School District Sues Liberty Mutual Over Handling of Snow Damage Claim
A legal battle is brewing between Ashtabula Area City School District in Ohio and Liberty Mutual Fire Insurance Company. The school district has filed a lawsuit alleging that the insurer’s handling of a snow damage claim at Lakeside High School exacerbated the initial damage, leading to bacterial contamination and significantly increased repair costs. This case highlights the complexities and potential pitfalls in insurance claims, particularly concerning mitigation efforts and determinations of constructive total loss.
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The Snowfall and the Subsequent Damage
In December 2024, Lakeside High School suffered significant damage when the roof of a 125,000-square-foot academic wing collapsed under the weight of an estimated 54 to 60 inches of snow. This initial incident triggered an insurance claim with Liberty Mutual, holding a commercial property policy with a blanket limit of over $232 million across multiple locations, with the high school alone having an insured value limit exceeding $82 million. What began as a seemingly straightforward structural failure claim quickly escalated into a contentious dispute over the scope of coverage and the appropriate course of action.
According to the lawsuit, Liberty Mutual directed a restoration company to begin demolishing the compromised roof around January 28, 2025. However, the school district alleges that the insurer then instructed the complete removal of the roof without implementing adequate temporary protection measures. This left the academic wing exposed to the elements for months, resulting in snow and rain intrusion. This exposure, the district claims, directly contributed to the development of microbial and bacterial growth within the building’s structure.
Contamination and the Dispute Over Repair Costs
By late February or early March 2025, the school district, concerned about the moisture conditions, hired an industrial hygienist to assess the situation. Testing revealed significant microbial and bacterial growth inside the concrete block walls. In some samples, concentrations of bacteria exceeded three million colony-forming units per swab, according to reports cited in the lawsuit. Structural engineers concluded that the extent of repairs required for the second-floor masonry walls was so extensive that complete removal and rebuilding might be more cost-effective and time-efficient.
The school district subsequently requested that Liberty Mutual deem the academic wing a total loss, requiring demolition down to the slab. However, the insurer declined this request. Instead, Liberty Mutual issued repair estimates in April and July 2025, valuing the loss at approximately $21 million to $27 million in replacement cost. The district’s own estimate, completed in September 2025, came in at more than $56 million. The significant discrepancy in these estimates forms a core point of contention in the lawsuit.
The Question of Constructive Total Loss
A key issue at the heart of the dispute is whether Liberty Mutual should have declared a constructive total loss. The district argues that the insurer’s repair estimates approached 70 to 76% of the rebuild cost for the academic wing. The filing states that Liberty Mutual could not identify a specific threshold it uses for determining when a property should be considered a constructive total loss. This lack of clarity raises questions about the insurer’s internal processes and decision-making in handling complex claims.
Breach of Contract and Alleged Bad Faith
The school district also alleges that Liberty Mutual has failed to pay covered extra expenses, despite repeated requests in June, September, and October 2025. The insurance policy provided $1 million in extra expense coverage, but the district claims it has not received any payments. This alleged failure to fulfill the terms of the policy further fuels the district’s claims of breach of contract and bad faith.
Liberty Mutual commissioned its own environmental review, which found 27 samples positive for gram-negative bacteria and six samples positive for gram-positive bacteria. However, the insurer’s report concluded that disinfection within the concrete block cavities was not warranted because direct exposure of the wall cavity to occupants was not intended or likely. The district vehemently disputes this conclusion, arguing that the bacterial contamination poses a significant health risk and necessitates comprehensive remediation efforts.
The district is seeking policy benefits, damages for breach of contract and negligence, and punitive damages for alleged bad faith. The case raises important questions about the obligations of insurers when directing mitigation and repair work. The school district alleges that Liberty Mutual’s decision to remove the roof without adequate temporary protection breached both the insurance contract and a duty of care. Liberty Mutual has not yet responded to the allegations in court.
Implications for Insurance Claims Handling
This case serves as a reminder of the importance of clear communication and proactive mitigation in insurance claims. Insurers have a responsibility to act promptly and effectively to minimize damages following a covered loss. When directing mitigation efforts, they must ensure that adequate protection measures are in place to prevent further damage or contamination. Failure to do so can lead to increased costs, protracted disputes, and potential legal action.
The outcome of this lawsuit could have significant implications for the insurance industry, particularly regarding the handling of large property claims and the determination of constructive total loss. It underscores the need for insurers to have well-defined processes and guidelines for assessing damage, directing repairs, and communicating with policyholders. It will be important to follow the progress of this case as it unfolds.
Conclusion
The lawsuit between Ashtabula Area City School District and Liberty Mutual highlights the potential for disputes to arise in complex insurance claims. The core issues revolve around the adequacy of mitigation efforts, the determination of constructive total loss, and the insurer’s alleged failure to fulfill its contractual obligations. This case underscores the importance of clear communication, proactive claims handling, and a commitment to minimizing damages following a covered loss. The resolution of this case will likely have implications for insurance practices and the responsibilities of insurers in similar situations.
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