News Summary
A legal battle in Houston sees Allstate Indemnity Company suing Federal Insurance Company over a $910,000 dispute resulting from a car accident settlement. After Allstate paid $1 million for damages exceeding the primary auto policy, it claimed Federal should contribute based on Texas law. The case highlights the complexities of overlapping insurance policies and the significance of ‘other insurance’ clauses, potentially impacting future insurance practices. As the lawsuit unfolds, industry observers await the implications of this legal standoff.
Houston’s Legal Showdown: Allstate Takes Federal Insurance to Court
In the heart of Houston, Texas, a legal battle is brewing as Allstate Indemnity Company has decided to roll up its sleeves and take Federal Insurance Company to court over a hefty $910,000 dispute. This showdown was filed on August 7, 2025, in the Southern District of Texas and has caught the attention of many in the insurance world.
The Background
At the center of this dispute is a claim related to excess liability coverage for one Kendall Jordan, who found himself in a bit of legal hot water following a car accident. The injured party in this incident, Makenzy Cornell, sustained serious bodily injuries and sought over $1 million in compensation from Jordan. That’s where things start to get complicated.
Jordan’s defense team, looking out for their client’s best interests, suggested that both Allstate and Federal should chip in for a $1.25 million settlement demand. After applying a $250,000 limit from Jordan’s primary auto policy, a cool $1 million remained on the table for the excess insurance carriers.
The Insurance Policies
Now, let’s break down the insurance policies involved. Allstate was more than willing to step up to the plate, holding an umbrella policy that provides coverage up to $1 million. Meanwhile, Federal Insurance boasts a more substantial personal excess liability policy with an eye-popping $10 million limit. However, there’s a twist in this tale. When it came time to settle, Allstate ended up paying the entire $1 million after Federal backed away from contributing to the settlement.
Allstate’s Claim
Why the rift? Allstate argues that Federal should have contributed at least $910,000 of that settlement, based on Texas law regarding overlapping excess policies. In fact, Allstate is so committed to its position that it sent a series of demand letters to Federal throughout the latter part of 2024, starting on June 18. Yet, these letters seemed to vanish into thin air, as Federal didn’t respond.
Now, Allstate is stepping up to request a declaratory judgment to compel Federal to reimburse it for that $910,000 it believes it shouldn’t be solely responsible for. It’s important to note that Allstate’s policy specifies it will only cover what’s left after the underlying insurance has been fully used. On the flip side, Federal’s policy states it covers damages exceeding all underlying insurance, which adds another layer of complexity to this already tangled web.
Potential Impact on Insurance Practices
This lawsuit is not just a battle of dollars; it also brings to light the significance of “other insurance” clauses in the world of insurance disputes. The outcome could shape how insurers interpret and define these clauses going forward. Both companies are essentially waiting to see who makes the first move in this very real game of chess, with each claiming they should be last in line to pay up.
The Road Ahead
As it stands, this case remains in the complaint phase, and Federal has yet to file a response. The legal drama continues to unfold, and the insurance industry is keeping its eyes peeled for how this case resolves. The stakes are high, and its ramifications could echo throughout the sector for years to come. Who will emerge victorious in this legal standoff? Only time will tell!
In the meantime, residents of Houston, stay tuned! This case could change the way insurance deals are structured in Texas and beyond.
Deeper Dive: News & Info About This Topic
- Insurance Business: Allstate Demands $910,000 from Federal Insurance in Texas Insurer Showdown
- Houston Chronicle: Texas Home Insurance
- CNBC: Best Flood Insurance
- NerdWallet: Texas Home Insurance
- Google Search: Texas Insurance Law
Author: STAFF HERE HOUSTON TX WRITER
HOUSTON STAFF WRITER The HOUSTON STAFF WRITER represents the experienced team at HEREHouston.com, your go-to source for actionable local news and information in Houston, Harris County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Houston Livestock Show and Rodeo, Art Car Parade, and Chevron Houston Marathon. Our coverage extends to key organizations like the Greater Houston Partnership and Houston Area Urban League, plus leading businesses in energy and healthcare that power the local economy such as ExxonMobil, Schlumberger, and Houston Methodist. As part of the broader HERE network, including HEREAustinTX.com, HERECollegeStation.com, HEREDallas.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.
