Samsung Accuses Factory Mutual Insurance of Lowballing $400M Winter Storm Uri Claim

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(USA Herald) – Samsung Austin Semiconductor LLC has filed a complaint against Factory Mutual Insurance Co. (FM Global) over the insurer’s handling of a $400 million claim for damage caused by the 2021 Winter Storm Uri. Samsung alleges that FM Global has violated Texas insurance laws by misrepresenting coverage and failing to properly investigate and settle the claim in good faith.

According to the complaint, FM Global confirmed coverage for $126 million in damages to the Texas semiconductor chip manufacturing facility that were directly caused by freezing temperatures. However, the insurer refused to cover any other losses, citing a “lack of services” exclusion. Samsung argues that this exclusion cannot apply to their claim as they only lost power during the storm due to circuit breakers at the on-site substation.

The company further alleges that FM Global’s evaluation of coverage was not based on the policy terms or the facts of the claim but rather a “broader scheme” that the insurer has applied to all Texas policyholders seeking Uri-related claims. Samsung believes that FM Global is knowingly and improperly attempting to minimize their exposure by limiting winter storm coverage to lower sub limits for service interruption.

“FM Global has wrongfully and in bad faith refused to honor its agreement to insure its full share of Samsung Austin’s covered losses,” the company stated in the complaint. “FM Global has knowingly underpaid Samsung Austin’s claim by hundreds of millions of dollars, relying on plainly inapplicable exclusions and other inapplicable policy provisions in an attempt to wrongfully limit its obligations.”

Samsung’s Austin-based facility suffered significant losses as a result of Winter Storm Uri. Freezing temperatures caused damage to outside air units that are essential for precise atmospheric controls necessary for chip production. This resulted in direct physical damage to machinery and equipment, as well as lost income and other expenses. The company reported roughly $150 million in damage to its machinery and equipment, as well as more than $250 million in business interruption losses over subsequent months.

The company accuses FM Global of knowingly underpaying their claim by hundreds of millions of dollars. Samsung is seeking full coverage under their $2.5 billion “all risks” policy and damages for FM Global’s violation of Texas insurance laws.

This story was first reported by Samuel Lopez, an investigative journalist for the USA Herald. As the case unfolds, it will be important to keep an eye on the outcome, as it has implications for all policyholders and highlights the ongoing battle between insurers and policyholders over fair claims handling practices.

In conclusion, Samsung’s fight against FM Global over their Winter Storm Uri claim is a testament to the importance of policyholders being aware of their rights and fighting against insurer’s bad faith. It will be interesting to see the outcome of this case and the impact it will have on the insurance industry as a whole.