Our Mobile Office recently filed a lawsuit on behalf of Swift Lumber against Accelerant Insurance Company et al. due to a bad faith breach of contract.

Case Background

On June 5, 2023, Swift faced a big loss, including the destruction of 32 Variable Frequency Drives (VFDs), damage to a transformer, mold on lumber, loss of business income, and more.

Swift, a business in Atmore, Alabama, had insurance with Accelerant Specialty from October 1, 2022, to October 1, 2023.

• Swift told Accelerant about the loss on June 7, 2023.
• Mutual, working with Accelerant, looked into the loss and decided lightning, which wasn’t covered by the insurance, caused the damage.
• Swift didn’t find out about this decision until Accelerant had already said they wouldn’t cover the loss.
• Swift got a notice from NARS saying their insurance was valid when the loss happened but mentioned possible reasons the insurance might not pay, like damage from artificial electrical energy and mechanical breakdowns.
• On October 23, 2023, Accelerant refused to pay for the damages after Engineering Design & Testing Corp. (EDT) said the damage was caused by an arcing event due to insulation breakdown, not by lightning or electrical supply problems.

The Denial

Accelerant didn’t talk about Mutual’s different opinion when they declined to cover the loss.

The Equipment Breakdown Enhancement Endorsement, which they didn’t mention, says it would cover damage from things like electrical arcing if it’s not specifically excluded.

This part also changes the definition of “specified causes of loss” to include equipment failure, indicating that this kind of damage should be covered despite other listed exclusions.

Swift believes that Accelerant and Mutual’s refusal to pay is a violation of their agreement, since Swift did everything right, like paying all the fees on time.

Breach of Contract Breakdown

A breach of contract happens when someone doesn’t follow the rules or terms of an agreement. Think of it like this:

• When people make a deal, they agree to do certain things. A breach of contract is when someone doesn’t do what they said they would.
• This can happen in deals that were talked about or written down.
• Not keeping a promise can be something small, like being late on a payment, or something big, like not delivering something important they promised.

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