Unmasking Insurers’ Bad Faith: A Policyholder’s Triumph in the Hurricane Harvey Insurance Battle

(AP Photo/David J. Phillip, File)

As a legal news contributor for USA Herald, I have witnessed countless policyholders being taken advantage of by insurance companies. Today, I share the story of one such policyholder who fought back against deceitful practices and emerged victorious, ultimately shedding light on insurers’ bad faith conduct and reaffirming the rights of policyholders.

The story begins with 5556 Gasmer Management LLC, a Texas property owner who faced a long, arduous battle with two brokers and several insurers over coverage of damage caused by Hurricane Harvey. After years of litigation, they recently announced a settlement reached through mediation in their ongoing arbitration process.

Back in 2019, 5556 Gasmer Management filed a suit against insurance companies including Indian Harbor Insurance Co., QBE Specialty, and others. The crux of the complaint was that these insurers wrongfully denied coverage after failing to properly investigate the property owner’s claims of hurricane damage. The suit sought declaratory judgment, breach of contract, violations of the Texas Insurance Code, and bad faith. It also accused the brokers, AmRisc LLC and US Risk LLC, of deceiving the property owner when placing the policy.

In a move designed to further complicate the matter, the insurers removed the suit to federal court and demanded arbitration before a New York tribunal, as mandated by the terms of the agreement. This maneuver was a blatant attempt to avoid facing the consequences of their actions in a court of law.

5556 Gasmer Management fought back, arguing that the arbitration agreement was “unconscionable” and pointing out that the brokers had failed to disclose the “extremely onerous arbitration clause” in the policy. The property owner further asserted that even if the court ruled that its claims against the insurers must be arbitrated, the claims against AmRisc should still be heard in court, as the broker was not a signatory to the insurance policy.

In May 2020, U.S. District Judge Charles Eskridge granted the insurers’ motion to compel arbitration but denied the broker’s motion, staying the property owner’s claims until after arbitration. This decision signified a small but crucial victory for 5556 Gasmer Management.
After years of battling the insurers and brokers, the property owner has finally reached a settlement, a testament to their perseverance and determination to stand up for their rights. As I share this victory, I aim to highlight the importance of policyholders’ rights and expose the bad faith conduct of insurers who try to evade their obligations.

In a world where policyholders often feel helpless against powerful insurance companies, 5556 Gasmer Management’s settlement is a beacon of hope. Their victory sends a clear message: policyholders have rights, and they should not be afraid to stand up and fight for them. So, let this serve as a reminder to insurance companies that policyholders will no longer tolerate deceitful practices, and the fight for justice will continue to prevail.

By Samuel Adam Lopez, Legal News Contributor for USA Herald