On September 29, 2025, Paddock Equity Investors LLC filed a federal lawsuit that exposes the playbook insurers use to underpay major commercial property claims. The owner of Paddock Hills Shopping Center in Florissant, Missouri, alleges that Auto-Owners Insurance Company grossly underpaid a storm damage claim exceeding $2 million—using a familiar pattern of delay, deny, and minimize.
The case, filed in the U.S. District Court for the Eastern District of Missouri, provides a textbook example of how insurers leverage third-party adjusters, engineering reports, and bureaucratic delays to wear down commercial property owners and settle claims for pennies on the dollar.
The July 2023 Storm: $2 Million in Damage
On July 17, 2023, a severe wind and hail storm struck the Paddock Hills Shopping Center at 1 Paddock Hills Shopping Center, Florissant, Missouri 63033. According to court documents, the storm caused "severe and increasing loss" to multiple building systems:
Damaged components included:
- Flat roofing systems (TPO and modified bitumen membranes)
- Asphalt shingle roofing systems (three-tab, fiberglass-mat shingles)
- Metal flashing
- Gutters and downspouts
- Building appurtenances
- HVAC units
The property is described as a single-story, concrete masonry unit and multi-wythe brick structure with complex roofing systems. The storm damage was extensive enough to require comprehensive repairs across the entire shopping center.
The shopping center owner notified Auto-Owners on August 22, 2023, more than a month after the storm. Auto-Owners acknowledged the claim, assigned claim number 300-0551909-2023, and designated Terrence Dills as the claim adjuster.
Then the insurance company's delay tactics began.
How Auto-Owners Allegedly Underpaid the Claim
The lawsuit alleges Auto-Owners engaged in a pattern of conduct designed to minimize the claim payout. Here's the timeline of how it unfolded:
Phase 1: Third-Party Adjuster Inspection
Auto-Owners initiated inspections through Michael Collins, an adjuster with Catastrophe Specialist, Inc., a third-party adjusting firm. Third-party adjusters are frequently used by insurers because:
- They're paid by the insurance company, not the policyholder
- They're incentivized to find reasons to reduce claim values
- They provide "independent" opinions that favor the insurer
- They create additional layers of bureaucracy and delay
Phase 2: Engineering Report to Dispute Damage
Auto-Owners then hired Todd Koenig, P.E., with Donan Forensic Engineering, to conduct a more detailed investigation. Donan's report, issued December 21, 2023—more than five months after the storm—reached a convenient conclusion for Auto-Owners.
According to the lawsuit, Donan concluded that approximately 150 shingles on the south-facing mansard roof showed damage consistent with the storm. However, the report apparently minimized damage to other roofing systems and building components.
This is a classic insurer tactic: Hire an engineer who will issue a report that supports denying or reducing the claim. The report provides "technical justification" for the insurer to claim the damage is less extensive than the policyholder asserts.
Phase 3: Delay and Underpayment
The lawsuit alleges Auto-Owners "mishandled and underpaid" the claim. While the specific dollar amounts aren't detailed in the public filing, the complaint makes clear that the shopping center owner believes the claim exceeds $2 million and that Auto-Owners' payment fell dramatically short of that amount.
The property owner alleges the damage was covered under the policy for "direct physical loss caused by wind and hail, subject to all terms, conditions, and exclusions of the policy."
The Five Tactics Insurers Use to Underpay Commercial Property Claims
The Paddock Hills case demonstrates the standard playbook insurers use to minimize commercial property claims:
1. The Third-Party Adjuster Tactic
Insurance companies frequently use third-party adjusting firms to handle large claims. These firms:
- Operate on contracts that incentivize low claim payments
- Often receive more business from insurers who like their "conservative" (low) estimates
- Create distance between the insurer and the low estimate
- Add bureaucratic layers that slow the process
What property owners should know: You have the right to hire your own public adjuster to represent your interests. While the insurance company's adjuster works for the insurer, a public adjuster works for you and is typically paid 10-15% of the recovery on a contingency basis.
2. The Engineering Report Tactic
Hiring engineers to inspect damage sounds reasonable, but insurers often use this tactic to:
- Delay claim resolution by months while reports are prepared
- Find "alternative causes" for damage (claiming it was pre-existing or caused by maintenance issues)
- Provide technical jargon that intimidates property owners into accepting low settlements
- Create "expert opinions" the insurer can cite in litigation
What property owners should know: You can and should hire your own engineer or roofing expert to document damage and rebut the insurer's engineer. Many roofing contractors will inspect damage for free in hopes of getting the repair work.
3. The "Existing Damage" Argument
In the Paddock Hills case, the December 2023 engineering report looked at storm damage more than five months after the July storm. In that time:
- Weather continued to impact the damaged roof
- Water intrusion may have worsened damage
- The delayed inspection made it easier to claim damage was "pre-existing"
Insurers love to argue that damage existed before the covered event. This allows them to deny or reduce claims even when storm damage is obvious.
What property owners should know: Document property condition BEFORE storms and immediately AFTER. Timestamped photos and video are critical. Consider annual property condition reports to establish a baseline.
4. The "Repair vs. Replace" Dispute
Many commercial property claim disputes center on whether damaged components should be repaired or replaced. Insurers typically:
- Argue that repairs are sufficient even when replacement is necessary
- Claim only "visible" damage needs repair
- Refuse to pay for upgrades to current building codes
- Dispute whether entire systems need replacement or just damaged sections
For roofing specifically:
- Insurers may pay to replace 150 damaged shingles but refuse to replace the entire roof
- They'll argue "spot repairs" are sufficient even when roof integrity is compromised
- They'll refuse to replace entire sections that don't match the spot repairs
What property owners should know: Building codes often require full replacement when damage exceeds certain thresholds. Your contractor should document why full replacement is necessary, not just desired.
5. The Delay and Pressure Tactic
From August 22, 2023 (notification) to December 21, 2023 (engineering report) was four months. The lawsuit was filed September 29, 2025—more than two years after the storm.
This delay is intentional. Insurers know that:
- Property owners face mounting repair costs and pressure from tenants
- Delayed repairs cause additional damage (water intrusion, etc.)
- Property owners may accept low settlements just to move forward
- The longer the delay, the harder it is to prove what damage the storm caused
What property owners should know: Missouri law requires insurers to settle claims within reasonable time periods. Delays beyond 30-60 days for straightforward claims may constitute bad faith.
Missouri's Insurance Claim Laws
Missouri has specific protections for property owners dealing with insurance claim disputes:
Missouri's Vexatious Refusal to Pay Statute
Under Missouri Revised Statutes § 375.420, if an insurer "vexatiously refuses to pay" a claim, the insurer may be liable for:
- The full claim amount
- Attorney fees
- A penalty of up to 20% of the claim amount
- Court costs
"Vexatious refusal" means the insurer didn't have a reasonable basis to deny the claim. If the Paddock Hills shopping center can prove Auto-Owners lacked reasonable grounds to underpay the claim, the insurer could face significant additional penalties beyond the claim amount.
Missouri's Prompt Payment Requirements
While Missouri doesn't have a specific commercial property prompt payment statute, common law requires insurers to:
- Acknowledge claims promptly
- Conduct reasonable investigations
- Make coverage decisions within reasonable time frames
- Pay undisputed amounts while disputes are resolved
The four-month delay from claim notification to engineering report may support a bad faith claim if the court determines the delay was unreasonable.
Missouri Case Law on Depreciation and Valuation
Missouri courts have consistently held that insurers must pay "actual cash value" or "replacement cost" as specified in the policy. For commercial properties:
- Actual cash value = Replacement cost minus depreciation
- Replacement cost = Cost to replace with like kind and quality
- Functional replacement cost = Cost to replace with modern equivalents
Many disputes center on how depreciation is calculated and whether the insurer must pay for modern building code upgrades.
Red Flags Your Commercial Property Claim Is Being Underpaid
The Paddock Hills case shows warning signs that your insurer may be underpaying your claim:
1. The Adjuster Keeps "Discovering" New Reasons to Reduce the Claim
First they say damage is less extensive than you claim. Then they say some damage is pre-existing. Then they say your contractor's estimate is too high. Then they say certain work isn't covered.
Each "discovery" reduces the claim and extends the timeline.
2. The Insurer Hires Multiple Experts
One engineer isn't enough—they need multiple inspections, multiple reports, multiple delays. Each expert adds months to the process and provides new reasons to deny coverage.
3. Your Contractor's Estimate Is Dramatically Higher Than the Adjuster's
If your licensed roofing contractor says repairs will cost $2 million and the insurance adjuster says $200,000, something is wrong. Insurers often:
- Use outdated pricing
- Exclude necessary work
- Fail to account for code upgrades
- Refuse to pay for proper materials
4. The Insurer Offers a "Quick Settlement" for Much Less Than Your Losses
Insurers know that property owners face pressure from lenders, tenants, and mounting damage. They'll offer a quick settlement for 30-50% of the actual loss, hoping you'll take it rather than fight for years.
Never accept a quick settlement without consulting an attorney or public adjuster first.
5. The Insurer Claims Your Policy Doesn't Cover What You Thought It Covered
You thought you had full replacement cost coverage. The insurer says it's actual cash value. You thought the policy covered all wind damage. The insurer says this particular type of damage is excluded.
Policy language disputes are common, and Missouri law requires ambiguous language to be interpreted in favor of the policyholder.
Seven Steps to Protect Your Commercial Property Claim
If your commercial property suffers storm damage, follow these steps to protect your insurance claim:
1. Document Everything Immediately
Before the adjuster arrives:
- Take hundreds of photos and videos from every angle
- Document every damaged component
- Create a written inventory of damage
- Note the date and time of documentation
Use your phone to create timestamped visual evidence that can't be disputed later.
2. Mitigate Further Damage
You have a duty under your policy to prevent additional damage:
- Tarp damaged roofs
- Board up broken windows
- Extract standing water
- Secure the property
Save all receipts. Emergency mitigation costs are typically covered and reimbursable.
3. Get Multiple Contractor Estimates
Don't rely solely on the insurance adjuster's estimate. Get at least three estimates from licensed contractors who specialize in commercial property damage. Make sure estimates include:
- Detailed scope of work
- Material specifications
- Labor costs
- Code upgrade requirements
- Timeline for completion
4. Consider Hiring a Public Adjuster
For claims over $100,000, strongly consider hiring a licensed public adjuster before you even file the claim. They:
- Work for you, not the insurance company
- Know how to document damage insurers often overlook
- Negotiate directly with the insurer's adjuster
- Typically increase claim payouts by 40-70%
- Work on contingency (10-15% of recovery)
For a $2 million claim, a public adjuster might charge $200,000-$300,000, but could recover an additional $800,000 you wouldn't have gotten on your own.
5. Don't Accept the First Offer
First offers are typically 20-40% of the true value. Insurers know most property owners don't understand their rights and will accept lowball offers.
Respond to lowball offers with detailed documentation showing why the offer is insufficient. Don't be afraid to negotiate.
6. Know Your Deadlines
Missouri has specific deadlines for insurance claims:
- Lawsuits must typically be filed within 5 years of the date of loss
- But some policies have shorter "suit limitations" periods (often 1-2 years)
- Check your policy for specific deadlines
The Paddock Hills lawsuit was filed approximately 2 years and 2 months after the July 2023 storm—likely approaching a policy deadline.
7. Consult an Attorney If the Claim Is Denied or Underpaid
If your claim is denied or you believe it's significantly underpaid, consult an attorney who specializes in insurance bad faith claims. Many work on contingency and can help you recover:
- The full claim amount
- Attorney fees
- Penalties for vexatious refusal to pay
- Additional damages for bad faith
What This Means for Commercial Property Owners
The Paddock Hills Shopping Center case is still in early stages, but it demonstrates a pattern every commercial property owner should understand:
Insurance companies make money by collecting premiums and minimizing claim payouts. Their adjusters, engineers, and attorneys are all working to protect the insurer's financial interests—not yours.
When you suffer a major loss:
- The insurance company's adjuster is not your friend
- The engineering report the insurer orders is not objective
- The first offer is almost never fair
- Delays are often intentional
- You need your own experts to protect your interests
Final Thoughts
Auto-Owners Insurance Company is a well-regarded regional insurer with billions in assets. Yet even a financially strong insurer may use tactics to minimize claim payouts when millions of dollars are at stake.
The Paddock Hills case will likely take years to resolve. In the meantime, the shopping center owner faces:
- Mounting repair costs
- Potential tenant losses
- Property value decline
- Financing complications
- Ongoing damage from unrepaired storm losses
This is the hidden cost of claim disputes: the financial and operational burden falls on the property owner while the insurance company has unlimited resources to fight the claim.
Don't let this happen to your commercial property. Review your policy annually, maintain detailed property condition documentation, and know your rights before you ever need to file a claim.
The best defense against underpaid claims is knowing the tactics insurers use and being prepared to fight back.
Facing a disputed commercial property claim in Missouri? Contact a licensed public adjuster or insurance bad faith attorney immediately. For commercial property owners in Missouri seeking better coverage, work with independent agents who can compare policies across multiple carriers to find coverage that truly protects your investment.