The Atlantic Hurricane Season has just begun, and with the weather community predicating a tumultuous season one insurance company's decision to pull up stakes has resulted in a class action lawsuit on behalf of thousands of Golden Triangle residents that are now uninsured.
Serving as a class action representative of all Capitol County Mutual Fire Insurance Co. policyholders who paid premiums from November through June, Rebecca Joseph filed suit against the insurer with the Jefferson County District Court on June 11.
Capitol County Mutual and its sister companies lost more than $70 million when Hurricanes Rita and Katrina waltzed through the Gulf Coast. In a "calculated" move to recover some of those losses, the insurance company went ahead and insured thousands of Texans during the months of November through June, but then sent a letter to its customers a few weeks ago informing them the company would be bailing and leaving them uninsured during hurricane season.
"The defendant provided notice…to the plaintiffs on May 29, 2007 (informing them) that Capitol County intended to non-renew their policies effective July 2007," the suit said. "The timing of the Defendant's actions is not coincidental."
The suit goes on to say that not only were the defendant's actions not coincidental, but they constitute an illegal price fixing scheme in violation of numerous Texas statutes and Texas common law.
"The defendant knew as early as May 2006 that it did not intend to renew the plaintiffs policies to contain coverage for windstorm, hurricane and hail," the suit said. "However, defendant continued to collect premiums, which were based on all risks covered by the policy, during a time period when there was little to no risk of covered losses from windstorm, hurricane and hail."
With the 2007 hurricane season rapidly approaching, and a high number of storms predicted, Capitol County "then attempted to non-renew each and every policy that could expose the company to potential hurricane losses," the suit said. "This was a calculated move to recover losses by defendant."
Capitol County policyholders pay on a month-to-month basis, and a portion of the premium paid each month insures against windstorm, hurricane and hail damage, the suit said. The plaintiffs paid for that coverage during November to June, a time period not typically subjected to windstorm damage.
"Accordingly, the defendant has collected premiums for a risk during months when it was not likely to be exposed to liability and quickly attempted to non-renew the plaintiffs' policies once the risk increased," the suit said.
The five-count suit faults Capitol County with deceptive trade practices, fraud, negligent misrepresentation, insurance code violations, and breaching its contract.
The suit also contains a request for a temporary and permanent injunction, which asks the court to stop Capitol County from non-renewing the plaintiffs' policies.
If the defendant is allowed to non-renew, "the plaintiffs will suffer irreparable harm because damages to them are difficult to calculate in light of the fact that the insurance provided protects against unknown future risks," the suit said.
With thousands of people insured by Capitol County Mutual Fire Insurance in Jefferson County alone, the Texas Department of Insurance is asking residents to call with any questions they may have about insurance or their policy being non-renewed. TDI can be reached at 1-800-252-3439, from 8 a.m. to 5 p.m., Monday through Friday, or by visiting www.tdi.state.tx.us.
Joseph and the other plaintiffs are suing for actual, consequential, incidental, treble and exemplary damages, plus mental anguish and all court costs.
They are represented by attorney Jason Byrd of the Beaumont law firm Snider & Byrd.
Judge Bob Wortham, 58th Judicial District, will preside over the case.
Case No. A179-469.