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Texas Cities Should Not Buy Property Insurance from Texas Municipal League Interstate Risk Pool – Property Insurance Coverage Blog



Another Steve Badger vs. Chip Merlin Rematch will take place this Thursday at the Texas Association of Public Insurance Adjusters (TAPIA) Fall Conference. In preparation for this debate, I came across another example of a city in Texas being abused in the property insurance process by the Texas Municipal League Intergovernmental Risk Pool.

Risk pools often help government entities fight third-party liability. Many mayors and elected representatives seem quite happy with this type of service and usually lower prices. In my opinion and experience, risk pools often treat their own customers as third parties and look for ways to minimize property insurance claims payments. Instead of acting in good faith and giving peace of mind, property insurance claims are often undervalued and then fought.

The City of Hidalgo's property insurance claims waited at the Texas Supreme Court until the court denied a Writ of Mandamus requested by Riskpool. This case is a new example of what Texas cities can expect from the pool of risk.

First, the statement was delayed and then the risk pool delayed further issues with recurring and unsuccessful attempts to appeal. The risk pool even took the legal position that the city could not sue it due to state immunity. How arrogant it is that the management of the risk pool would take such a position ̵

1; to feel that it can act with complete immunity against contractual promises it gives its own members. Texas judges stopped that argument.

Here are the background facts alleged by the city:

On June 1, 2016, a severe storm consisting of heavy rain, hail and winds between 85 and 100 miles per hour hit the arena with enough energy to snap the trees surrounding the outside and shoot a golf cart through its rolling steel door. The storm collapsed the arena's west wall and caused significant structural damage to the outside of the main entrance. The storm also caused damage to the building's roof so that water could penetrate and continuously flow through the structure's interior. The water caused extensive damage to the main seating area, the arena suites, the offices, the changing rooms, the toilets, the ticket area and the mechanical operation center.

The next day, the city filed an application for its state self-insurance pool administered by the Texas Municipal League (Risk Pool). The risk pool then assigned an adjuster to adjust the city's Storm requirements and prepare an estimate of the city's damage.

On … June 27, 2016, Risk Pool sent the city a $ 283,666.81 damage check – the amount that Risk Pool allegedly owed the city after using $ 2500.00 deductible on the claim and containing excessive write-offs, as well as overhead / profit. This amount was completely insufficient to repair and / or compensate the covered damage to the property as a result of the storm of 2016, as the city's actual protected property as a result of the storm exceeded $ 7,329,546.

The city noticed the risk pool that the payment was not sufficient to compensate for the loss. When the talks failed, the city retained advice. On 14 May 2018, the city tried to invoke its contractual right to valuation. The risk pool rejected the city's call and refused to participate in the evaluation process.

On 8 August 2018, the city moved to a mandatory assessment granted by the district court on 28 February 2019. The risk pool appealed a notice of appeal. on March 5, 2019 and argued that the court's decision compelling judgment served as a denial of its immunity from action. On January 9, 2020, the thirteenth Court of Appeal confirmed the district court's decision, which forced an assessment. On January 22, 2020, Risk Pool submitted a request for questioning. On March 3, 2020, the thirteenth Court of Appeal issued an updated opinion clarifying its original decision. On 27 March 2020, the risk pool submitted a second proposal for questioning which was decided on 22 April 2020.1

From these facts it can be seen that it took over three years just to force the risk pool to go to alternative dispute resolution evaluation process. The risk pool refused to acknowledge that its decision was even subject to judicial review. Why would anyone buy insurance from people who manage in a way where their actions can not be questioned?

Eventually, a valuation was written that was not favorable to the city. The city won in leaving this valuation based on facts that proved that the referee and / or the pool's valuer was not "disinterested", but biased.

Merlin Law Group has represented many cities, school districts and other government entities. Most people are overwhelmed when a disaster strikes and they need all the professional help they can get. They really do not need their own pool of risk to be an enemy. Not all civil servants should buy property insurance from a risk pool that works as described above.

The rest of this story about how the city of Hidalgo ruled will be discussed in Badger v. Merlin Rematch. Hope you will attend.

Thought For The Day

I wrestled with an alligator, I struggled with a whale; handcuffed lightning, thrown thunder in jail; just last week i murdered a rock, damaged a rock, put a brick in hospital; I'm so mean I'm making medicine sick.
—Mohammad Ali
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1 See City of Hidalgo Reply to Petition for Writ of Mandamus, 9-10, I Re: Texas Municipal League Intergovernmental Risk Pool No. 21-0308 (tex.).


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