Indiana companies accuse insurance broker of negligence after costly storm destroyed their property

Two Indiana water systems distributors have filed a lawsuit against their insurance broker that alleges the company inaccurately certified an insurance policy, causing them to pay an extra $3 million to resolve property damages.

The plaintiffs, Franklin Electric Co. Inc. and Headwaters Cos. LLC, filed a negligence complaint against Willis Towers Watson Northeast Inc., a global insurance broker, in the U.S. District Court for the Northern District of Indiana on Friday.

According to the complaint, on Jan. 1, 2022, Headwaters entered into a contract in which McCuda LLC, a Connecticut property management company, agreed to lease to Headwaters a portion of an Albany, New York, warehouse building for six years. The contract required Headwaters to procure property insurance on the building.

Willis Towers Wilson, which recently rebranded itself to WTW, had been Franklin Electric’s professional insurance broker for about 14 years. WTW would later be the key insurance broker for Headwaters’ New York warehouse building. (Franklin and Headwaters are affiliated companies, as Franklin is Headwaters’ only member, according to the complaint.)

Franklin and Headwaters say that WTW handled the procurement of a commercial property insurance policy for the companies and locations under a policy issued by XL Insurance America Inc. According to the lawsuit, the XL policy provides Franklin and Headwaters and their locations risk coverage up to values listed on a statement of values — which WTW assisted in negotiating and preparing.

However, the New York warehouse building was not listed on the statement of values.

In March 2024, WTW prepared and issued an updated certificate of insurance, which Franklin and Headwaters say inaccurately stated that the warehouse building had a value of $200 million in blanket property coverage — even though it was not included on the statement of values. The updated certificate also identified McCuda as the named loss payee.

Months later, on June 20, 2024, a severe thunderstorm moved through Albany and significantly damaged the warehouse building, leaving it a “total loss.”

Franklin and Headwaters submitted notice of the loss to XL Insurance, which paid for the damaged contents inside the building but denied coverage for the actual warehouse building, saying that there was no value reported for it in the statement of values.

Headwaters was then required to pay McCuda more than $3 million for the property damage, according to the lawsuit.

The companies now argue that WTW negligently failed to advise them on the warehouse’s appropriate value and failed to review the statement of values when updating the certificate of insurance.

Spokespersons for Willis Towers Watson did not respond to a request for comment.

The case is Franklin Electric Co., Inc. and Headwaters Companies, LLC v. Willis Towers Watson Northeast, Inc., 1:26-cv-00343,