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Venerated courthouse burned; insurer accused of bad faith

Connections between Minnesota and Mississippi might not readily come to mind, but here's one: a nearly century-old courthouse in the latter state has suffered severe fire damage, and officials there are accusing a Minnesota-based insurance company of engaging in flat-out bad faith by low balling the claim.

Webster County is duly trying to cover all it bases. On the one hand, it is seeking a nonjudicial remedy outside court by taking the dispute to an appraisal hearing. The county's property insurance policy provides for that process, pursuant to which both sides independently assess damages and try to reach agreement on recovery costs.

The county states that Atlantic Specialty Insurance Co. has refused to participate, and officials now want a judge to compel it do so.

At the same time, the county and insurer are embroiled in litigation. Atlantic Specialty sued first, in federal court. The county followed by filing a complaint in state court. County officials say that Atlantic’s suit was filed in bad faith, intended to intimidate and harass and with the fundamental intent of underpaying on the claim. The county’s claim was subsequently moved to federal court.

The insurer has consistently rejected claim-related documents submitted by the county. Reportedly, it wants to pay a replacement amount that takes into account the property’s depreciated value. Thus far, it has paid $2.32 million to compensate for the fire that occurred early last year.

The county counters that depreciation is irrelevant in the dispute; the courthouse is a historical building that only increases in value over time. Webster County seeks payment of $8.17 million, which is the full limit on its policy. The county wants the courthouse rebuilt, and officials say that state law mandates that outcome.

It is far from uncommon for insurers in Minnesota or elsewhere to stall on claims or to employ a strategy that seeks to underpay or evade paying a legitimate claim. Policyholders who are facing bad-faith challenges from insurance companies can secure knowledgeable and aggressive legal representation from a proven insurance recovery law firm.

Source: Mississippi Business Journal, "Fight between county, insurer over courthouse fire continues," Associated Press, April 13, 2014

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