Dallas Fort Worth Insurance Lawyer Blog

Insureds in Grand Prairie, Fort Worth, Hurst, Euless, Bedford, Grapevine, Saginaw, Rhome, Lake Worth, Burleson, and other places in Texas have very little knowledge of the remedies available to them when their insurance company refuses to defend them in a law suit. One of those remedies might surprise them.
This surprise can be found in a case styled, Luxury Living, Inc. v. Mid-Continent Casualty Company. This is a 2003, case heard by a Federal Court in the Southern District of Texas. Here are some of the facts:
Luxury Living, Inc., a home builder. was sued by a homeowner alleging defects in construction that resulted in physical injury to the home. Mid-Continent refused to defend Luxury Living on the ground that the claim asserted by the third-party homeowner was not covered by the insured's commercial liability policy. The insured, Luxury Living, filed this action seeking declaratory judgment that the insurer, Mid-Continent, has a duty to defend the insured and for damages, including reimbursement of the insured's defense costs to date, 18% statutory penalty on those costs for wrongful denial of the claim, and attorney fees to date. The insurer responded that because the homeowner's claims were not covered by the policy, the duty to defend was not triggered. Additionally, the insurer asserted policy exclusions that preclude coverage for damages arising out of installation of the Exterior Insulation Finish System ("EIFS"). Finally, the insurer argued that statutory penalties do not apply to third-party claims. Both sides moved for summary judgment.
In it's holding, the district court granted the insured's motion for summary judgment, held that the insured was entitled to reimbursement of its defense costs and attorney fees incurred to date, and awarded the 18% penalty on all defense costs. Applying the "eight corners" rule, the court found that the commercial general liability insurer had a duty to defend a homeowner for claims arising from negligent work which constituted an "occurrence" under the policy, absent an exclusion. The court also found that the EIFS allegations did not implicate the "damage to property" and "damage to work" exclusions in the policy and, therefore, the duty to defend applied. Finally, the court rejected the insurer's argument that statutory penalties provided for late payment of claims under Texas Insurance Code, Section 542.060 do not apply in this instance as involving a third-party claim. The court noted that although the statute does not define "first party," a claim is defined as "a first party claim made by an insured or a policyholder under an insurance policy ... that must be paid by the insurer directly to the insured or beneficiary." Thus, the court found that an insured's claim for reimbursement of defense costs from its liability insurer constitutes a "first party" claim and held that the statutory penalty applied to attorney fees as part of the defense costs incurred to date.
This case might also be confusing. It's value is in understanding a way that the insurance laws of the State of Texas can go a long ways to helping an insured in Texas when the insurance company refuses to assist in a claim. This case is a little more nuanced in the way an attorney can help an insured get what they bargained for in the insurance contract, plus a penalty on the insurer for playing games instead of stepping up and doing what they should have done in the first place. Hopefully, an experienced Insurance Law Attorney is aware of this case and how it can help clients who find themselves in this or a similar situation.

When does someone in Grand Prairie, Fort Worth, Burleson, Crowley, Lake Worth, Benbrook, Alvarado, Keene, Joshua, or anywhere else in Texas, know that the insurance company is taking too long to pay the claim?
There is no easy answer to the question. The laws related to the time frame for payment of claims are found in the Texas Prompt Payment of Claims Act. A reading of these laws is confusing. Even an experienced Insurance Law Attorney will have to read the law, look at the facts in the case then reread the law and see how it applies to the facts of the case. A big part of this law is the penalty the insurance company is subject to having to pay for violations of the law. So how is this penalty calculated?
The Fort Worth Court of Appeals decided a case in 2008, that provides some guidance. The case is styled, GuideOne Lloyd's Insurance Company v. First Baptist Church of Bedford. Here are some relevant background facts:
First Baptist Church brought suit against GuideOne for hail damage to the roof of its church building. GuideOne's engineer concluded the roof had to be replaced and could not be repaired. GuideOne solicited an estimate to repair the roof anyway, and the church obtained an estimate for the replacement cost, including a statutorily required insulation upgrade. The jury awarded the church approximately $286,000 for the covered losses, $60,000 in damages on the church's Insurance Code violations, and $30,000 in compensatory and $55,000 in exemplary damages for a knowing violation, along with $100,000 in attorneys' fees, and $188,000 based on the 18% interest penalty under the Prompt Payment of Claims Act for untimely payment of claims. The jury found that GuideOne had made an unconditional tender of $155,000 to the church after the church filed suit. GuideOne argued that the trial court erred in disregarding the jury's finding regarding its unconditional offer and that the interest penalty should have been calculated without subtracting the $155,000 that the jury found it had unconditionally offered after the suit was filed. GuideOne also challenged certain questions on the jury charge as erroneous.
In making its ruling, this court said the trial court erred in disregarding the jury's finding that GuideOne had unconditionally offered $155,000 to settle the claim because there was some evidence to support the jury's finding. In applying the offer to arrive at a new interest calculation, the court applied the $155,000 tender first to the accrued prejudgment interest on the amount of the coverage with the balance applied the principle coverage amount owed, and then use the adjusted principle to calculate the 18% interest penalty for untimely payment. The court rejected GuideOne's argument that the plaintiff had not received a finding on the accrual date for its Prompt Payment claim because the accrual date was undisputed and need not be submitted to the jury.
With regard to the jury charge issues, the court found that submission of multiple alternative definitions of an "unfair or deceptive act or practice" was harmless even if erroneous, and that a question on "false, misleading or deceptive" acts was not duplicative of the question about "unfair or deceptive acts or practices." Other challenges to the jury's finding were not erroneous because the judgment was not based on the challenged findings and otherwise, GuideOne waived its challenges to the jury charges.

Persons who are insured in Grand Prairie, Arlington, Mansfield, Fort Worth, Dallas, De Soto, Duncanville, Cedar Hill, and other places in Texas are probably unsure what the phrase "like kind and quality" means in an insurance contract. Here is a case that may help to understand.
This is a Texas Supreme Court case that was decided in 2004. The style of the case is, Republic Underwriters Insurance Company v. Mex-Tex, Inc. Here are some relevant background facts in the case:
The roof atop a shopping mall was damaged by a hail storm. Before the insurance company agreed to pay for the replacement, the insured, owner of the mall, retained a roofer on a priority basis to replace the roof in order to avoid further injury to the tenants from future rains at a total cost of $179,000. Republic estimated the cost of replacing the roof with an identical make to be $145,460 and tendered that amount. The new roof was substantially similar in kind and quality to the old one, but the additional cost was due to the method of the roof's attachment to the building and the high priority of the job. Republic refused to pay the balance of the claim and the insured sued. Tex-Mex sought to recover the balance of the amount owed plus a statutory 18% penalty on the entire claim. Republic argued that the penalty, if any, should be assessed only on the disputed amount, rather than on the entire claim. The trial court entered the judgment in favor of Tex-Mex and Republic appealed. The Amarillo Court of Appeals affirmed, holding that the policy did not require the replacement roof to be identical and that an insurer's tender of the amount it believed was owed on a claim did not stop the accrual of Texas Insurance Code 542.060 penalties, or prejudgment interest, on what was later judicially determined to be the full amount of the claim. This Texas Supreme Court granted review of the case.
The Texas Supreme Court reversed and remanded, agreeing that replacement of a damaged roof with one of "like kind and quality" fell within the policy but rejecting the lower court's holding that Insurance Code, Section 542.060 calls for an 18% penalty of the amount of the claim, not just the amount outstanding after partial tender.
The court observed that interpreting "claim" as the amount ultimately determined to be owed net of any partial payments made prior to such determination was consistent with the statutory goal of encouraging prompt payment by insurers of undisputed amounts. The court also found a lack of support for the trial court's conclusion that the insurer's payment was in full satisfaction of the claim. Therefore, the statutory penalty could be imposed on $33,540, the difference between the trial court's determination of the claim amount and the partial payment tendered by the insurance company, from the date of payment until the date of the judgment.
This case helps explain the "like kind and quality" issue but it points out something else in the process. What else it does is point out one of the ways for determining how late payment penalties work.

People with insurance policies in Grand Prairie, Fort Worth, Dallas, Saginaw, Keller, Grapevine, Mesquite, or anywhere else in Texas would be surprised to learn that there are situations where family members are excluded from insurance claims. Here is one example of that.
The case is styled Rumley v. Allstate Indemnity Company. The opinion was issued by the Beaumont Court of Appeals in 1996. Here are some facts:
Joyce Rumley ("Wife") sustained personal injuries in a one car vehicle accident in which her husband, Wilburn Rumley, was the driver. Mrs. Rumley filed a claim for benefits under their insurer, Allstate. Allstate paid Personal Injury Protection (PIP) benefits but refused to pay liability because the policy contained a family member exclusion. At the time, the Texas Supreme Court had granted writ of error but had not yet issued an opinion in National County Mutual Insurance Company v. Johnson. In that decision, the Texas Supreme Court invalidated the family member exclusion. Wife sued Allstate and Ted Pate, a senior staff claims representative for Allstate, for breach of duty of good faith and fair dealing, violations of the Texas Insurance Code and violations of the Texas DTPA.
Allstate filed a Motion for Summary Judgment on the grounds that Wife's claim was a third-party claim for which Defendants owed no duty of good faith and fair dealing; there was a reasonable basis for denying the claim in that the family member exclusion was an unsettled issue of law; and there was no special or contractual privity between Pate and Rumley. The trial court granted summary judgment. Wife appealed.
In upholding the grant of summary of summary judgment in favor of the claim representative the court explained -
A third-party claimant cannot pursue an action against an insurer for unfair claims settlement practices under the Insurance Code.
Although Wife was a named insured on the policy and premiums were paid from community funds thereby establishing Wife's contractual relationship with Allstate, when Wife asserted a liability claim against her spouse, she assumed a posture of a third-party claimant.
In the context of her claim based upon her husband's negligence, Wife was antagonistic to both insurer and spouse. She did not rely upon Allstate's good faith any more than any other injured party would.
As a third-party claimant, Wife had no standing to assert extra-contractual and statutory claims against Allstate or the claims representative for denial or delay in the payment of her claim.
This case is yet another example of a case that should be confusing to most people. And it serves as yet another example why an experienced Insurance Law Attorney needs to be involved in these cases.

A natural question for someone in Grand Prairie, Fort Worth, Dallas, Arlington, or anywhere else in Texas to wonder about. Can the policyholder sue? Can the beneficiary sue? Can an estate administrator sue? The answer is one of those that depends on the facts and circumstances. Here is a case that gives some guidance.
The case is out of the San Antonio Court of Appeals and the opinion was issued in 1996. The style of the case is Mendoza v. American National Life Insurance Company. Here are the facts:
Jerry Mendoza purchased a $25,000 life insurance policy from American National on August 1, 1991. Carrion was a named beneficiary of the policy. The October premium was not paid. The policy provided for a 31 day grace period. On November 1, 1991, the last day of the grace period, American National's district manager, Sitka, verbally agreed to extend the grace period until November 4, 1991. The policy, however, specifically provided that only American National's president, vice-president or secretary had the authority to extend this time period. Jerry Mendoza died in an automobile accident on November 3, 1991. The premium was never paid. In a prior appeal, this court affirmed a summary judgment in favor of American National on Mendoza's breach of contract, negligence and bad faith claims. This appeal concerns the trial court's granting of summary judgment on Mendoza's claims for intentional infliction of emotional distress, Insurance Code and DTPA violations.
In its' opinion the court said that in order to qualify as a consumer under the DTPA, a person must seek to acquire goods or services by purchase or lease and those goods or services must form the basis of the complaint. Lack of privity between a plaintiff and defendant does not preclude a plaintiff from establishing consumer status. Section 541.060 provides standing to "any person" who has been injured by another's engaging in an unfair or deceptive act or practice in the business of insurance. Therefore, a plaintiff may assert causes of action under the DTPA even though the plaintiff is not a consumer. Carrion, a named beneficiary of the policy, would clearly be injured as a result of Sitka's alleged misrepresentations. Therefore, Carrion has standing. Mendoza's mother, in her capacity as representative of his estate, however, does not have standing.
Although the policy provides that Sitka does not have authority to extend its termination date, it is well settled in Texas that such provisions are ineffectual to prevent parol waiver of such provisions and conditions by an authorized agent acting within the scope of his authority. Assuming Sitka exceeded his authority in modifying the agreement, because American National selected Sitka as its agent, American National assumed the risk for Sitka exceeding his instructions. American National cannot escape liability for Sitka's misrepresentation that coverage would be extended until November 4, 1991. The fact that American National conducted an investigation after Mendoza's death to determine if the accident was alcohol related was not conducted in an outrageous manner and could not support an action for intentional infliction of emotional distress.
Only Carrion has standing to assert Insurance Code or DTPA claims. Accordingly, the summary judgment as to Carrion was reversed.
A reading of the above should be confusing to most people. The case serves as yet another illustration for why an experienced Insurance Law Attorney needs to be involved in a claims when an insurance company denies a claim for benefits.

Insurance Law Attorneys and Lawyers in Fort Worth, Dallas, Weatherford, and other places in Texas know the claims that can be made against an insurance company that treats one of its insureds in an unlawful manner. These same lawyers should also know the claims to make against insurance agents that make misrepresentations to their insureds when selling a policy of insurance.
The question today is: Can an agent be held liable for something he does not say? The answer is: It depends. Here is a case that gives some guidance.
The San Antonio Court of Appeals issued an opinion in 1998, in the case styled, Moore v. Whitney-Vaky Agency. Here are some facts:
Moore was the owner of an apartment complex. An agent for Whitney-Vaky asked whether he could handle the insurance for the complex. Moore testified in deposition that he did not recall discussing any types of coverage with the agent, that he never asked the agent to tell him what the policy covered, that he did not discuss the contents of the policy with the agent, that he never ask the agent to tell him what the policy covered and that he could not recall any conversations with the agent about the coverages he wanted prior to obtaining the policy. However, Moore stated that he believed that all liabilities were covered under the policy and argued that he should have been informed of the provisions of the policy at the time he purchased it.
Subsequently, Moore was sued for wrongful termination by a former employee. Moore believed the claim was covered under his liability policy and made a claim. The claim was denied. Moore then retained counsel and settled the suit. After settlement, Moore sued the insurer and Whitney-Vaky, the agent. The insurer was non-suited. Whitney-Vaky then moved for summary judgment. The parties agreed that the only issue to be determined by the trial court was whether Whitney-Vaky had a duty to advise Moore of the coverage provided under the policy. The trial court granted the motion for summary judgment and Moore appealed.
This appeals court affirmed the trial court ruling and stated that an insurance agent in Texas owes a common-law duty to a client for whom he undertakes to procure insurance: (1) to use reasonable diligence in attempting to place the requested insurance; and (2) to inform the client promptly if unable to do so. Neither of these duties was breached here because Moore admitted that he never requested a specific type of coverage, and Whitney-Vaky did provide a policy of insurance in accordance with its understanding of Moore's expectations. Moore also was never led to wrongly believe that his policy covered risks that were in fact excluded because Moore admitted that he never discussed the contents of the policy with the agent, and that the agent never said anything to give him the impression that the policy would cover all suits against him. There is also no evidence of a special relationship that may give rise to a duty to disclose coverage limitations, even though Moore continued to use Whitney-Vaky to renew his policy every year. Since there is no evidence of some specific misrepresentation by Whitney-Vaky or the agent about the insurance, Moore's mistaken belief about the scope of coverage is not actionable under either the DTPA or the Texas Insurance Code.

Insureds in Weatherford, Mineral Wells, Aledo, Azle, Willow Park, Hudson Oaks, Springtown, Millsap, Brock, and all other places in Parker County have to protect themselves immediately by seeing an Insurance Law Attorney when their insurance company refuses to defend them in a lawsuit.
A 1998, Dallas Court of Appeals case serves as an example of what happens when someone delays in hiring an attorney. The style of the case is, Greenberg, et al v. Cigna Lloyds Insurance Company. Here are some facts:
Greenburg was the independent executor as well as the trustee for his brother's children. The children eventually brought suit against Greenberg in Probate Court alleging among other things that Greenberg was liable for improper self dealing and breach of fiduciary duty. After receiving notice of the suit, Greenberg contacted two insurance companies that had secured insurance policies, including commercial general liability policies. Greenberg and his sons were told that there was no coverage under the policies. Greenberg hired an attorney to represent him in the probate suit. Judgment was rendered against him. Later, he entered into a compromise settlement agreement under which Greenberg agreed to pay $1.1 million. The trial in the underlying probate case began on September 25, 1989. In September 1994, Greenberg filed suit against Cigna as well as other insurance companies alleging breach of contract, breach of fiduciary duty, breach of duty of good faith and fair dealing, negligence, gross negligence, breach of express and implied warranties, violations of Texas Insurance Code, Section 541.060, and the DTPA, and intentional misrepresentation. Cigna filed a motion for summary judgment which was granted on the basis of a limitations defense. Greenberg then filed this appeal.
In reviewing this case, the Dallas Court of Appeals held that the summary judgment in favor of Cigna was affirmed. The court said that a cause of action for wrongful refusal to defend ordinarily accrues when the refusal to defend occurs. In this case, the underlying trial commenced on September 25, 1989. It is undisputed that the trial preceded in the probate suit without defense being provided by Cigna. Therefore, the refusal to defend occurred at the very latest on the day the trial commenced in September 1989. Greenberg did not file the breach of contract claim until September 1994. Therefore, the breach of contract claim is barred by the four year statute of limitations. All of the extra contractual claims are based on Cigna's failure to provide a defense. Those claims also began to run when Cigna failed to provide the defense in the underlying suit. The claims are subject to two or four year statutes of limitations. Therefore, the extra contractual claims are also barred by limitations.
Without talking to the parties involved there is no sure way of knowing why there was a delay. There are ways to excuse a delay and to get around the statute of limitations defense, but the facts have to be just right to be successful in this effort.
Bottom line - don't delay getting an insurance law attorney involved.

Residents of Grand Prairie, Arlington, Fort Worth, Dallas, and other areas in the State of Texas would want to understand what happens when a policy payment is missed. The following case is one where the policy ended up lapsing. An experienced Insurance Law Attorney may have been able to get a different result.
The case is State Farm Life Insurance Company v. Beaston. The case decided in 1995, by the Texas Supreme Court. Here is some background.
Beaston purchased a graded premium whole life policy from State Farm. The premium on the policy was due on 12/28/93. The thirty-one day grace period expired on 1/28/94. Three days after the expiration of the grace period, Beaston died in an automobile accident. State Farm refused to pay benefits because coverage had expired. Beaston's wife, the beneficiary, brought suit alleging that the policy remained in force because of its dividend-at-death provision. The trial court found the policy ambiguous and instructed a verdict in favor of Beaston with respect to coverage.
The jury found: (1) the defendants had engaged in unfair or deceptive acts and that such conduct was a producing cause of damages to Beaston; and (2) defendants did not: (a) engage in any false, misleading or deceptive act or practice; (b) engage in any unconscionable action or course of action; (c) commit negligence; or (d) commit gross negligence. The jury awarded no policy benefits but awarded $200,000 for past mental anguish and attorney's fees in the amount of forty percent of her recovery. Based on the court's directed verdict and the jury's findings, the court entered judgment in favor of Beaston in the amount of $598,000. The court refused to award damages for mental anguish or to treble the award pursuant to Texas Insurance Code, Section 541.060, because there was no finding the defendants acted knowingly. The Court of Appeals held that mental anguish damages should have been awarded and actual damages should have been trebled. The Court of Appeals further held that Beaston's contingent attorney's fees should be calculated from the total recovery and not the total damages.
In it's analysis of this case, the court said that the interpretation of an insurance contract is governed by the same rules of construction applicable to other contracts. The policy, viewed in its entirety, unambiguously provides that State Farm would use "any available dividend accumulations" to pay all or part of the unpaid premium. Beaston's policy had not accumulated any dividends on its first anniversary and the policy lapsed before its second anniversary. Therefore, no dividend had accumulated. As a result, there were no dividend accumulations available to cure the lapse. Accordingly, Beaston had no coverage under the policy. On an issue of first impression, the Court held a "knowing" violation is required for an insured to recover mental anguish under Section 541.060. Thus, the judgment of the Court of Appeals was reversed and judgment rendered that Beaston take nothing.
This case has a harsh result.
Referring to the first paragraph above, this author is not saying that an experienced Insurance Law Attorney would have resulted in a favorable outcome. Rather, this author is saying that there are many ways to get around late payments and missed payments and that the odds of knowing about these ways are greatly increased with an attorney who has dealt with the situation in the past.

People in Grand Prairie, Fort Worth, Dallas, Arlington, Hurst, Euless, Bedford, Grapevine, and other places in the DFW metroplex would want to know why an insurance company refuses a claim and what the consequences are. The following case may give some insight.
This is a 1999, Fort Worth Court of Appeals case styled, "Mid-Century Insurance Company v. Foreman." Here are some facts:
Joyce Foreman was involved in a car accident with anther driver, Karl Buehner. Foreman's auto policy included $250,000 in underinsured motorist coverage. Foreman settled with Buehner's insurance carrier for approximately $20,000. It is disputed whether or not Mr. Foreman spoke with the Mid-Century agent before the settlement. Because of extensive medical bills, the Foreman's filed an uninsured motorist claim with Mid-Century. Fisher, a Mid-Century adjuster, mailed an acknowledgement and request for information. Fisher spoke with Mr. Foreman who told her that they had hired a lawyer. Fisher stopped all contact with the Foremans.
The Foremans sued Mid-Century to recover extra-contractual and contractual UIM damages. Based on a review of the Foreman's medical records, Mid-Century denied the Foremans' claim for failing to obtain consent before settling with State Farm and Buehner under the policy terms. Later, Mid-Century withdrew its denial based on the Texas Supreme Court opinion in Hernandez v. Gulf Group Lloyds, which held that a settlement without consent exclusion is unenforceable absent a showing that the insurer had been prejudiced by the insured's failure to obtain consent.
The Foremans' claim for UIM benefits was severed and tried separately from all extra-contractual causes of action. In the trial for UM benefits, the jury awarded $112,287.00 to Joyce and $12,500.00 to her husband. That judgment was not appealed.
The Foremans' extra-contractual claims were then tried. The Foremans focused on Mid-Century's denial of the claim. The jury found that Mid-Century caused the Foremans damages by committing deceptive acts, breached its duty of good faith and fair dealing, and knowingly failed to promptly pay the claim. The jury also found that Mid-Century's conduct was knowing and intentional but was not grossly negligent. The jury awarded $150,000 to Foreman and $175,000 to her husband for mental anguish damages. A bifurcated proceeding was then held in which the jury awarded the Foremans an additional $125,000 each because Mid-Century "knowingly violated the DTPA." These additional damages were not awarded to the Foremans because the Insurance Code provided a greater recovery. Mid-Century appealed.
The appeals court held that because there was no evidence that the insurance company acted "knowingly," the judgment is reversed and a take nothing judgment in favor of the insurance company is rendered.
In its holding, the court said a culpable mental state is required to recover mental anguish damages under Section 541.060. "Knowingly" means actual awareness of the falsity, unfairness or deception of the act or practice made the basis for a claim for damages under Section 541.060. "Actual awareness" may be inferred where objective manifestations indicate that a person acted with actual awareness.
The Court stated that "actual awareness" does not mean merely that a person knows what he is doing, but it does mean that a person knows that what he is doing is false, deceptive or unfair. This is a more culpable mental state than gross negligence.
The court then said, in this case, there is no evidence that Mid-Century knew it was acting falsely, deceptively or unfairly towards the Foremans. Therefore, their mental anguish award cannot stand. The Foremans' assertions based on unsupported inferences are no more than a mere scintilla of evidence and cannot support a jury's finding.

People in Weatherford, Mineral Wells, Aledo, Hudson Oaks, Willow Park, Brock, Millsap, Springtown, Cool, Peaster, and other places in Parker County might be interested in this life insurance case.
The case is a 1996, opinion issued by the Southern District of Texas. The style of the case is Bates v. Jackson National Life Insurance Company. Here are some facts.
Bates' children sued Jackson National for proceeds of a life insurance policy issued to Bates. The children asserted causes of action for breach of contract, bad faith, Insurance Code violations and DTPA violations.
On October 31, 1991, and November 1, 1991, Bates was diagnosed with phlebothrombosis and diabetes, respectively. On November 12, 1991, Bates submitted an application to Jackson National in which he represented he had not consulted or been treated by a physician in the last five years and that he had not submitted to an x-ray or any laboratory studies or tests. Furthermore, Bates represented in the application that he had not been told he had any disease, abnormality or diabetes. The policy issued and the application was attached to and made a part of the policy.
On November 11, 1992, Mr. Bates was murdered by an ex-lover of his girlfriend / common law wife. The kids timely filed a claim with Jackson National. Jackson National denied coverage based on material misrepresentations made by Bates in the application for insurance.
The kids acknowledge that the application contained false representations and that Jackson National relied on those representations. The kids dispute, however, that Bates intended to misrepresent information to Jackson National or that the misrepresentations were material.
The court held that a material misrepresentation in an insurance application does not defeat recovery if the misrepresentation was made innocently and in good faith. An insured's mere knowledge of his or her health condition is insufficient to prove intent to deceive as a matter of law. Accordingly, a fact issue exists as to whether or not Bates intended to deceive Jackson National. What this means is that Jackson National cannot get a favorable ruling in a declaratory judgment action or a motion for summary judgement, which means the kids get to present their case to a jury.
In 2003, the Texas Legislature passed relevant laws dealing with this issue.
Texas Insurance Code, Section 1101.006 says:
(a) ... a life insurance policy must provide that a policy in force for two years from its date of issue during the lifetime of the insured is incontestable, except for nonpayment of premiums.
This means that misrepresentations do not matter after a person has had and been paying for the policy for a period of two years.
Texas Insurance Code, Section 1101.007 says:
A life insurance policy must provide that, in the absence of fraud, a statement made by an insured is considered a representation and not a warranty.
This means that a wrong statement has to be proven to have been made intentionally and not by mistake before the insurance company can hope to avoid payment on the policy.
What is relevant to the reader is that life insurance companies will look long and hard to find ways to keep from paying a policy claim. Upon being notified of a death, they will immediately order all the medical records they can on the insured, then compare those records to the application. When a claim is denied, for any reason, an Insurance Law Attorney needs to be consulted as soon as possible.

Customers in Grand Prairie, Arlington, Mansfield, Fort Worth, Hurst, Euless, Bedford, Saginaw, Haslet, Rhome, and other places in Texas would have a hard time trying to read and interpret an insurance policy. This is when the advice of an experienced Insurance Law Attorney is most helpful.
The United States District Court, Southern District of Texas, Houston Division, issued an opinion on October 5, 2011. This opinion deals with policy interpretation. The case arises from a declaratory judgement lawsuit filed by the insurance company, RLI Insurance Company, and the partial motion for summary judgment filed by the insured, Willbros Construction (U.S.) LLC, et al.
The court ruled in favor of the insureds. Her is some factual background.
This case concerns whether a particular exclusion in an insurance policy precludes coverage of the value of line pipe that the insureds attempted to install under a river. RLI issued a policy to the insured that was in effect during all relevant times. The insureds had been retained to construct a natural gas pipeline ("the project"). The insureds subcontracted with Southeast Directional Drilling, LLC (SEDD) to drill the pipeline hole. While SEDD was installing the line pipe by pulling it through a hole drilled underneath a river, the line pipe became lost and damaged. A replacement hole was drilled, and the insureds purchased replacement line pipe. They submitted a claim under the policy for $1,567,530.09, to recover the cost of the replacement line pipe, which RLI denied. This lawsuit resulted.
RLI contends that the insureds' loss was caused by faulty construction or workmanship excluded from coverage by the "Defects, Errors, and Omissions" exclusion to the policy, because the hole through which the pipe line was to be installed was defectively drilled. It maintains that the "ensuing loss" provision does not extend coverage to the insureds' claim because there was no separate and independent "covered peril" beyond the faulty construction that caused the loss.
The insureds contend that the policy covers the pipe's value, and that even if the hole was defectively drilled, the resulting damage to the line pipe is a covered loss that is not otherwise excluded.
The issue is whether the line pipe constitutes "construction," as used in the polemical policy provision. Because "construction" is an ambiguous term that could have multiple meanings in the policy, The Court held in the insureds' favor.
The policy extended coverage to "direct physical loss caused by a covered peril to materials, supplies, machinery, fixtures, and equipment that the insureds were installing, constructing, or rigging as part of their installation or construction project." However, exclusions in the policy act to deny coverage of certain claims, including "Defects, Errors, and Omissions" exclusion, which provides:
"We" do not pay for loss caused by:
1) an act, defect, error, or omission (negligent or not) relating to:
a) design or specifications:
b) workmanship or construction; or
c) repair, renovation, or remodeling; or
2) a defect, weakness, inadequacy, fault, or unsoundness in materials.
But if a defect, error, or omission described above results in a covered peril, "we" do cover the loss or damage caused by that covered peril.
In effect, the exclusion eliminates coverage for the repair or replacement of defective workmanship while preserving coverage for damage that results from that defective workmanship. The exclusion protects RLI from becoming the guarantor of the insureds' work, but it does not eliminate coverage for ensuing losses caused by defective workmanship -- here, the damages line pipe.
The parties dispute whether the lost or damaged line pipe is property covered by the policy, or "construction" excluded from coverage. In cases involving ambiguous contract terms, the Court must "adopt the [interpretation] of an exclusionary clause urged by the insured as long as that [interpretation] is not unreasonable, even if the [interpretation] urged by the insurer appears to be more reasonable or a more accurate reflection of the parties' intent."
Accordingly, the Court found that the line pipe was covered property. Consequently, even if the hole was defectively drilled, the resulting damage to the line pipe is a covered loss of property separate and distinct form the allegedly defective hole.

People in Grand Prairie, Arlington, Fort Worth, Dallas, Colleyville, Lake Worth, Keller, Roanoke, Saginaw, North Richland Hills, and other places in Texas will get very frustrated when their insurance company delays in paying a claim. Here is some general information about this happening.
Most insurance companies will pass off claims delays as fluke occurrences. What is important to realize is that these actions, or lack thereof, are actually routine and intentional conduct. A lot of this is the result of the McKinsey system, set up by McKinsey & Company. This system for "lowballing" claims payments is driven by the claims performance management and pay systems from the top to the bottom of the organization.
A Rutgers law professor who has studied this, has suggested that the deck is stacked against individuals who make claims. He says, "You have an accident or a fire in your house. You call up the insurance company. You describe the circumstances. Maybe they send an adjuster out, and they say it's not covered, or it's covered but here's the dollar amount that we're obligated to pay you ." Most people do not have the expertise "to know whether or not that's right."
Most insurance company representatives will not comment on specific cases because of privacy requirements, but consider their claims processes both legal and effective. They will say, "Our customers and claimants receive prompt and courteous claim service and our goal is to settle each claim fairly and efficiently." All insurance companies claim practices are available to and regularly reviewed by state departments of insurance. In Texas that agency is the Texas Department of Insurance.
Insurance experts argue that insurance regulation has become little more than a fig leaf. This is because state insurance departments are usually understaffed and overwhelmed. And even if the departments had the legal firepower to contend with the insurance giants, the regulators are closer to the industry than to consumers. Proof of this is that eleven of the past 15 presidents of the National Association of Insurance Commissioners (NAIC) went to work for the insurance industry after leaving office. A study in Georgia found that around half of state-level insurance commissioners did so as well. Studies from other states would be interesting.
Penalties for violations of state regulations are "laughably low" in many states. It usually takes an experienced Insurance Law Attorney to help individual claimants for the illegal acts of the insurance companies. Also, it is important to realize that insurance taxes are a major source of revenue for states, and insurance oversight commissions are usually more concerned with keeping companies solvent than in resolving the problems of policyholders.
With the exception of the federal Affordable Care Act, insurance is regulated on a state-by-state basis. Although most states set a specific timeline for how quickly an insurance company must initially respond to claims, there is much more leeway when it comes to settling those claims. These rules will vary state by state. In Texas, the rules regulating these timelines are found in the Texas Insurance Code, Prompt Payment of Claims Act. According to NAIC, claim delays have long been the most frequent cause of policyholder complaints. As of November 28, 2011, the NAIC had received 11,053 delay-related complaints this year alone, comprising almost a quarter of the year's total complaints. These data only reflect confirmed complaints -- the ones that the state insurance commission has investigated -- so the actual number of delayed claims is likely much higher.

When someone in Grand Prairie, Hurst, Euless, Bedford, Fort Worth, Dallas, Irving, Carrolton, or anywhere else in Texas makes a claim with their insurance company, they expect the claim to be paid promptly.
Here is something to get you upset.
According to an unpublished Harris Interactive Poll conducted in September, 16 percent of surveyed adults have experienced financial hardship while waiting for an insurance claim to be settled or know someone who has. The same poll found that 59 percent of adults believe that most insurers intentionally delay claims -- and those with an income of $35,000 or less were more likely to agree.
With 15.3 percent of Americans -- about 46.2 million people -- living in poverty, close to 10 percent unemployment, and roughly 2 million people who've been looking for work for more than two years, Allstate's business model is profiting off many consumers at their most vulnerable. A claim delayed by even a month can spell financial disaster for a family. As a National Bureau of Economic Research study found, about 25 percent of Americans could not come up with $2,000 in a 30 - day period.
One Allstate customer, Burdett, a retiree, reported her experience on the website AllstateInsuranceSucks.com. When her Georgia home burned in November 2010, she was in Ohio, where she lives most of the year. She said the fire marshal in Georgia told her that her house would have to be torn down.
The next day her Allstate adjuster, told her the house could be repaired. Allstate also said it would have to do a thorough investigation to determine if the fire was caused by arson. If it was arson, the adjuster told her, Allstate would not pay for any damages. According to former employees, such investigations are a common practice at Allstate and are encouraged by supervisors as a way to avoid paying claims quickly.
Burdette, who lives on her Social Security checks, flew from Ohio to survey the damage herself. While in Georgia, she contacted public adjuster Anita Taff. Public adjusters serve as advocates for individuals who feel they need another set of eyes on a claim. Taff met with Burdette at the house, Burdett said, and discussed the damage with the contractor Burdett had hired. Upon returning to Ohio, Burdett spoke with Taff over the phone to find out what her impression was. Burdette said Taff warned her that the contractor might go along with Allstate's insistence that the house could be repaired.
Taff stated that she believed, delaying claims is an effort to put the squeeze on policyholders. She explained that while a claim is being held up, the insurance company may stop paying the policyholder's additional living expenses, forcing the policyholder to cover mortgage and rent entirely out of pocket. Taff said, "That is something that many people cannot afford to do, so they're forced to take a lower settlement,"
Burdette said she immediately called the contractor and told him not to go near her house. According to Burdette, she received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster. "He said, 'If you hire a public adjuster, I'm going to deny and delay this claim for as long as possible.'" Taken aback, she then asked if it wasn't in his best interest to settle the claim. "Not really," was the reply according to Burdette.
Although the Allstate adjuster eventually agreed to work with Taff on Burdette's claim, her troubles did not end. The contractor who had been banned from her property nevertheless worked on the house and billed Allstate for $22,000. Burdette had explicitly told Allstate not to pay the contractor a dime, she said, but the company paid him under her policy anyway.
Now, more than a year later, Burdette's home is still being repaired and Allstate refuses to reimburse the $22,000. She consulted four different lawyers to see if she had a legal case. While she said they all agreed that she was entitled to reimbursement, she said they also agreed that she lacked the funds to fight the insurance giant. "They told me, 'You'll run out of money.'"
For Texans, an experienced Insurance Law Attorney can help by using the Texas Insurance Code and the Prompt Payment of Claims Act.

Few people in Weatherford, Mineral Wells, Aledo, Willow Park, Hudson Oaks, Azle, Springtown, Millsap, Cool, Brock, or anywhere else in Parker County wants to be forced to hire an attorney to submit an insurance claim. But, like it or not, that is what most people have to do to get fair treatment.
A recent article on insurance singles out Allstate Insurance Company, but this same story could be told about many of the insurance companies. Here is what some of the article said:
Unlike may other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurance companies have long operated as semi-public trusts. But since the mid 1990's, a new profit hungry model, combined with weak regulation, has upended that ancient contract. In Texas, the Texas Department of Insurance is the agency that is suppose to be providing oversight on the insurance industry.
Claims has been converted into a money making process, is the report from consultants and people who study the industry.
The change started when consulting giant McKinsey & Company sold Allstate and other leading insurance companies on a new system to boost the bottom line. Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurance companies embraced a computer driven method that produced purposefully low offers to claimants.
Those who took the low ball offers received prompt service, while those who did not had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits. An ex Allstate agent told the American Association for Justice, a trial lawyers lobby, the strategy was to make claims "so expensive and so time consuming that lawyers would start refusing to help clients." The strategy was dubbed "Good Hands or Boxing Gloves" by consultants.
McKinsey, which was reportedly hired by Allstate in 1992, prepared about 12,500 PowerPoint slides to present its plan. The slides were introduced in litigation in 2005, when Allstate turned them over under a temporary protective order. This information was detained in a book titled, "From Good Hands to Boxing Gloves: The Dark Side of Insurance."
McKinsey's strategy put profits above all. One slide in the McKinsey presentation illustrated this philosophy by painting the insurance business as a zero sum game: "Improving Allstate's casualty economics will have a negative economic impact on some medical providers, plaintiff attorneys, and claimants. ... Allstate gains -- others must lose."
Allstate has certainly gained: It made $4.6 billion in profits in 2007, double its earnings in the 1990's. The stunning increase, came through "driving down loss values to an average of 30 percent below the actual marker cost" -- that is, paying dramatically less on claims.
An insurance company can make a lot of money on the small claims because if you save a few dollars on a huge number of claims, it's worth more than saving a lot of dollars on a very small number of claims.
Allstate is the best known user of the McKinsey model, topping the list of the "Ten Worst Insurance Companies in America" published by the American Association for Justice. But Allstate's rise in profits has led most of the industry to adopt the same approach. McKinsey has worked with State Farm and other companies in redesigning their claims systems. Another book written on the subject is "Delay, Deny, Defend."
Statistics show that the companies that take in 70 percent of total insurance profits in the United States now abuse their obligations to their policyholders. When Allstate CEO Tom Wilson earned $9.3 million last year, he was not even on the top 10 list of best paid insurance executives according to New York Law School's Center for Justice and Democracy.

Insureds in Grand Prairie, Arlington, Weatherford, Fort Worth, Mansfield, Dallas, and other places in Texas, who have some form of disability insurance will too often, have to seek the assistance of an experienced Insurance Law Attorney when they make a claim. This is because insurance companies that issue disability policies are reluctant to pay these types of claims.
A case decided in 1978 serves as a good example. This is a Beaumont Court of Appeals case. The style of the case is, Lone Star Life Insurance Company v. Joseph B. Griffin. Here is some background.
Griffin testified that as he was returning to his home from his farm, he passed by his drugstore. As was his custom, he entered the store to see if everything was normal (having been burglarized several times in the past). He smelled smoke which he found to be coming from the rear of his building. He testified that he emptied his fire extinguisher but his efforts were futile; that he was trying to get out of the building when an aerosol can exploded in his face; that he lost consciousness while upon the floor of the store near a door, and regained consciousness later in a hospital.
A Dr. Popejoy testified as to his treatment of Griffin beginning at about two in the morning following the fire. He told of finding external burns on several parts of Griffin's body but the most serious injury was to his lungs from the inhalation of smoke and fumes. Griffin was hospitalized for several weeks and testified that he was unable to do any work for several months thereafter.
Dr. Popejoy testified positively and unequivocally that Griffin's injuries were caused by the inhalation of the smoke and fumes which resulted in his total and permanent disability. A Dr. Anderson examined Griffin for Lone Star. His examination was more than two years after the accident and he found Griffin to be only partially disabled, at the worst. Anderson attributed Griffin's condition to his constant smoking of cigarettes which he admitted to have been addicted to for approximately fifty years. Anderson testified that Griffin could do all of the work of a pharmacist but could not do any sustained heavy lifting.
The policy of insurance provided that Lone Star would pay plaintiff $1,000 per month for sixty months for an accidental injury resulting in total disability and that it would pay $1,000 per month for twenty four months for total disability resulting from sickness. Lone Star paid several monthly payments of $1,000, noting on each check that the payment was for accidental injuries. Without any change in its medical information in its file and for some undisclosed reason the checks were coded to indicate that the disability was the result of sickness, not an accident. The twenty-fourth payment was coded to indicate a sickness disability payment and a letter was written. The check indicated it was the last payment.
Griffin hired a lawyer and filed a lawsuit.
A jury awarded Griffin $34,518.40, plus twelve percent penalty, $4,142.21, plus $9,900 in attorney fees. Pursuant to the Texas Business and Commerce Code, Section 17.50, each of such awards was trebled so that the total judgment against Lone Star was in the sum of $132,181.83, with interest at nine percent per annum. (this section does not allow a trebling of attorney fees or a trebling of the interest amount)
On appeal this appeals court reversed the trebling of damages.