What happened: Mt. Hawley Insurance Company alleges it was forced to pay $1 million to settle a wrongful death claim after Hanover rejected an earlier $900,000 settlement offer without telling anyone
Who's involved: Mt. Hawley Insurance (an RLI Corp. subsidiary) suing two Hanover Insurance Group subsidiaries and a Florida contractor
What's at stake: $1 million in settlement costs Mt. Hawley says the defendants should have covered, plus attorneys' fees and interest
Why it matters: The case tests whether an insurer that takes over a defense as an additional insured carrier can reject a within-limits settlement offer without notifying the excess carrier - and who pays when the claim spirals
Where it stands: Filed October 2, 2026, in federal court in Miami
A construction worker was fatally electrocuted while installing rebar near high-voltage power lines on a synagogue project in Miami-Dade County. Three years later, the insurer that paid to settle the resulting wrongful death claim says it should never have been the one writing the check.
Mt. Hawley Insurance Company filed suit on October 2, 2026, in the US District Court for the Southern District of Florida, alleging that two subsidiaries of The Hanover Insurance Group and a general contractor owe it the $1 million it paid to resolve the case. Mt. Hawley is a surplus lines subsidiary of RLI Corp. The Hanover American Insurance Company and The Hanover Insurance Company are both part of The Hanover Insurance Group, Inc. (NYSE: THG).
The dispute turns on a layered insurance arrangement common on commercial construction projects - and on what happened when that arrangement fell apart.
The Shul of Bal Harbour, a synagogue in Miami-Dade County, hired Schmid Construction as general contractor to renovate its existing temple and build a new one. The deal required Schmid to carry commercial general liability (CGL) insurance and add The Shul as an additional insured - meaning Schmid's policies would pay first if anything went wrong on the job, before The Shul's own coverage kicked in.
Schmid's CGL carrier was Hanover American, with $1 million in per-occurrence coverage. Hanover Insurance Company provided an additional $5 million in excess coverage above that. Mt. Hawley, meanwhile, had written The Shul's own CGL policy - also $1 million per occurrence - but under the construction contract, its coverage sat above the combined $6 million in Hanover limits. In other words, Mt. Hawley was supposed to be the last carrier to pay.
On July 18, 2019, according to the complaint, a worker was fatally electrocuted while installing rebar near high-voltage lines at the project. The worker's estate later filed a wrongful death action against both The Shul and Schmid.
Mt. Hawley asked Hanover American, Hanover Insurance Company, and Schmid to step in and cover The Shul's defense on July 8, 2020, according to the complaint. Two days later, Hanover American agreed and took over.
Then, the complaint alleges, things went sideways.
On October 13, 2020, the estate offered to settle with The Shul for $900,000 - well within Hanover American's $1 million policy limit. According to the complaint, Hanover American never told The Shul or Mt. Hawley about the offer. It turned the proposal down on its own.
When Mt. Hawley later raised the issue, the filing alleges, Hanover American responded in an October 2021 letter that it had "no duty to communicate any settlement opportunities" to The Shul and that it held "complete control and sole discretion over settlement."
The price kept climbing.
By August 2022, the estate had made a new demand: $6 million. Mt. Hawley demanded that Hanover American settle. According to the complaint, Hanover American refused, pointing to a third party - H&M Builders, LLC - that it said owed The Shul money under a separate arrangement.
On October 4, 2022, the complaint alleges, Hanover American rejected the estate's $6 million demand without making any counteroffer.
That same day, Mt. Hawley warned Hanover that "because Hanover has informed [Mt. Hawley] that it will not protect The Shul by accepting Plaintiff's demand, please be advised that Mt. Hawley will offer The Shul's policy limit of $1,000,000 to Plaintiff in exchange for a full and final release of The Shul alone."
Three days later, Mt. Hawley made the offer. The estate accepted on October 11, 2022.
Mt. Hawley then asked Hanover American to reimburse the $1 million, arguing that Hanover American owed The Shul coverage that should have paid first. The complaint says Hanover American refused - while acknowledging that Mt. Hawley was "excess over the Hanover policy with respect to The Shul."
Hanover American later paid $500,000 to settle the estate's separate claim against Schmid.
So the carrier that was supposed to pay first ended up paying $500,000. The carrier that was supposed to pay last ended up paying $1 million. Mt. Hawley now wants that money back.
The suit brings two claims - both seeking to recover the settlement payment from the parties Mt. Hawley says should have covered it. Mt. Hawley also seeks attorneys' fees and interest under several Florida statutes.
When one carrier controls a defense and a within-limits settlement offer comes in, the question of who gets told - and what happens when no one does - is now squarely before the court.
The allegations in the complaint have not been tested, and no court has ruled on the merits.
