Berkshire Hathaway Sued After Cancelling Property Insurance Policy
Berkshire Hathaway, the parent company of GEICO, is facing a lawsuit after cancelling a commercial property insurance policy for a Texas business.
GD Group, a Texas-based corporation, claims Berkshire Hathaway Direct Insurance Company rescinded its property insurance policy after a recent claim.
The cancellation left the business without coverage, without compensation, and with mounting losses for lost income. In total, the business claims to have experienced $1.2 million in property damage, $474,000 in lost income, and $2.6 million in contents losses.
GD Group filed the lawsuit in federal court in San Antonio on September 25, 2025. It remains at the complaint stage.
According to the complaint, the issue dates back to August 2024:
- On August 8, 2024, a sprinkler system at a GD Group property ruptured, causing widespread damage to property and contents.
- GD Group filed an insurance claim with its insurer, Berkshire Hathaway.
- On October 29, 2024, Berkshire Hathaway told GD Group the claim was under investigation.
- Berkshire Hathaway’s investigation confirmed extensive water damage. However, the company allegedly declined to issue a coverage determination.
- Berkshire Hathaway later rescinded the policy because of a “material misrepresentation made to BHDIC [Berkshire Hathaway Direct Insurance Corporation] during the policy application process.” Berkshire Hathaway also refunded the premiums.
GD Group originally purchased the policy in February 2024. They assumed something like water damage from a ruptured sprinkler system would be covered.
GD Group Left Without Coverage & Faced Further Damages After Cancellation
GD Group claims to have been “fundamentally bewildered” by Berkshire Hathaway’s actions. The company claims the insurance application was properly submitted.
GD Group also claims to have reached out to Berkshire Hathaway in an attempt to resolve the issue. Berkshire Hathaway, however, allegedly refused to resolve the issue, choosing instead to simply reimburse all premium payments to GD Group.
During this dispute, GD Group claims to have suffered further damage.
After the initial burst pipe, GD Group moved forward, assuming they were still covered under their Berkshire Hathaway commercial property insurance plan. The cancellation left them without compensation for the initial August 2024 loss and without coverage for later losses.
GD Group lost income due to the closure, for example. Normally, commercial insurance would cover damage to commercial property and business interruption losses.
To assess the damage and get a fair estimate, GD Group hired a third-party agency, Mutual Group Inc. Here’s what they found:
- Mutual Group Inc. photographed the damage and evaluated the cost of repairing that damage.
- According to Mutual Group Inc., the cost of repairing and replacing the damage would be $1,210,175.43.
- Mutual Group Inc. also estimates the company lost $474,012.96 in income.
- Mutual Group also found GD Group experienced $2,608,422.25 in contents losses, which can include inventory, furniture, and other items owned by the business.
After the evaluation, GD Group filed a lawsuit accusing Berkshire Hathaway of bad faith, breach of contract, deceptive insurance practices, and late payment of claims.
GD Group also claims Berkshire Hathaway failed to conduct an adequate investigation, violated multiple provisions of Texas insurance law, and failed to provide a reasonable explanation for the denial.
Why Berkshire Hathaway Cancelled the Policy
Insurers don’t usually cancel policies without good reason. Insurers want to do business with you and take your premiums.
So what happened here? Why did Berkshire Hathaway cancel GD Group’s policy?
According to Insurance Business, Berkshire Hathaway rescinded the policy because GD Group allegedly filed three business claims in the three years prior to the loss and misrepresented those claims in the application process.
During an insurance application, insurers need to know about claims you’ve previously filed. If you’re buying insurance a few months after your fifth business fire in three years, for example, your insurer needs to know about that (it’s unclear what types of claims GD Group had previously filed or how the company failed to adequately disclose those claims).
As Insurance Business explains, the outcome of this case could be a big deal: it could impact how insurers handle rescission and claims investigations in the commercial property industry.
Should an insurer be able to wait until after the loss to find an issue with your application and deny your claim?
Should insurers be able to rescind a policy months after issuing it – even when the business owner or homeowner assumed they were covered for the duration?
These questions remain to be answered.
The suit is still at the complaint stage, and all claims are allegations. Berkshire Hathaway has maintained its denial of the claim, and the issue is ongoing in the Texas court.
