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Insurance company to pay up on earthquake; Damage to building in Honesdale

By Fritz Mayer
August 6, 2014

HONESDALE, PA — After arguing for three years that damage to the now-defunct Honesdale EMS ambulance building was not due to an earthquake, an insurance company has agreed to pay $250,000 to settle a claim in the matter.

About a week before the trial was to begin, American Alternate Insurance Corp. (AAIC) agreed to settle the case for the building located at 364 12th St. Previous to that time, AAIC said the damage to the building was created not by an earthquake but instead by neglect.

The policy that covered the building did not cover damage from subsidence or other types of “earth movement,” although it did cover damage from earthquakes, but with a deductible of nearly $58,000.

According to court documents, the case dates back to June 23, 2010, where there was a magnitude five earthquake near Quebec, Canada, with tremors that were felt in this region.

An independent safety inspector examined the building in 2005 and 2008 and testified in court. In 2005, he wrote that the building was in “average condition.” In 2008 he did not recommend any changes to the building.

Also in 2008, AAIC, using information from a risk control representative, determined that the replacement cost of the building had nearly doubled and strongly recommended that plaintiff increase the limit on its policy.

On the day of the earthquake, workers at the Honesdale EMS building reported feeling the building shaking and hearing squeaking noises from the walls. They evacuated the building, and found damage to the foundation, loose bricks, cracks and other issues after they returned.

The building was inspected by then code enforcement officer, Wayne Early, and Arnie Bertsche, an engineer, and was condemned.

The ambulance company filed a claim and Jack McDermott, an adjuster inspected the property, and concluded that the earthquake had not damaged the building.

However two employees of another insurance company testified that “McDermott was more of an advocate for non-payment of the claim than a fact finder,” that “he was abrasive and unprofessional,” and that “he used foul language, calling the claim bogus.”

Another engineer engaged by AAIC, Michael. H. Queen, P.E., also inspected the building, and he concluded the earthquake did not damage the building and the claim was denied.

The ambulance company requested that AAIC reconsider the matter and provided a letter from Bertsche, which said his report concluded that it was “more than plausible” that the significant structural damage to the building had been caused by the earthquake.