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Be careful before you choose this Houston-based insurance company to represent you after a hurricane or other natural disasters.
There is something in the fine print of AmRisc insurance policies that we want to warn you about.
The sounds. The fury. The victims.
The category four storm took 69 lives and hit the Texas coast so hard it wreaked havoc for hundreds of miles.
And every single school in Corpus Christi ISD was damaged, 70 million dollars in damages.
“We did have some roofs where you could really see the damage. Where things were torn off and blown out. And we had water into the buildings and the classrooms,” said CCISD president.
To repair the damage the district filed a claim with their insurance company, Houston based AmRisc which is owned by Truist Bank.
But AmRisc could only pay out 8 million dollars for the damage.
“Between what they’ve given us and what we expect, we think there’s a big gap, said CCISD comptroller.
So, the district filed a lawsuit against AmRisc.
That’s when it found buried deep in the fine print of its insurance policy was a clause preventing it from suing AmRisc.
Instead, to try to get money to fix their schools for 33,000 students, Corpus Christi ISD was forced into a private and confidential arbitration.
Not right here in Texas, but in New York. With New York lawyers and a New York judge.
“New York laws are traditionally pro insurance compared to Texas,” said Matthew Pearson.
Attorney Matthew Pearson should know, he’s been the lawyer for a lot of school districts and many of his fights involve the same insurance company.
“I would tell them upfront, look, you know, we can litigate this. But I will tell you, the value of your case in New York is at least 50-percent less,” continues Pearson.
And just 50 cents on the dollar is exactly what Corpus Christi ISD eventually got from AmRisc in its New York arbitration.
The insurance company paid only 35 million dollars, half of the 70 million dollars in hurricane damage.
So, who paid the rest?
You guessed it. Taxpayers. The district had to raise taxes to help pay for the repairs.
You got to love the folks at AmRisc, after hurricane Hanna raked schools in Edinburg ISD and caused 40 million dollars in damage, they offered to pay a little over 800 thousand dollars.
That case is still ongoing.
AmRisc peddles surplus lines insurance to cover a lot of things other insurance policies don’t cover, like hurricane damage. But here’s the deal, they’re accused of failing to mention that little New York game.
“In lots of cases we’re seeing these policies aren’t actually put together, finalized and sent out until 30 days, 45 days after the fact. And sometimes we’ve had clients that don’t even get a copy of their policy until after there is a claim,” said Pearson.
The complaints led Texas lawmakers to try and put a stop to it.
“It makes no sense for a Texas property owner to have their claims resolved in New York under New York law,” said Mayes Middleton.
Galveston State Representative Mayes Middleton led the charge, Texas fights, he said, should be settled in Texas, not New York.
“This burden makes the arbitration process more expensive, cumbersome, time consuming, and dissuades policyholders from seeking a better outcome,” continues Middleton.
Testifying at the capitol hearing last April were several policy holders of AmRisc, or in this case victims.
Including Fred Bandera, who owns eighteen commercial properties damaged by the same hurricane.
“You know the cost of having to go to New York and the expenses and the differences in the laws. I had to settle for between 30 to 40% of the claim,” said Fred Bandera.
Here’s another unhappy AmRisc customer, Houston businessman Matt Dilick from Friendswood.
“I’m a property owner and I’ve been a victim of this concealment of the arbitration clause,” said Matt Dilick.
Dilick owns the Settlers Ranch apartment complex in southeast Houston, also damaged by Hurricane Harvey and once again AmRisc refused to pay the full claim. In fact, they were trying to pay nothing.
So, Dilick sued right here in Harris County.
“I was actually sued in New York to take my Texas case to New York,” continued Dilick.
But luckily in Dilick’s case, a New York judge thought the whole thing didn’t make sense since all of the parties were from Texas and he sent it back to Harris County.
After a recent hearing, we caught up with the attorney representing this insurance company.
“I’m with Dolcefino Media and we want to ask you about the lawsuits against the school districts, the ones the school districts have filed.
Attorney: No comment.
Brian: What about the kids and parents of those districts?
Attorney: there’s no comment
“Texas law needs to apply here,” said Ware Wendell.
Ware Wendell is with Texas Watch, an insurance watchdog group in Austin.
“There is no good, compelling reason to take Texas insurance disputes and send them up to New York and let New York city lawyers charge 1200 dollars an hour to resolve our Texas insurance disputes right here in our state,” continued Wendell.
The legislature agreed, no more New York arbitration with AmRisc. The bill was sent to the governor to sign.
“It was a bipartisan bill that made it out of committee, that made it through the senate, that made it through the house and got up to the governor,” said Matthew Pearson
But Governor Greg Abbott vetoed it.
“Texans for lawsuit reform sent the governor a letter asking him to veto and lo and behold, he vetoes it.)
Texans for lawsuit reform isa powerful Austin lobby, they never bothered to testify against the bill, but they really didn’t have to.
In its letter to Abbott it acknowledged “the New York problem.” But then turned around and claimed the legislation “does not recognize that consumers of surplus lines insurance are sophisticated businesses capable of protecting their own interests.” In other words, buyer beware.
That’s hard to do when the arbitration clause is hidden in the fine print.
Still the governor agreed with the lobbyists saying, “could inadvertently increase premiums.”
But the insurance industry watchdog believes the veto will do exactly that, raise insurance rates.
“The governor vetoed the bill, which I am very concerned is going to drive up costs for Texas policyholders, whether those are school districts, or businesses, or even homeowners. And for those school districts, that’s going to result in a tax hike for you and me,” said Ware Windell.
And continue to line the pockets of New York lawyers and protect an insurance company that should face the music here in Texas.Keep up with us on social media: