Texas Brine: Arch Specialty Insurance Should Pay Sinkhole Claims Costs

January 9, 2014
Complaint

Texas Brine Co., the company blamed for the Bayou Corne-area sinkhole, has filed a formal complaint with the Louisiana Department of Insurance. The company alleges one of its insurers is not paying up as its policy requires.

Company officials charge Arch Specialty Insurance Co. has not reimbursed the costs of Assumption Parish government entities since Nov. 1 and never reimbursed Texas Brine for any of its $55 million in costs from the state-mandated response to the growing 26-acre sinkhole in northern Assumption.

“Arch’s conduct violates both the letter and the spirit of Louisiana law governing fair claims handling by insurers,” wrote Mark D. Mese, a Texas Brine attorney, in the Dec. 23 complaint letter obtained on Jan. 6.

The Advocate reports Arch is the second Texas Brine insurer to balk at paying for sinkhole costs.

Liberty Insurance Underwriters Inc. sued Oct. 22 in U.S. District Court in Houston, asking a judge to declare the insurer does not have to pay on its $50 million policy.

Liberty alleges Texas Brine had years of warning about a company-operated salt dome cavern suspected of partially collapsing and causing the sinkhole to emerge in August 2012. Texas Brine has disputed those allegations.

Texas Brine officials said in a separate statement that Arch is trying to shirk its responsibilities and needs to be held accountable by the department.

Texas Brine said in the Dec. 23 complaint that Arch ignored requests for a resolution, even reneging on a promised meeting Dec. 12 at Arch company offices in New Jersey.

Arch Insurance Group spokesman Thomas Routson said the company does not comment on claims-related matters.

Assumption Parish Sheriff Mike Waguespack said his office has been reimbursed $725,996 but is owed another $176,459. He said he expects the demands from the sinkhole only to increase in the coming months due to planned response work around the hole.

 

Latest Comments

  • January 10, 2014 at 10:51 am
    E. Emanuel says:
    I beleive what is at issue here is 3rd party PD claims, i.e. General Liability coverage BI or PD, not first party Property coverage.
  • January 10, 2014 at 9:58 am
    M. Prankster says:
    Sinkhole collapse is a covered cause of loss on the basic, broad and special causes of loss commercial property coverage form...Did Arch specifically exclude sinkhole collapse... read more
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