AIG Sued by California Real Estate Firm Over Last-Minute Denial

An American International Group Inc. unit was hit with a suit from a California residential real estate company and homebuilder over the insurer’s alleged “eleventh hour denial of coverage” for a third-party claim.

AIG Specialty Insurance Co. unreasonably delayed processing the claim under a liability policy, represented it would provide coverage and pay defense costs, induced reliance on those representations, and then denied coverage less than a month before a scheduled mediation, Watt Communities and related plaintiffs said in a lawsuit filed Nov. 22 in the US District Court for the Central District of California.

The third-party claim, filed by ...