Dallas Fort Worth Insurance Lawyer Blog

For the most part insurance companies are regulated by State Law. Federal Laws in the insurance industry exist but I'm not going to talk about that here. You just need to know right now that if you are in Texas, that any insurance policy you have is probably controlled by Texas Insurance Laws. This is true most the time even if you actually purchased the insurance out of state or from an insurance company that is not based in Texas.

Whether you purchased an insurance policy in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or where ever in Texas the politicians in Austin and the Texas Insurance Commission regulate the policy. As long as you are now living in Texas, the laws and regulations of Texas are going to apply with few exceptions.

Prior to 2003, the rates paid and the policy forms used for writing insurance coverage were uniform through out the State and anybody who dealt with insurance policies on a frequent basis such as agents and attorneys knew what the policies said and how they should be applied. In 2003 the insurance companies prevailed with rate deregulation and also obtained the ability to deregulate policy forms. The insurance companies ran with this new found freedom, and as a result, there are many policy forms in the market today, which makes it difficult for consumers to compare different products. One attempt to compare different insurance products can be found at http:www.opic.state.tx.us/hoic.php

The above site may help you in shopping and comparing insurance policies but only an experienced Insurance Law Attorney is going to be able to assist you in the proper interpretation of the policy if and when the occasion arises that you are making a claim for benefits through the policy and the claim for benefits is being denied. Feel comfortable in contacting us when you need help.

The title of this article may really be kinda mis-leading. In fact it probably should be "It Is Easy In Texas To Get Away With Claims Denial For Fraud". Here is why the second title may be more truthful: Most people don't know that the first title is more accurate. Confusing? Let me explain.

It is almost routine for a for an insurance company to deny a claim and state as one of the reasons for denial that the person who purchased the insurance lied or committed fraud when they filled out the application for insurance. Unless the person who gets the letter knows to take the letter to an Insurance Law Attorney, they probably get angry, upset, frustrated, and then give up. Thus it was easy for the insurance company to get away with a claim denial based on fraud.

If you are in the Dallas Fort Worth area or out in Parker County and Weatherford, or anywhere else in the State for that matter you can contact Mark Humphreys. Then you will be told that Texas law makes it very difficult for an insurance company to get away with claims denial for fraud. Then you will allow us to file a lawsuit on your behalf for the benefits you have been denied.

Under Texas law, an insurance company must plead and prove the following to avoid a policy because of fraud or misrepresentation by the insured person: (1) the making of the representation; (2) the falsity of the representation; (3) reliance thereon by the insurance company; (4) the intent to deceive on the part of the insured person in making the representation; and (5) the materiality of the representation. Mayes v. Massachusetts Mut. Life Ins. Co. is a Texas Supreme Court case stating so.

Another Texas Supreme Court case, Union Bankers Ins. Co. v. Shelton, said the insurance company was wrong in its denial. In Union Bankers, the insurance company attempted to rescind life insurance policies because the insured person failed to inform the insurance company of a change in his health after he signed the applications.

Claiming fraud or misrepresentation is a very difficult defense for the insurance company. There is a long line of case law in Texas making this difficult. The problem is that most people and even attorneys who do not practice insurance law do not know the law as it relates to this matter and thus when a letter is received from the insurance company denying the claim, there is crying and weeping, and surrender.

Continue reading "It Is Hard In Texas To Get Away With Claims Denial For Fraud" »

In 1929, a case was decided that has had deep effects on the claims handling process in Texas. The case was G. A. Stowers Furniture Company vs American Indemnity Company. The case arose out of a situation in Galveston, Texas, but applies to any place in Texas including Dallas, Fort Worth, Arlington, Grand Prairie, Irving, Weatherford, or any other city or town in the State.

In this case, Stowers had a $5,000 insurance policy with American. A claim was made against Stowers wherein the claimant was willing to settle the claim for $4,000. The claim was potentially worth much more. American decided to deny the claim. American's thinking was that the worst that could happen to them was that if the case were tried and lost that American would be out $5,000 which was the top limit on the policy. So instead of settling the case for $4,000 the case went to trial and a judgment was taken against Stowers for over $14,000. American paid the policy limits of $5,000 and walked away leaving Stowers to make up the difference.

Stowers sued American saying American refused to act as a reasonable and prudent insurer would have acted and thus cost Stowers money. Stowers said it was unreasonable for American to have not settled the case for $4,000, when they could have, rather than expose Stowers to a judgment in excess of the policy limits. The court agreed with Stowers.

This law, now known as the "Stowers Doctrine" in Texas says that if an insurance company is given the opportunity to settle a case for an amount less than or equal to the policy limits and refuses to do so, then the insurance company and not its insured is responsible for any judgment in excess of the policy limits. The test is, would a reasonable and prudent insurance company go ahead and settle the case, given the facts of the case, rather than expose its policy holder to the risk of a judgment in excess of the policy limits.

There have been several adjustments to this law over the years that involve issues of liens and subrogation interests. Plus the exact language of any offer to settle for an amount equal to or less than the policy limits is scrutinized closely by the courts to see if the offer properly invokes the "Stowers Doctrine". If this "Stowers Doctrine" is properly taken into account and the claim is not paid by the insurance company then the policy holder has a claim against its insurance company for its conduct in the matter.

Continue reading "Texas Insurance Law On How Claims Are Paid" »

It is not an over-statement to say Texas Insurance Companies make lots of money and profits. Many of these companies are based in or have big offices in Dallas and Fort Worth. Having said that, every few years one will go out of business. When an insurance company goes out of business it is usually the result of a natural disaster such as a hurricane effecting an area where they have a lot of policies issued. Not once has it been because of too many lawsuits.

So what happens if your insurance company goes out of business? In Texas, when an insurance company becomes insolvent, meaning its liabilities or debts exceed its assets, the company is placed in receivership by a state District Court Judge and this authorizes the Texas Commissioner of Insurance to take charge of the company.

So what happens to your insurance claim? In Texas, all licensed insurers must be members of the guaranty association for their particular type of insurance. There are associations for title insurance, life and health insurance, annuities, property and casualty, auto, and home, etc.

The purpose of the guaranty associations is to pay lawful claims made to the insurance company that has been placed in receivership. The thing to keep in mind is they will play games with you and give you a feeling of "hopelessness". It has been our experience that it is definitly more difficult and time consuming, but in the end we have always been to get our clients situations worked out.

Continue reading "What If My Texas Insurance Company Goes Out Of Business?" »

A DFW area (Weatherford) widow and resident of Texas, recently got a good settlement involving a credit life insurance policy.

In 2005 a man went into a local car dealership to buy a new truck. After the down payment and trade-in he financed a little over $27,000 on the truck. While closing the deal with the finance manager at the dealership he was asked to purchase a credit life policy covering the debt on the truck and he did. This type of policy is suppose to pay any remaining debt on the loan. A year later he died and the debt on the truck remained at about $23,000.

His widow applied for benefits to pay off the truck and was denied. The stated reason for denial was that her husband had lied about his medical conditions on the application for insurance. He had died from a cause that was asked about on the application. The application had a box checked wherein he was stating he had never had that medical problem, and it was signed by him. The insurance company sent a copy of the application with the box checked and the husbands signature, to his widow.

Here was the problem: The widow had her copy of the application wherein the box was not checked. As a result, it was obvious that someone with the insurance company or the car dealership had checked the box at a later date.

The widow had sought the help of an attorney who did not regularly practice Insurance Law. Right before trial the attorney insisted that the widow settle for $10,000 which the insurance company was offering. He told her she would never get more. She refused and sought another attorney.

She came to Insurance Attorney Mark humphreys who immediately re-sued the insurance company, the car dealership, and the finance manager for violations of the Texas Insurance Code, Deceptive Trade Practices, Breach of Contract, fraud, negligence, and other causes of action.

The case settled 4 months later for 6 figures.

The United States Court of Appeals for the Fifth Circuit has upheld a decision from the Northern District of Texas wherein the District Court Judge upheld a claim denied by National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The stated reason for denial was that the circumstances of death did not fall within the policy's coverage.

The claimant Mary McMurray and her husband went on a honeymoon cruise with Oceania Cruises. The cruise was paid for by Joe McMurray by using his Platinum Select Citibank Mastercard, which included a $1,000,000 accidental death or dismemberment insurance policy Issued by National Union. As the spouse of Joe, Mary McMurray was eligible for benefits. Among the types of hazards covered by the insurance policy was coverage if the insured person (Joe) was injured or killed while "riding as a passenger in or on (including getting in or out of, or on or off of) any Common Carrier." The policy defined "common carrier" as "any licensed land, water or air conveyance operated by those whose occupation or business is the transportation of persons for hire." "Passenger" was defined as "a person not performing as a pilot, operator or crew member of a conveyance."

Like lots of cruise ship passengers, the McMurrays went on other excursions while on the cruise and purchased a separate whitewater rafting excursion operated by a separate entity. The excursion was charged to the McMurrays' cruise account and became an additional charge on the Citibank Mastercard. While on the rafting trip, Joe McMurray was thrown from the raft and drowned. National Union denied the claim stating the raft was not a common carrier and the McMurrays were not passengers under the policy while on the raft.

National Union filed what is called a "declaratory judgment action" with the court asking the court to agree with their decision that there was no coverage and declare such by court action.

The court spent time discussing the plain ordinary meaning of the terms "common carrier" and "passenger" and how Texas defined these terms. The court decided that the rafting company was not a "common carrier" as that term is defined and thus no coverage. This was in spite of the McMurray argument that carrying a person from one place to another for hire is transportation and what a common carrier does and that was exactly what was occurring in the raft trip. While the court agreed that the rafting was involved in transportation, transportation was not its primary function. Its primary function was entertaining rafting participants and that transportation was incidental to the primary purpose.

It is unknown whether this ruling in favor of the insurance company will be appealed but it does serve as an example of how some fights arise in the context of trying to recover benefits under insurance policies. Keep in mind that in Texas and most other states the courts are suppose to find in favor of coverage whenever possible. In other words if there is a way to interpret an insurance policy such that the policy should provide benefits, the courts are suppose to interpret the policy in such a way as to allow the benefits.

Continue reading "Texas Life Insurance Claim Denial Upheld By Federal Court" »