When Hurricane Ike struck Galveston in 2008, it caused damage and insurance disputes for countless homes and properties. JAW The Pointe LLC knows of this damage and the following legal complications more than most. After purchasing the property just a year before the hurricane hit, the owners secured a group policy with Lexington for numerous two-story buildings that also provided up to $25 million in insurance to around 300 apartment complex owners.
According to Lexington, the policy only covered wind damage, not flood damage or the combination of wind and flood damage. The Pointe apartments suffered from both wind and water damage and the owners were required to completely demolish and rebuild their apartments according to city codes. The estimated cost for rebuilding was around $6.2 million, which was more than the original purchase price of $5.7 million. While the original policy wouldn’t cover the damage, JAW had a separate policy that covered floods, which provided around $5.7 million in settlements for the property to be repaired.
Though JAW had the right coverage, Lexington denied payments and claimed that under the policy’s “anti-current causation clause,” they wouldn’t have to pay. It also claimed that it had already paid out all of the $25 million to other claims from among the 300 owners.
JAW took action in response to this by suing Lexington for bad faith insurance. The jury found the insurer guilty and awarded them nearly $4 million in total damages. However, the story doesn’t end there. Lexington appealed the case to the Texas 14th District Court of Appeals, where the verdict was ultimately reversed on grounds that JAW did not provide sufficient proof of covered losses. They claimed that JAW had already received enough in settlements to cover all costs and that they had not separated the covered and non-covered losses in their claim, making them ineligible for coverage. The owners of The Pointe filed an appeal to this reversal in 2013, with no current response. Just this month, on the 20th, JAW sent a letter to the court asking that they reinstate the verdict for their damages, bringing the case to attention again.
Nearly a decade later, these Galveston apartment owners are still fighting for the damages they need to cover costs associated with rebuilding and damages. This case just demonstrates how difficult it can be to prove a bad faith insurance claim, especially with the legal power that insurance companies often utilize. The insured may believe that they have the proof and evidence to support their case, but should always expect the insurance companies to try to find a loophole and avoid paying out at all costs. That is why having a seasoned Texas bad faith insurance attorney on your case is so crucial.
