Raizner Law has filed an insurance lawsuit on behalf of Texas-based commercial property owners (“plaintiffs”) against Zurich American Insurance Company (“Zurich”). The lawsuit was necessary due to Zurich’s failure to pay statutorily mandated interest and attorneys’ fees under Section 542 of the Texas Insurance Code, known as the Prompt Payment of Claims Act.
Under the applicable insurance policies, there is a provision that permits either party, if they disagree on the “value of the property or the amount of the loss,” to make written demand for appraisal. Despite the parties’ utilizing of the appraisal process, and despite Zurich’s payment of the actual appraisal awards, Zurich failed to pay statutory interest and attorney’s fees on the awards, necessitating this lawsuit.
Plaintiffs Suffer Property Damage; Zurich Delays Payment of Claims in Violation of Prompt Payment of Claims Act
Between March 2016 and August 2017, all of the plaintiffs’ 14 properties were damaged, and insurance claims were filed with Zurich between June 2016 and January 2018. Under the applicable policy, a provision permits either party – if they disagree on the value of the property or the amount of loss – to make a written demand for appraisal. Both parties then select a “competent, disinterested, and impartial appraiser” under this provision.
The parties engaged in appraisal pursuant to the terms of the applicable policy for all of the properties except one, and Zurich made payments owed under the insurance policy for all of the properties. Despite the plaintiffs’ timely filing of claims, Zurich’s payment of the appraisal awards did not occur until several months or, in some cases, even years later. The appraisal awards were entered (and paid) between May 2018 and August 2019.
In compliance with Texas Insurance Code Section 542A.003, plaintiffs gave pre-suit notice to Zurich on March 13, 2020. The pre-suit notice outlined plaintiffs’ claims and damages, quantified losses, and offered to waive a formal claim for attorneys’ fees in the event contractual amounts were paid promptly. Zurich responded to this demand on April 17, 2020, but refused to acknowledge its statutory violations.
The Carrier Acted in Bad Faith
Additionally, our client cites numerous violations of the Texas Insurance Code, including:
- Failure to acknowledge receipt of the claim
- Failure to timely commence investigation of the claim or to request from plaintiffs any additional items, statements, or forms Zurich reasonably believed it needed
- Failure to notify plaintiffs in writing of the acceptance or rejection of the claim not later than the 15th business day after the receipt of all items, statements, and forms required by the defendant
- Delay of payment of plaintiffs’ claims
- Failure or refusal to make payments for covered damages
- Failure to attempt to effectuate the 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 a claim arising under its policy
- 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
- Misrepresentation of the insurance policy to plaintiffs by making an untrue statement of material fact
- Misrepresentation of the insurance policy under which it affords coverage to plaintiffs by failing to state a material fact necessary to keep other statements from being misleading
- Misrepresentation of the insurance policy under which it affords property coverage to plaintiffs by making a statement in such manner as to mislead a reasonably prudent person to a false conclusion of material fact and failing to disclose a matter required by law to be disclosed
- Knowingly committed the foregoing acts, with actual knowledge of the falsity, unfairness, or deception of the foregoing acts and practices
The plaintiffs additionally alleged Zurich breached its contract and made a claim for statutory interest penalties along with reasonable attorneys’ fees for violations of the Texas Insurance Code sections 542.058 and 542.060.
Texas Insurance Coverage Attorneys
If you are a commercial property owner and your insurance claim has been wrongfully delayed or grossly underpaid, the Texas insurance coverage lawyers at Raizner Law can help. Contact us today for a free consultation to review your case.