A Mississippi couple is taking Liberty Mutual and its affiliates to federal court, claiming their insurers dragged their feet and shortchanged them on a water damage claim.
Marcus and Angela Clegg, who live in Tupelo, filed their lawsuit on August 14, 2025, in the US District Court for the Northern District of Mississippi. Their complaint centers on how Liberty Mutual Group, Safeco Insurance Company of America, and American Economy Insurance, Inc. handled a claim for water damage at the Cleggs’ home. The couple says they did everything by the book after discovering a stopped-up air conditioning drain line had soaked their property back in August 2024.
According to the Cleggs, they reported the problem right away and handed over all the paperwork the insurers asked for. But instead of a quick resolution, they say they got a letter from Liberty Mutual’s claims team that only partially covered their losses. The letter, dated August 26, 2024, called the incident a “plumbing failure” and offered just $11,857.80 for repairs. The Cleggs say this was nowhere near enough to fix the damage.
The complaint paints a picture of back-and-forth emails, inspections, and a lot of waiting. The Cleggs claim the insurers kept asking for more documentation and delayed sending out their own adjusters. When estimates finally arrived, they were all over the map. One from Johnson Carpet, dated August 30, 2024, put the cost at $176,083.89. Another from Newman Floor Covering, dated September 25, 2024, came in at $180,738.00. The Cleggs say they even got a reservation of rights letter from Liberty Mutual on October 17, 2024, but still didn’t see a full payout.
By the time the dust settled, the Cleggs say they’d spent $159,324.53 on repairs, backed up by receipts from local vendors. Yet, according to their lawsuit, the insurers stuck to their guns and didn’t pay the full amount. The Cleggs argue that the companies leaned on policy language about “plumbing failure” and “water damage” to limit what they’d pay, but never gave a clear explanation for denying full coverage. The insurance policy at the heart of the dispute is Safeco Policy No. DF350221.
The lawsuit doesn’t just accuse the insurers of dragging out the process. The Cleggs allege that Liberty Mutual and its affiliates failed to properly investigate their claim and didn’t live up to their end of the insurance contract. They’re asking the court for compensation to cover their actual costs, plus punitive damages for what they describe as bad faith and gross negligence. The complaint also references Mississippi’s Policyholder’s Bill of Rights and state insurance regulations.
As of now, the case is just getting started. The court hasn’t made any decisions, and the insurers haven’t yet responded to the Cleggs’ allegations. Everything in the complaint reflects the couple’s side of the story, not established facts.
For insurance professionals, this case is a reminder that how claims are handled can end up under a microscope - and in court. The industry will be watching to see how it plays out, especially when it comes to interpreting policy language and the expectations around timely, fair claims payments.
