Legal Proceedings Against Auto-Owners Insurance for Flood Claim Mishandling

A medical group in North Carolina, Ashewell Medical Group, alongside its landlord, Boxee Holdings, has initiated legal proceedings against Auto-Owners Insurance Company and multiple claims handlers. The lawsuit, filed in federal court, alleges mishandling of an insurance claim following flooding from Hurricane Helene, which affected their Asheville office and pharmacy in September 2024. The medical practice contends that the defendants delayed processing, shifted coverage stances, and ultimately denied flood loss coverage.

According to the complaint, Ashewell Medical Group and Boxee Holdings possessed a Standard Flood Insurance Policy (SFIP), offering up to $500,000 in personal property coverage. They report documented flood-related losses exceeding $300,000, affecting structural elements such as walls and ceilings, tenant improvements, and medical and pharmacy inventories.

Claim Handling Discrepancies

The lawsuit outlines issues with claim handling procedures. Initially, the flood adjuster indicated in February 2025 that the losses, including building improvements, would be covered up to 10% of the policy limit, pending verification. There was even an assurance that an advance payment might be processed. However, the claim later resulted in denial or insufficient payment, conflicting with prior assurances, despite the plaintiffs' extensive documentation, including inventories and invoices.

Additionally, the complaint highlights procedural delays, noting that a sworn proof of loss was not requested until nine months post-flood, surpassing the typical 60-day requirement. The plaintiffs allege that the denial of the pharmacy inventory claim by Torrent Technologies was due to insufficient documentation, despite previous submissions.

Coverage Disputes and Broker Liability

The coverage argument by Auto-Owners is contested, as the insurer purportedly asserted that contents coverage did not extend to tenant improvements. This was referenced to a separate policy that the plaintiffs claim was already depleted, offering no relief. The plaintiffs argue they are entitled to distinct sublimits under their existing policy.

Further allegations involve First-Citizens Bank & Trust Company and its agent, suggesting a failure to secure adequate flood insurance for the property situated in a recognized flood zone. This extends into claims of broker liability for errors and omissions.

The lawsuit consists of 14 claims, including breach of contract, professional negligence, and unfair trade practices under North Carolina law, with potential for treble damages. The plaintiffs seek at least $125,000 in coverage for denied claims, declarations of coverage, legal fees, and a jury trial. The defendants have yet to respond to these allegations in court.