MKB Constructors, a public works contractor involved in school construction, obtained a “Builder’s Risk” policy from American Zurich Insurance Company that included an “earth movement endorsement,” covering damage caused by “earth sinking.” While only 2 inches of settling of the building pad was contemplated by prior geotech analysis, actual settling during construction of the pad was much greater, leading to increased construction costs. MKB then brought a claim under the policy. Zurich’s initial investigation corroborated MKB’s claim, but they did not tell that to MKB. Instead, Zurich looked for ways to unreasonably deny the claim. In their verdict, the jury found that Zurich was unreasonable and awarded $2.4 Million to MKB. This award included an $862,000 penalty against Zurich under Washington’s Insurance Fair Conduct Act (IFCA). This is believed to be the largest penalty ever levied against an insurance company under the IFCA statute. MKB is also entitled to an award for attorney fees, expert fees and costs as a further penalty for Zurich’s misconduct.
Friedman | Rubin Trial Lawyers: Ken Friedman, Peter Mullenix and Richard Dykstra.