Raizner Slania LLP has filed an insurance lawsuit on behalf of the owner of a Harris County commercial property (“Plaintiff”) against The North River Insurance Company (“North River”) and Crum & Forster (collectively “Defendants”). The lawsuit was necessary due to the unreasonable underpayment of Plaintiff’s commercial property water damage claim.
Fire Suppression System Failure Causes Water Damage
On July 15, 2020, the subject commercial property was substantially damaged after its fire suppression system failed. This led to sizeable portions of the property’s exterior, interior, systems, fixtures, and other business property being damaged by the water discharge. Due to the significant damage present, the insured was unable to operate and sustained a sizeable business interruption loss as a result. Yet, as devastating as the physical damage and business interruption were, Plaintiff felt fortunate to be protected by its $47 million insurance policy procured to ensure the property and business in instances like this. Plaintiff promptly filed a claim with North River, alerting the insurer to the extensive damages.
North River and its representatives derailed the claim process and repeatedly and drastically undervalued the extensive damages. Despite the obvious water damages and clear evidence of covered damage, Defendants engaged in and ratified improper claim conduct and ultimately refused to fully pay for the covered damages to Plaintiff’s property.
To this day, due to the Defendants’ outcome-oriented, inadequate, and haphazard investigation, North River has refused to fully pay for the covered damages under the policy.
Plaintiff Issues Demand Letter
On June 1, 2017, Governor Abbott signed House Bill 1774 into law as Section 542A of the Texas Insurance Code. Section 542A.003 requires detailed, comprehensive pre-suit notice that is intended to make the claims and litigation processes more transparent and potentially even prevent unnecessary lawsuits. Upon receiving notice, an insurer has the right to conduct an inspection and even make an offer to avoid litigation. When utilized properly, Section 542A should assist business consumers like Plaintiff in avoiding protracted litigation over a clear claim.
In compliance with Section 542A.003, Plaintiff gave its pre-suit notice to Defendants on October 6, 2021. The pre-suit notice provided a comprehensive outline of Plaintiff’s claims and damages, quantified its loss, and even offered to waive a formal claim for attorneys’ fees if the contractual amounts were paid promptly. However, North River responded to the demand on November 8, 2021, and refused to acknowledge its own wrongdoing.
The Carrier Acted in Bad Faith
Our client cites numerous violations of the Texas Insurance Code, including:
- Failure to attempt to effectuate a prompt, fair, and equitable settlement of a claim with respect to which liability has become reasonably clear;
- Failure to adopt and implement reasonable standards for prompt investigation of claims arising under its policies;
- Failure to provide promptly a reasonable explanation, in relation to the facts or applicable law, for the denial of a claim;
- Refusal to pay the claim without conducting a reasonable investigation with respect to the claim;
- Misrepresentation of the insurance policy under which it affords property coverage to Plaintiff by making an untrue statement of material facts;
- Misrepresentation of the insurance policy under which it affords property coverage to Plaintiff by failing to state a material fact that is necessary to make other statements made not misleading;
- Misrepresentation of the insurance policy under which it affords property coverage to Plaintiff by making a statement in such a manner as to mislead a reasonably prudent person to a false conclusion of material facts and failing to disclose a matter required by law to be disclosed;
- Knowingly committing the foregoing acts with actual knowledge of the falsity, unfairness, or deception of the foregoing acts and practices;
- Failure to acknowledge receipt of the claim;
- Failure to timely commence an investigation of the claim or to request from Plaintiff any additional items, statements, or forms that Defendants reasonably believe to be required from Plaintiff;
- Failure to notify Plaintiff in writing of the acceptance or rejection of the claim not later than the 15th business day after receipt of all items, statements, and forms required by Defendants; and
- Delayed payment of Plaintiff’s claim.
Plaintiff additionally alleged North River breached its contract, breached its duty of good faith and fair dealing, acted fraudulently and with malice, and violated the Texas Deceptive Trade Practices Act (DTPA).
Commercial Insurance Coverage Attorneys
If you own a commercial property that has suffered damage and your claim has been wrongfully delayed, grossly underpaid, or denied, the experienced team of insurance coverage attorneys at Raizner Slania can help. Contact us today to see how we can best assist you.