Three American International Group Inc. (AIG) companies owe $55.3 million in compensation and damages to Victaulic Co. for breach of contract and bad faith practices. Broken down, the companies will owe $9.3 million in compensation and $46 million in punitive damages to Victaulic Co.
The three subsidiaries of AIG involved were:
- American Home Assurance Co.
- National Union Fire Insurance Co.
- Insurance Company of the State of Pennsylvania
The case involved a denial of commercial general liability insurance provided by these three companies for more than 10 years. There were multiple incidents of denial involved in the suit against AIG.
AIG’s Contradictions Lead to a Win for Victaulic Co.
Victaulic Co. was able to successfully prove that AIG’s companies wrongfully refused to provide necessary coverage under its policies for numerous product defect suits leveled against them through numerous sources. Since AIG refused to give the coverage they were owed, Victaulic Co. responded by suing them for breach of contract and bad faith practices. It was demonstrated in court that the AIG subsidiaries did breach their insurance contracts in bad faith and with purposeful and malicious intent.
Some of the most impactful pieces of evidence where the conservations held by AIG internally. Witness testimony helped prove that AIG had reached a conclusion on coverage within the company, only to tell Victaulic something different, contradicting themselves on multiple occasions.
For example, in on situation, an AIG claims handler had found that a claim made against Victaulic was actually a covered occurrence. However, when AIG contacted Victaulic just 15 days later, they claimed there wasn’t enough information to determine if a covered occurrence actually happened. This made it extremely difficult for the company to get coverage AIG knew they owed them, and in some cases, outright denied them.
Three of Nine Claims Ruled in Favor of Victaulic
In total, the disagreements between AIG and Victaulic spanned across nine different product defect actions brought against the pipe-joining company. While AIG tried to file suit in Pennsylvania in 2012 to claim that they didn’t owe Victaulic coverage, their suit was dismissed. In response, Victaulic filed suit in California and was ultimately successful in getting three claims ruled in their favor out of the nine.
Overall, countless documents and strong witness testimony helped Victaulic present a strong case of bad faith and breach of contract. As such, AIG will be forced to provide coverage and compensation for their actions.