Reinsurer Loses Bid to Dismiss Hotel’s Flood Damage Coverage Action

PHOENIX — An Arizona federal judge has refused to dismiss bad faith and breach of contract claims asserted against Hartford Steam Boiler Inspection and Insurance Co. (HSB) by a hotel demanding coverage for flood damage, ruling that the reinsurer could be held liable “based on its direct involvement” in the adjustment of the claim.

In a May 23 order, Judge James A. Teilborg of the U.S. District Court for the District of Arizona also let the hotel’s claim for tortious interference with contract proceed, finding the allegations “give rise to the reasonable inference that Hartford was substantially certain that undervaluing …