A $27 million legal battle over a fire insurance claim between Maxus Metropolitan and Travelers Property Casualty Company has caught the attention of the commercial insurance world. The dispute centers on a 2018 fire that severely damaged a large apartment complex in Birmingham, Alabama.
In September 2018, a fire swept through the Metropolitan apartment complex, destroying one building entirely and damaging others. Maxus Metropolitan held an insurance policy with Travelers that covered up to $35 million for physical damage and $5 million for lost business income.
Maxus reported the fire to Travelers the same day it happened, but Travelers took nearly two months to decide what it would cover. After Maxus filed a complaint with the Alabama Department of Insurance, Travelers initially advanced $1 million and later increased the payout to about $3.5 million. However, Travelers declined to cover certain cleanup costs related to soot and water damage in some parts of the property.
Unsatisfied, Maxus hired an expert who found soot stains throughout multiple buildings and recommended extensive cleaning, including evacuations. Maxus shared this report with Travelers, who responded with their own inspection, finding no significant soot problems. Despite this, Maxus went ahead with the cleanup after letting Travelers know.
Maxus then took Travelers to court in Missouri, accusing them of breaching the insurance contract and refusing to pay without good reason. Travelers argued that tiny amounts of soot didn’t count as “physical damage” under the policy and that some water damage wasn’t related to the fire or occurred outside the policy period. Maxus disagreed, saying the soot and water damage caused by the fire should be covered.
The jury sided with Maxus, awarding over $27 million in damages, plus additional money for Travelers’ unreasonable refusal to pay and legal fees. The court also granted interest on the award before the judgment.
In August 2025, the Eighth Circuit Court of Appeals mostly agreed with the lower court’s decisions. The appeals court confirmed that even microscopic soot could count as physical damage if it made the property unusable or unsafe. It also upheld the finding that Travelers acted in bad faith by investigating poorly and not communicating clearly. However, the court sent back the issue of interest to be recalculated based on when Maxus requested payment, not when bills were paid.
This insurance policy specifically included soot as a pollutant covered under physical loss or damage. Missouri law recognizes that contamination like soot can make a property unusable, which fits the policy’s protections.
For people working in insurance, this case shows how important it is to be clear about what policies cover and to handle claims carefully and quickly. If insurers drag their feet or don’t explain decisions, they risk big losses in court.
Ultimately, the case is a major example of how fire damage claims can become complicated and costly. It also highlights why insurers must be ready to handle unexpected challenges and understand what “damage” really means in their policies.