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

Insurers’ Fallout in Lawsuit Prompts New Suit Against ACE American

April 30, 2012 - ACE American Insurance Co. has been sued by a fellow insurer that contends it has wrongly failed to defend a client.

American States Insurance Co., of Richardson, Texas, accused ACE American of breach of contract in refusing to accept the tender of defense of a company that was involved in an auto accident lawsuit.

American States had issued a commercial auto policy to Hook and Anchor Marine & Water Sports LLC for a year leading to Aug. 8, 2009. ACE American had sold a business auto policy to Chemical Weed Control Inc. for a year leading to June 6, 2009.

On Oct. 21, 2008, a Chemical Weed-owned truck driven by Hook and Anchor employee Jayme Lynn Jones was involved in a collision in San Angelo, Texas. The driver of the second vehicle, Alexander Kosaka, was injured and sued both of the companies.

The lawsuit stated that ACE American settled the claims against Jones and has acknowledged that Hook and Anchor qualifies as an insured under its policy. American States said that because Jones was driving a vehicle that was owned by Chemical Weed, it tendered the defense of Hook and Anchor to ACE American as the primary carrier. ACE American reportedly declined, setting the stage for this suit in U.S. District Court in Houston.

American States asked the court to declare that ACE American’s policy is primary, while the plaintiff’s coverage is excess with regard to the duty to defend and indemnify Hook and Anchor. It asked that the court determine that ACE American alone has the duty to defend Hook and Anchor in the underlying suit.

American States also cited Texas Insurance Code regarding the prompt payment of claims in saying that because ACE American has refused to accept the tender of Hook and Anchor’s defense it is liable to the plaintiff for an 18 percent penalty on the defense costs that American States has incurred.

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