Our client, a small business owner, suffered catastrophic flood damage following a major storm, only to have their commercial property insurance claim fully denied. The insurer claimed the damage was caused by “groundwater seepage,” a peril explicitly excluded in the policy, rather than by “storm surge” or surface flooding, which was covered. The denial was based on a brief, biased assessment by the insurer’s own adjuster.
Our client faced the ruinous prospect of covering six-figure repair and business interruption costs alone, with the insurer leveraging complex policy exclusions to avoid its clear contractual obligation.
We overcame this by conducting a forensic investigation that dismantled the insurer’s premise. We retained an independent hydrologist and a forensic engineer who analyzed weather data, water marks, and damage patterns. Their conclusive report demonstrated that the inundation was caused by overwhelmed municipal storm drains and direct overland flooding from the recorded deluge—a covered event—not from excluded seepage. Simultaneously, we filed a bad faith lawsuit, arguing the insurer had conducted its assessment in a rushed and negligent manner, willfully misinterpreting the cause of loss to trigger an exclusion.
Confronted with this unassailable expert evidence and the legal peril of acting in bad faith, the insurer reversed its denial and agreed to a settlement covering 100% of the property damage, lost income, and all associated recovery costs.
Result: The business owner received full compensation for all repairs and lost revenue, enabling a complete recovery and the reopening of the business.
