appeals court’s split ruling leaves the first three claims resolved while the last two remain open. For the parties, that means the appeal narrowed the dispute but didn’t settle the full amount at issue.

What the ruling means for claim handling

This is more significant than it looks: the dispute shows how an insurer’s early administration of a claim can shape the arguments available later, even when the policy contains competing definitions and deductibles. Similar coverage disputes often turn on both contract language and a documented record of decisions, notices, and payments. Here, the court focused on the timing of Zurich American’s reservation and the lack of testimony explaining the shift. The ruling doesn’t establish that every advance payment waives a policy defense; the result depends on the specific conduct and record before the court.

If you’re working in this space, the practical point is the value of clear, timely communication about how a claim is being classified and whether the insurer is reserving its rights. And this is the part most people overlook: an unexplained change in position can become important evidence when a court assesses the insurer’s conduct. The last two claims remain unresolved, so the final financial exposure still depends on what a jury finds about the period before the August update. Not the end of the dispute.