Ike damage results in suit against Fire Insurance Exchange

By Kelly Holleran | Feb 12, 2009

A Jefferson County woman has filed suit against Fire Insurance Exchange and an adjuster, alleging she was not paid money to which she was entitled after Hurricane Ike destroyed sections of her home.

When Ursula Reed's property at 5053 Lakeside Drive in Port Arthur sustained roof, water, wind, foundation, contents and structural damages on Sept. 13 during Hurricane Ike, she submitted a claim to Fire Insurance Exchange, which had insured her property, according to the complaint filed Jan. 26 in Jefferson County District Court.

"Plaintiff's property and home sustained massive damages including flooding in the back of the home," the suit states. "Additionally, shingles lifted off the roof and the gutters were torn off completely. All window screens were blown off or damaged. The enclosed patio now leaks and water enters around the windows and the front door every time it rains."

Reed requested Fire Insurance Exchange cover the cost of repairs, plus additional living expenses, the suit states.

However, Fire Insurance Exchange denied Reed's claim for the repairs of her property, even though the policy provided coverage for losses, she claims.

It denied the claim after assigning an adjuster � Reo Shultz -- to adjust the claim, according to the complaint.

Fire Insurance Exchange told Reed it would not pay the full proceeds of the policy, although demand was made for it, which constitutes a breach of the insurance contract, the suit states.

"Defendants Fire and Shultz misrepresented to Plaintiff that the damage to the Property was not covered under the Policy, even though the damage was caused by a covered occurrence," the suit states.

Fire Insurance Exchange and Shultz also failed to make an attempt to settle Reed's claim in a fair manner, a violation of the Texas Insurance Code, unfair settlement practices, she claims.

The company and Shultz failed to explain the reason for their offer of an inadequate settlement, another violation of the Texas Insurance Code, according to the complaint.

Fire Insurance Exchange and Shultz failed to affirm or deny coverage of the claim within a reasonable time frame, the suit states.

They refused to fully compensate Reed, even though they did not conduct a reasonable investigation, which constitutes another violation of the Texas Unfair Competition and Unfair Practices Act, Reed alleges.

Shultz's conduct constitutes multiple violations of the Texas Insurance Code because he misrepresented material facts relating to the coverage at issue.

Fire Insurance Exchange and Shultz are liable to Reed for a conspiracy to commit fraud, according to the complaint.

Fire Insurance Exchange's behavior constitutes a breach of contract because it did not live up to promises made in its insurance policy with Reed, according to the complaint.

The company's unfair settlement practice constitutes an unfair method of competition and an unfair and deceptive act or practice in the business of insurance, the suit states.

Reed is seeking unspecified actual, treble, punitive and exemplary damages, plus attorney's fees, costs, pre- and post-judgment interest and other relief to which she may be entitled.

J. Steve Mostyn of The Mostyn Law Firm in Houston and Michael R. Ramsey and Gregory F. Cox of The Mostyn Law Firm in Beaumont will be representing her.

The case has been assigned to Judge Bob Wortham, 58th District Court.

Case No. A183-133

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