Claims against Broker for Insufficient Coverage Fail

Failure in ripped paper

The School District suffered $3.5 million in property damage after Hurricane Harvey struck.

May 10, 2021
Tred R. Eyerly - Insurance Law Hawaii

After a coverage dispute for damage caused by Hurricane Harvey was settled, the insured's claims against its insurance broker for providing insufficient coverage were dismissed. Hitchcock Indep. Sch. Dist. v. Arthur J. Gallagher & Co., 2021 U.S. Dist. LEXIS 57452 (S.D. Texas Feb. 26, 2021).

The School District suffered $3.5 million in property damage after Hurricane Harvey struck. Its insurers denied coverage and the School District sued. During the litigation, the School District learned that the policies contained an arbitration clause and a New York choice of law provision. Rather than pursue its claims in arbitration, the School District settled with its insurers and sued its broker for failing to obtain insurance without arbitration or choice of law provisions. The broker moved to dismiss

The School District claimed that it had to settle with the insurers for less than what it would have settled had the arbitration and choice of law provisions not been in its policies. The court found this novel theory to be based upon pure speculation

Mr. Eyerly may be contacted at te@hawaiilawyer.com



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