Insurance agency hit with over $3 million in negligence settlement with city

Insurance agency hit with over $3 million in negligence settlement with city | Insurance Business

Insurance agency hit with over $3 million in negligence settlement with city

An insurance agency in Taunton, MA ended up paying the city council more than $3 million for its “failure to properly advise” the municipality.

Taunton Gazette reported that nearly eight months after the city of Taunton won its $2 million lawsuit against local firm Farrell Backlund Insurance Agency, an out-of-court settlement with the agency and its lawyers has been reached this week, earning the city another $1.1 million.

“It’s a victory. We’ve reached the conclusion of the City Hall fire litigation,” said Taunton mayor Thomas Hoye.

Hoye added that the city will use the money to help pay for the rebuilding and renovation of City Hall. A recent cost estimate for the renovation project was pegged at $26.6 million.

In 2012, the city filed a $6 million suit against both Farrell Backlund (naming agency president Russell Martorana) and the city’s insurer, Axis Insurance. The city also sued the agency for $4.4 million, claiming that Farrell Backlund “failed to properly advise the city as to the appropriate coverage” for the City Hall building.

According to officials, an arsonist set a fire in the City Hall building’s fourth floor on August 17, 2010.

While the fire damage was minimal, firefighting efforts left extensive water damage to the walls and ceilings in the front section of the building. The mayor at the time, Charles Crowley, had the walls demolished to prevent mold growth.

Since then, the city’s departments have operated a temporary location inside a former local school.

Taunton was later informed that it was entitled to a $4.8 million settlement, but ended up collecting only $3.2 million. Axis had withheld almost $1.6 million representing state code upgrades, recoverable depreciation and a $100,000 deductible, alleging that the city missed a two-year deadline to present plans to rebuild the City Hall building and work on those plans.

The city later collected $600,000 from Axis, just before the trial over the lawsuit began earlier this year.

 

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