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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

ACE American Settles Lawsuits Over Policyholder Claims

July 18, 2011 - ACE American Insurance Co. has paid $4 million to settle lawsuits with a client that had claimed damages against the company in the wake of Hurricane Ike.

American Spectrum Realty Inc. said in a press release that it reached a settlement with its insurance carrier that was net of fees from attorneys, experts, consultants, and other costs associated with the claims. The Houston-based company did not indicate whether the $4 million paid to it was inclusive of $2.22 million that ACE had previously advanced to the company in the wake of Ike.

American Spectrum owns and operates a number of residential and commercial buildings across the country. After Hurricane Ike struck Texas on Sept. 12, 2008, the company submitted damage claims to its carrier, ACE, for two buildings in Houston.

American Spectrum later expanded that list to more than 20 properties as it hired a public adjustor to assist it in the claims process. ACE, meanwhile, hired a forensic accounting firm to inspect the claims, and on March 3, 2010, sued American Spectrum in U.S. District Court in Philadelphia seeking a declaration that it had properly indemnified its client. By that time ACE said that it had paid the company $2,223,207, net of a $500,000 deductible.  

The insurer said in the suit that in many instances that American Standard presented it with bid proposals for repair work, not for actual bills of work that had been completed. And it said that as late as a year after the hurricane, American Standard had not yet presented a claim under the loss of business provision of the policy.

ACE said in its lawsuit that American Standard said it was owed $18.82 million by the insurer. But American Standard had sued ACE in 2010 in state court in Texas for breach of duty and dealing in bad faith over the claims, and contended it was due more than $50 million.

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