A hard-money lender is taking American Zurich Insurance Company to court, alleging the insurer shortchanged a $184,500 vandalism claim on a Georgia “fix-and-flip” project.
Loan Mountain Investments LLC (LMI), a Delaware-based lender specializing in residential real estate rehabilitation, has filed suit in the United States District Court for the Northern District of Georgia, Atlanta Division.
The complaint, dated September 19, 2025, accuses American Zurich Insurance Company (AMZ) of breaching its builders risk policy and acting in bad faith after a property LMI financed was damaged by vandalism and flooding.
According to the complaint, LMI provided financing to a client for the rehabilitation of a residential property at 4051 Glenda Drive in College Park, Georgia. To protect its interest during the construction period, LMI obtained insurance coverage from AMZ.
Between November 17 and December 6, 2023, the property was vandalized, with copper plumbing removed from the walls, resulting in flooding and extensive damage. LMI claims it spent $184,500 to repair the property.
LMI alleges that it made multiple attempts to obtain coverage from AMZ under the insurance policy, but AMZ refused to provide full coverage for almost two years. LMI states both directly and through counsel, it sent multiple demand letters to AMZ.
After receiving a demand letter from LMI’s current counsel, Terrazas PLLC, in July 2025, AMZ admitted that it should have covered the damage to the property but claimed it was required to pay only $52,508.59 of the total $184,500 that LMI paid to fix the property.
AMZ’s offer, according to the complaint, was based on its assertion that it could substantiate only $109,201.21 of the claimed damages, and that a co-insurance penalty applied, further reducing the amount. LMI disputes both points, alleging that AMZ’s substantiation ignores evidence supporting the total repair costs and that its interpretation of the co-insurance penalty is erroneous.
The complaint references the insurance policy’s co-insurance provision, which AMZ cited as a basis for reducing the payout. LMI alleges that AMZ’s ongoing denial of full coverage, despite evidence supporting the claim, constitutes breach of contract and breach of the implied duty of good faith and fair dealing. LMI also alleges statutory bad faith under O.C.G.A. § 33-4-6, which provides for additional penalties and attorneys’ fees if an insurer refuses to pay a claim in bad faith after a proper demand.
LMI seeks actual damages, statutory penalties and damages under O.C.G.A. § 33-4-6, costs of suit, reasonable attorneys’ fees, pre-judgment and post-judgment interest, and any other relief deemed just by the court.
