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A Washington condominium association is taking legal action against Allstate Insurance Co., alleging the insurer breached their coverage agreement by refusing to cover $9.7 million in repairs for "hidden damage" to the buildings' exteriors.

Allstate $9.7M Repairs : Allegations of Breach of Contract

In a complaint filed Tuesday, Sammamish Hills Owners Association claimed the hidden damage to the exterior weather-resistive barrier, sheathing, and framing occurred incrementally and progressively during each of its policies with Allstate. However, the insurer allegedly denied coverage.

The association first tendered a claim with Allstate in October 2022 and requested an investigation into any hidden damage. By June 2023, the association, its experts at Evolution Architecture, and its insurance providers, including Allstate, conducted an investigation that revealed "system-wide" hidden damage to the buildings.

Hidden Damage Costs and Denial of Coverage

The condo association stated that the repair costs exceeded $9.7 million. Despite the damage occurring during the policy period, Allstate denied coverage in December 2023. The association is seeking a declaration that the hidden damage is covered under the policies and that no exclusions bar coverage. They accused Allstate of breach of contract for the denials, as well as bad faith by failing to acknowledge that weather conditions caused the damage, which should be covered under the policy.

Violation of State Claims Handling Standards

According to the complaint, Allstate violated state claims handling standards by not fully disclosing all pertinent coverages, misrepresenting relevant factors such as the cause of damage, and failing to perform a proper investigation before denying coverage. The complaint also includes a claim under the state's consumer protection act, requesting the court to award $25,000 for each violation of the act, along with other monetary damages.

Allstate $9.7M Repairs : Legal Representation and Response

The condo association is represented by Jerry H. Stein, Justin D. Sudweeks, Daniel J. Stein, and Jessica R. Burns of Stein Sudweeks & Stein PLLC. Representatives for the parties could not be immediately reached for comment Wednesday. Counsel information for Allstate was not available at the time.

Allstate $9.7M Repairs : Conclusion

This lawsuit underscores the ongoing disputes between policyholders and insurers over coverage interpretations, particularly concerning significant repair costs like the $9.7 million repairs in question. The outcome of this case could have broader implications for how hidden damage claims are handled in the future.