Raizner Slania LLP has filed an insurance lawsuit on behalf of the owner of a commercial property in Webb County, Texas (“Plaintiff”) against Westchester Surplus Lines Insurance Company (“Westchester” or “Defendant”). The lawsuit was necessary due to the wrongful denial of the Plaintiff’s property damage claim.

Wind and Hailstorm Damages the Property

On May 26, 2020, a wind and hailstorm struck the property, leaving it substantially damaged. Sizeable portions of the property’s roof were compromised by wind and rain, including the HVAC system. Upon discovering the damage, Plaintiff promptly filed a claim with Westchester, alerting them to the extensive damages. 

Westchester’s claims-handling process resulted in a wrongful denial that omitted a wealth of facts, physical evidence, obvious wind damages, and meteorological data from Tropical Storm Imelda supporting Plaintiff’s claim. Westchester unreasonably pinned the loss on anything but the wind, an action designed to save the insurer hundreds of thousands of dollars in damage to the property and the business. 

Westchester assigned an internal adjuster to handle the claim. However, he was unqualified and incapable of adequately assessing the damages to the property. Westchester’s adjuster and engineer inspected the property, but blamed the damages on anything except the severe wind and hail. In fact, the report noted wear and tear and pre-existing condition breaches. Westchester has ignored the scores of facts, witnesses, and meteorological data supporting the covered claim and instead unreasonably pinned the loss on causes that would exclude coverage.

To this day, due to Westchester’s outcome-oriented, inadequate, and haphazard investigation, the carrier has refused to pay for the covered damages under its policy.

Plaintiff Sends 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 avoid unnecessary lawsuits. Upon receiving notice, an insurer has the right to conduct an inspection and even make an offer of payment to avoid litigation. When utilized properly, Section 542A should assist business owners like the Plaintiff in avoiding protracted litigation over a clear claim. 

In compliance with Section 542A.003, Plaintiff gave its pre-suit notice to Westchester on March 10, 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. Westchester responded to the demand on May 10, 2021 but refused to acknowledge any wrongdoing.

The Defendant Violated the Texas Insurance Code 

In addition to the actions mentioned herein, Plaintiff specifically alleges Westchester violated the Texas Insurance Code by: 

  • Failing to attempt to effectuate a prompt, fair, and equitable settlement of a claim with respect to which liability has become reasonably clear;
  • Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its policies
  • Failing to provide promptly a reasonable explanation, in relation to the facts or applicable law, for the denial of a claim;
  • Refusing to pay claims without conducting a reasonable investigation
  • Misrepresenting the insurance policies under which it affords property coverage to Plaintiff;
  • Misrepresenting the insurance policies 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
  • Misrepresenting the insurance policies under which it affords property coverage to Plaintiff by making a statement in such 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;
  • Failing to acknowledge receipt of the claim;
  • Failing to timely commence investigation of the claim or to request from Plaintiff any additional items, statements, or forms that Westchester reasonably believe to be required from the Plaintiff;
  • Failing 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 Defendant; and
  • Delaying of the payment of Plaintiff’s claim

The Plaintiff also made claims for statutory interest penalties along with reasonable attorneys’ fees, alleging the carrier breached its contract and duty of good faith and fair dealing, and violated the Texas Deceptive Trade Practices Act (DTPA).

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.

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