AIG Unit Hit With Insurer’s Suit Over Contaminated Water Case

An American International Group Inc. unit was sued by another insurer that paid the defense costs incurred by a Texas water utility company in litigation alleging water contamination.

The AIG unit, Granite State Insurance Co., breached its obligations to Star Insurance Co. by denying coverage to their mutual insured party, Military Highway Water Supply Corp., Star said in a lawsuit filed Monday in the US District Court for the Southern District of Texas.

The underlying lawsuit in Texas state court alleges personal injury, property damage, and wrongful death claims from exposure to contaminated water supplied by MHWSC. The insurers had ...