Dallas Fort Worth Insurance Lawyer Blog

The general rule in Texas is that a policy holder has a duty to cooperate with his insurance company when the insurance company is investigating a claim.

Whether your house in Arlington burns down or you have a vehicle wreck in Grand Prairie the answer is about the same. Ditto for a life insurance claim made in Weatherford or a health insurance claim made in Fort Worth. Every insurance policy is going to place upon you a duty to cooperate with the insurance companies investigation of the claim.

Generally speaking you would have a duty to report the claim as soon as is possible. You would be asked and expected to make a statement to the insurance company. Often times you are going to be asked to fill out reports and other paperwork. You may have to get estimates or appraisals. If the loss being claimed is for physical injury, then an independent medical exam performed by a Doctor of the insurance companies choosing may be necessary.

There are limits on what can be asked or required from you when making a claim for benefits. For example, it is against the law for the insurance company to require you to produce a copy of your federal income tax returns for examination or investigation. This law is found in the Texas Insurance Code, Section 541.060, subpart (9). There are three exceptions to this law. One, is when a court orders the tax returns to be produced. Two, is when the claim involves a fire loss. Three, is when the claim involves lost profits or income.

An experienced Insurance Law Attorney will tell that when the insurance company is requesting from you an examination under oath, that the insurance company is probably going to deny your claim. The EUO is almost always going to be conducted by an attorney hired by the insurance company. The EUO is usually the last thing that is requested. By this time, the insurance company has already taken a recorded statement from you and maybe others who may be involved in the claim. They have also requested and received most documents that are relevant to the claim.

In spite of having all the information they have reasonably requested, the insurance company is still uncertain about their obligations on the claim when they are requesting an EUO. The insurance company is now setting the claimant up for criminal prosecution and why the claimant must seek the assistance of an attorney familiar with the implications of an EUO.

The Texas Criminal Code, Section 37.02 describes the crime of perjury. A person commits the crime of perjury if, with the intent to deceive, he makes a false statement under oath. So you can see that when the insurance company is asking for an EUO, that the matter is getting very serious. This is not to say you are doing anything wrong, but do you really want to get into an arguement about whether something you said was misunderstood or taken out of context?

With regard to a policy holders' duty to cooperate with their insurance company when making a claim, the failure to cooperate is not necessarily an automatic breach of that duty. It is a fact specific issue that must be looked at on a case by case basis.

A resident of Grand Prairie, Arlington, Fort Worth, Weatherford, or any other area in Texas can sue an insurance company for violations of the Texas Insurance Code under the Texas Deceptive Trade Practices Act. This is important because both of these areas of the law allow for favorable theories of recovery to the consumer who is wronged when dealing with an insurance company.

Texas Insurance Code, Section 541.151, specifically says that a person who sustains actual damages may bring an action against another for damages caused by the other person engaging in an act or practice, "specificaly enumerated in Section 17.46(b), Business & Commerce Code, as an unlawful deceptive trade practice ..." The Business & Commerce Code is where the Texas Deceptive Trade Practices Act is located. The whole purpose of the DTPA is to prevent companies from doing wrongs to consumers.

In business and legal circles, Section 17.46(b) is referred to as the "laundry list" of things companies are prohibited from doing. Violations of this laundry list can result in actions by the States Attorney General plus numerous private causes of action by the consumer.

The Texas Insurance Code has its' own laundry list of a prohibitions directed to the insurance companies. The biggest list is found in Section 541.051, which is in Subchapter B of the Texas Insurance Code. This Subchapter B has ten other Sections which define prohibited acts or practices by insurance companies. These are Sections 541.052 thru 541.061.

The laws spelled out in the Insurance Code and the DTPA are very similar to each other and the remedies available to an aggrieved consumer are also similar. What is important to an experienced Insurance Law Attorney is being able to use both these lists of laws to add more bite to any claim being pursued against the insurance company. And more importantly, atleast to this writer, is it allows for a claim to be made against the individual agent or adjuster involved in any claim being made. This is important because by being able to make a claim against an individual agent or adjuster, rather than only the insurance company allows the case to be in State Court where recovery is usually better for the consumer, rather than the case being held in Federal Court, where results are usually better for the insurance companies.

An interesting case has recently been reported in The Boston Globe. It is a lawsuit about whether or not the State of Massachusetts should be providing insurance coverage for adjunct professors in the public higher education system.

Rather than getting into a discussion about the insurance that a business or governmental agency should be providing its employees let us talk about a specific issue that comes up in health insurance situations. Most of the time when someone buys health insurance they are going to be required to fill out an application which asks questions about the applicants past and present medical conditions.

Almost every health insurance policy is going to have conditions that are not covered by the insurance. The conditions will be pre-existing conditions and also conditions that "manifiest" themselves within 30 days of the inception of the policy.

One Court that has dealt with this issue was in the case, Benefit Life Ins. Co. v. Mizell. In this case the health insurance policy had a provision that contained a "thirty day inception delay", which stated that the policy did not cover expenses resulting from a covered sickness that first manifests itself within thirty days after the effective date of the policy. The effective date of the policy in this case was April 10, 1993. On a date thirty one days after the effective date of the policy, Mizell was treated for complaints of a knot about the size of a marble in the muscle of his arm. It was at first thought to be a ruptured biceps tendon. It was later diagnosed as cancer.

Benefits Life refused to pay Mizells' medical expenses and a lawsuit was filed. Mizell won at trial and was compensated $108,652.62. Benefit Life appealed this ruling.

On appeal the trial courts decision was affirmed. The Court reasoned that an illness will ordinarily have its inception for policy purposes "when it first becomes manifest or active or when there is a distinct symptom or condition from which a medical person can, with reasonable accuracy, diagnose the disease". The Courts said a condition does not necessarily commence when its medical cause began or has its origin but when it becomes manifest or active. The Court defined "manifest" as, readily perceived by the senses and especially by the sight.

In Mezell, the cancer was not manifest within thirty days of the effective date of the policy period. The Court went on to say that the diagnosis must be solely predicated upon distinct symptoms and conditions that Mezell presented during the thirty-day period and not upon testing procedures performed later.

Health Insurance cases can be complicated at times. Usually the case rests not only on the policy language but also on the medical recorders. The medical providers making good records of the dates of treatment and the procedures performed have a lot to do with the success or failure of a claim being denied if a lawsuit is subsequently filed.

An Appeals Court in San Antonio, Texas, has recently handed down a decison that discusses the above question. The case is, Lancer Insurance Company v. Oscar Perez, et al, and was decided on November 4, 2009.

The Lancer case involved members of a high school band going on an overnight field trip. The driver of a bus transporting the band was infected with active turberculosis. This disease was discovered by the passengers and subsequent tests proved positive for some of the band members. The bus driver and bus company were sued for negligently exposing the band members to the disease.

Upon being sued, the bus company made a written demand to Lancer to defend the lawsuit pursuant to the business automobile insurance policy Lancer had issued covering the bus. Lancer refused to defend and the case went to trial wherein the passengers were awarded $5.25 million in total damages.

After the judgement, the passengers then tried to recover monies against the bus company and as the result of legal actions Lancer was sued for its failure to defend the original lawsuit. Lancer argued that the type of damages in the lawsuit filed against the bus company were not the type of damages for which Lancer would be required to pay.

In the Courts analysis of the case the Court drew a distinction between Lancers' duty to defend the lawsuit and its duty to pay damages. In citing the Texas Supreme Court decision in, Utica Nat'l Ins. Co. of Tex. v. Am. Indem. Co., the court stated, "We begin by noting that it is well established that an insurer's duty to indemnify is a "distinct and separate" duty from the duty to defend".

A lot of people are familiar with what is called the "four corners rule". This rule deals with contract law wherein, the agreement between the parties is what can be deciphered by reading within the "four corners" of the contract between the parties and that looking at outside papers or statements is not permitted except in specific circumstances.

In insurance law, there is a principle called the "eight-corners rule". This principle is illustrated in a recent Texas Supreme Court case titled, Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co. decided also in 2009. Pine Oak says, "Whether a duty to defend exists is determined under the "eight-corners rule," by examining the claims alleged within the four corners of the plaintiff's petition and the coverage provided in the insurance policy."

What the preceding paragraph means is that if the four corners of the lawsuit do not allege facts within the four corners of the insurance policy, the insurance company is not legally required to defend the lawsuit. So, it is important that the words of the lawsuit are articulated in such a way as to invoke coverage from the policy.

Even if the insurance company has a duty to defend, the party seeking indemnification for any judgement taken, still has to establish a duty to indemnify. These two issues were in play in Lancer.

Lancer is an interesting read for the person who wants to understand a little bit about how these types of cases are decided. More important though is seeing the value of getting an experienced Insurance Law Attorney involved. An experienced Insurance Law Attorney will have an understanding of these issues that have to be dealt with when making a claim for benefits from an insurance company and when sueing a company that has insurance.

Let's say you are a Grand Prairie or Arlington resident. You purchased an auto policy from an agent in Fort Worth. The price quoted seemed way too high and you asked the agent if there was anything that could be done to get the premium lower. The agent says, "Yes, we can take your teenage son off the policy." You say okay. The agent sells you a policy that excludes coverage if your teenage son is driving the car.

You can guess what happens next - the son drives the car and gets involved in a wreck. Now what? Numerous lawsuits have been filed in these situations and outcomes will sometimes be different depending on the facts of the accident and more importantly, the wording in the insurance policy that excludes the son.

Courts will look closely at the wording in the policy at issue but as a general rule, these exclusions are found by the Courts to be valid. It has been held that public policy dictates the allowance of such exclusions to enable insured motorists with children having bad driving records to secure insurance they can afford, rather than being relegated to securing coverage from an assigned risk pool at a much higher cost. This issue was discussed at length in the case, Wright v. Rodney D. Young Ins. Agcy. Wright was a 1995, Fort Worth Court of Appeals case.

Another case, Zamora v. Dairyland County Mut. Ins. Co., was decided in 1996 by the Corpus Christ Court of Appeals, and said essentially the same. The Court wrote that, the named driver exclusion furthers public policy by enabling drivers with family members having poor driving records to secure insurance they can afford. It also deters insured drivers from entrusting their automobiles to unsafe excluded drivers, thus, keeping those unfit drivers off the public roadways.

One thing to keep in mind here is that the general rule cited in the two cases above is subject to the facts of each situation and the wording of the policies involved. It is for that reason that consulting with an experienced Insurance Law Attorney should be a priority if you find yourself in a situation where coverage is being denied because the driver was an excluded driver.

The Texas Windstorm Insurance Association, has found itself in an unfortunate position. The position is a creation of their own actions. Those actions were actions whereby they refused to pay proper claims to policyholders who suffered damages because of the hurricanes, Ike, Dolly, and Rita.

TWIA is crying "help" because they are afraid they are going to be punished for not properly paying claims to their policyholders. They are asking that they be immune from paying penalties, policyholder attorneys' fees, and other expenses coming out of litigation that resulted from their conduct.

The windstorm association is a state-created insurer and is claiming that because they are an instrument of government that they should have immunity. Lawyers for the policyholders say that TWIA is effectively a private company, and that immunity would effect the over 900 lawsuits pending against TWIA.

The Texas Department of Insurance has administrative control of TWIA. Even though TWIA was created by the government, it is privately run.

The full story can be found in the Houston Chronicle. The Houston Chronicle reports that the Texas Attorney General has ruled the association is subject to the Public Information Act because it was created by lawmakers and is accountable to the State Insurance Commissioner.

The importance of this case lies in whether or not the TWIA can get away with just paying what they should have paid in the beginning to policyholders for their claims, or are they subject also having to pay penalties, interest, and attorneys' fees. To only have to pay the original amount of the claim effectively "cheats" the policyholders since the actions of TWIA forced the policyholders to have to live with the loss and occur court costs and attorneys' fees.

The previous post to this blog talked about penalties Texas insurance companies face when they do not properly handle a claim that is presented to them by one of their insureds. Recently an insurance case was tried in Federal Court in Mississippi. The case arose out of a lose suffered by Reginald Bossier for damages resulting from Hurricane Katrina. In the case, the jury declined to award any amount of monies for punitive damages.

The insurance company being sued was State Farm. Notice also, that this case was in Federal Court. Earlier posts on this blog have pointed out that the insurance company would always prefer to be in Federal Court, rather than State Court. In this case, the jury compensated Bossier $52,300 for damages to an outbuilding destroyed by Hurricane Katrina. However, the jury refused to punish State Farm for any amount of punitive damages. State Farm had paid for some home damage resulting from the high winds but was refusing to pay for damages caused by water.

The attorney for Bossier had asked the jury to award Bossier $2 million to punish State Farm. That anything less than $2 million would not get State Farm's attention. The attorney also pointed out that "State Farm would rather pay its lawyers than its insureds." She also told the jury that if State Farm were not punished then they would continue to deny claims.

The facts of each case are unique and each case has to be carefully looked at to determine its merits. There is no real way of knowing whether another jury would have punished State Farm. It would be interesting to know if this same jury sitting in a State Court would have done anything different.

The Texas Department of Insurance maintains a web-site that highlights recent cases relevant to Texas insurance companies and Texas insureds.

Let's say your house in Dallas burns down and the insurance company wrongfully denies your claim. Or your boat in Weatherford sinks in the lake and your insurance company tries to tell you they are not going to pay because of a late payment on your insurance policy. How about you are driving your car in Fort Worth and are involved in a wreck and your insurance company denies coverage due to the car not being properly listed on the policy. Another example, your neighbors wife, in Grand Prairie, dies of an illness she has had and when the husband makes a claim for life insurance benefits he is denied because the insurance company says they committed a fraud in the application for coverage.

Okay, now lets say you can prove the insurance company was wrong in each of the above situations. What next? Do they just pay the benefits and go away? What about the extra heart ache you went through? What about the ten month delay in paying you the benefits you were entitled to? What about legal expenses? Can the insurance company just intentionally do you wrong and get away with it, by just paying what they should have paid in the first place?

Here are some answers. First, get to an experienced Insurance Law Attorney to help you. Then if you are so inclined, go to the Texas Department of Insurance web-site and read a few of the rules the insurance companies have to follow.

Here are some applicable laws that the Insurance Law Attorney will tell you about. Texas Insurance Code, Section 541.152, says when an insurance company is found to have violated or committed an unfair or deceptive act, that the prevailing party is entitled to recover from the insurance company, 1) the amount of actual damages, 2) court costs, 3) attorney's fees, and 4) "any other relief the court determines is proper".

On a finding by a Judge or Jury that the wrong was committed knowingly, there may be an award of an amount not to exceed three times the amount of actual damages. Knowingly is defined in Section 541.002, as "actual awareness of the falsity, unfairness, or deceptiveness of the act or practice.

Texas Insurance Code, Section 542.060, applies when an insurance company is late or slow in paying a claim. What is late or slow is determined by the facts in a particular situation. Section 542.060 allows recovery for attorneys fees plus interest at 18% a year as additional damages. A pretty good rate of return.

Additional damages, or punishment for the insurance company caught doing wrong can be found outside of the Insurance Code. The Texas Civil Practice & Remedies Code, Section 41.003, says an award of "exemplary damages" may be had where there is clear and convincing evidence that the harm a person suffers is the result of, 1) fraud, 2) malice, or 3) gross negligence. Texas Civil Practices & Remedies Code, Section 41.008, allows recovery but not to exceed, "two times the amount of economic damages: plus an amount equal to any noneconomic damages, not to exceed $750,000: or $200,000. These limitations do not apply in certain instances where certain defines criminal offenses were committed.

As can be seen, there are big penalties for insurance companies that do their policy holders wrong. What is important, is getting an attorney involved early when the insurance company is committing wrongs.

A person who buys a life insurance policy in Dallas, Texas, or in Arlington, Grand Prairie, Fort Worth or out in Weatherford in Parker County should have the same concern as everyone else when they purchase the policy. Is this policy going to pay benefits to the benficiary named in the policy? After all, that is the only reason it is being purchased.

A Federal Court case decided in 2007, gives good reason for looking over the policy and reading it well before purchasing it. The case, Assurity Life Insurance Company v. Grogan, was presented with the following policy condition: The policy coverage did not go into effect until the "first full premium was paid during the Proposed Insured's lifetime and continued good health."

Soon after purchashing the policy, the insured had a biopsy performed on a lump on his neck and was diagnosed with Hodgkin's disease. He died a few months later from complications.

Assurity Life filed a lawsuit saying the policy never took effect due to a failure of a condition precedent. Assurity subpoenaed the insured's medical records, which showed he had issues relating to the lump on his neck for several years.

The Court ruled in favor of Assurity Life. They held that the "good health" condition precedent for coverage had not been met because although the Hodgkin's disease had not been fully diagnosed before the policy took effect, it had manifested itself earlier through the ongoing neck problems.

The Court held that the "good health" condition precedent was well established in Texas law. The policy clearly stated that in order for it to take effect, the proposed insured must make the first premium payment while in good health.

This is a case where the insurance company won. What we do not know without talking to the people involved is whether or not there were other policies that could have been purchase had only the purchaser been aware of the limitations in this policy. Another issue is whether or not there is a potential claim against the agent who sold the policy. It would also be important to know how this policy was marketed or advertised.

The facts in each case will vary, just as the wording in each insurance policy will vary. It is important to have an experienced Insurance Law Attorney review the facts and the policy in each case where the claim for benefits is denied in order to insure that the insurance company is not treating someone wrong.

It is not unusual for an attorney to wish he could land a case worth millions of dollars. Every person who gets taken advantage of by an insurance company wishes they could sue the company and be compensated for millions of dollars. But the reality of everyday wrongs in the area of insurance law involve sums of money totaling much smaller amounts than millions of dollars.

What most people do not realize is the costs sometimes involved in fighting insurance claims. Most of the time an insurance company is not all that concerned about the cost. Their goal is to discourage people from challenging their decisions on claims. A lawsuit in State Court may cost an insurance company anywhere from $100 per hour to $300 per hour. That same case in Federal Court may cost $300 to $600 per hour with more hours being spent.

So why do insurance companies try to get lawsuits that are filed in State Court, removed to Federal Court? Because their chances of winning is usually better or if they lose, the dollar amount they lose is generally less when in Federal Court.

One thing to look for in an Insurance Law Attorney is someone who has experience in Federal Court. The other thing to look for and ask about is his knowledge in knowing how to keep a case from being moved to Federal Court. This is to improve the chances of winning and winning more.

On November 6, 2009, a Federal Judge ordered a case that had been moved to his Court from a State Court, to be remanded back to the State Court. The case, Scott E. Landreth v. Allstate Lloyd's was a homeowners claim resulting from water damage in the residence.

For a lawsuit which is filed in State Court to be removed from the State Court to a Federal Court, there is generally three issues? The first is, does the case involve a Federal question of law. This would be the strongest arguement for an insurance company to justify moving the case to Federal Court, and it is usually not a hotly contested issue. The Landreth case involved issues of State Law, specificly the Texas Insurance Code.

The second reason for removal to Federal Court has to do with the citizenship of the parties to the lawsuit. When the plaintiff and the defendant are from different states then "diversity" exists and the case can be removed to Federal Court. This is an area where the plaintiffs attorney needs to know how to sue and who to sue in order to defeat the diversity arguement. In other words, the plaintiff's attorney needs to know how to find someone such as the agent or adjuster to properly sue if the agent or adjuster are residents of the same state as the plaintiff. Doing this properly defeats the diversity arguement.

The third reason for removal to Federal Court involves the "amount in controversy". To be in Federal Court the amount in controversy must exceed $75,000 unless the case involves a Federal question of law. This means that when the plaintiffs attorney files a lawsuit, he needs to carefully look at the value of the case and not just sue for big dollars to impress his client. He needs to make sure the amount he seeks is realistic, otherwise the case, which may be worth a smaller amount, will end up in Federal Court.

The Landreth case discusses issues two and three above. The Federal Judge in Landreth ordered that the case be remanded back to the State Court.

There are many times where the insurance adjuster himself, commits a wrong against a policy holder. This is an important issue. Here is why. When an Insurance Law Attorney is representing a client in a claim there are a lot of strategies. One important strategy is to file a lawsuit in a court that is most favorable to achieving a favorable result. In that regard, State Court is almost always a better place to fight the insurance company than is Federal Court. Most insurance companies have home bases located out-of-state whereas 99% of adjusters will live in-state. This matters because the Federal Rules of Civil Procedure require that out-of-state defendants in a lawsuit be allowed to defend themselves in Federal Court unless there is more than one defendant and atleast one of the other defendants is an in-state resident.

For the reason explained in the first paragraph, it is important to be able to articulate a particular wrong that the in-state adjuster committed. The adjuster will be defended by an insurance company, usually the employer, thus a lawsuit against the adjuster in his individual capacity is not a futile act. Insurance company attorneys are going to always want to get the lawsuit removed to Federal Court if there is any way possible to do so. Repeating what was just said, this is because Federal Court is usually more favorable to the insurance company.

A case decided on October 27, 2009, discusses this issue. The case, Lakewood Chiropractic Clinic v. Travelers Lloyds Insurance Company and Sonja R. Victor, was a claim for benefits resulting from hurricane damages. Lakewood alleged that the adjuster, Sonja, violated several insurance statutes. Lakewood also alleged these same violations of Travelers. The problem here is that there was not a distinction made between what Sonja did and what Travelers did, that was wrong.

This is an example of where a full understanding of how the Texas Insurance Code allows for claims against an adjuster in her individual capacity. Texas Insurance Code, Section 541.151 gives guidance in this regard and points to other relevant areas in the Insurance Code and the Texas Business & Commerce Code, Section 17.46(b), that are helpful.

A failure to fully draw a distinction between the acts committed by an adjuster which are actionable in Texas, and the acts of the insurance company, will result in the case being tried in Federal Court. The advantage then will be in favor of the insurance company.

The above is just another example for why an experienced Insurance Law Attorney should be involved in any claims being made against an insurance company. Early involvement by an experienced Insurance Law Attorney is more likely to insure a favorable outcome to the policy holder.

Can it be a surprise? Insurance companies appear to be getting caught in under paying on claims. The Texas Windstorm Insurance Association (TWIA) seems to be caught in some controversy regarding its claims handling along the Texas Gulf Coast. Keep in mind the problems being experienced could just as easily be happening in Fort Worth, Dallas, Grand Prairie, Arlington, or even a small town like Weatherford out in Parker County.

This problem is written about in an article in the Houston Chronicle titled "Lawsuit Says Windstorm Insurer Rigged Process". The article discusses TWIA using prices lower than market rates to estimate materials and repair costs. TWIA is said to also be unfairly limiting costs on roof repairs and discouraging the reopening of closed claims.

In a lawsuit resulting from some of the abuses by TWIA, documents and software is said to have been discovered that supports the claims that the abuses are being committed. One example of the abuse was discovered when one adjusting firm reported the market rate for roof repairs to be $230 to $255 per 100 square feet, but TWIA's price was $182. In another situation it is said that they suggested using shingles off one house that were not in too bad shape, to put on another house. This does not sound right to most people but may actually be allowed depending on the language in the insurance policy.

On the issue of reopening closed claims, it is claimed that adjusters were getting bonus pay for denying a claim. Furthermore, if it was determined the adjuster did something wrong on a visit they risked not getting paid anything. The result of this being that the adjuster would not reopen a claim to see if anything actually was done wrong.

When any of the above happens to a home owner and the home owner is forced to file a lawsuit Texas Insurance Law has a statute to help. Section 542.003 Texas Insurance Code, says it is illegal to compel a policyholder to file a lawsuit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit brought by the policyholder.

Insurance companies make money when they get away with denying claims or paying less than the full value of the claim. The making money part is okay, as long as they are not breaking the Insurance Laws and cheating policyholders by their actions.

Whenever you have an insurance claim, you need to make sure you are getting what you bargained for when you purchased the insurance policy. Don't be afraid to talk with an experienced Insurance Law Attorney to make sure you are not being underpaid on your claim.

The Texas Supreme Court ruled on an insurance policy interpretation case on October 30,2009. This case is, Chrysler Insurance Company v. Greenspoint Dodge of Houston, Inc.

This case involves an insurance coverage dispute, the topic of which is liability policies insuring a corporation and its officers and others. The corporation was sued for defamation. One key here is that the policies at issue excluded coverage for defamatory statements made by the insured, that the insured knew to be false. The lower court said that the employees involved may not have been "principles", but were "vice-principles" and thus were covered under the policy.

Some facts here are that a Noe Martinez was fired by Greenspoint after the Greenspoint's general manager, comptroller, and used car sales manager defamed and disparaged Martinez. The general manager's nephew was hired to take Martinez's place. Martinez sued and won.

One of the issues here got into language in the policies regarding who was insured under the policies. In other words, who qualified as an insured. If the Greenspoint people were insured under the policies then the insurance company would have to pay the judgment in this case. If the Greenspoint people were not insured under the policies then Greenspoint would have to pay the judgment themselves.

The Supreme Court in reaching its decision in this case cited well established law as it relates to insurance. 1) The interpretation of an insurance contract is generally subject to the same rules of contract construction as other contracts. (This was stated in National Union Fire Insurance Company of Pittsburg, PA v. Crocker), 2) Contract language that can be given a certain or definite meaning is not ambiguous and is construed as a matter of law.(This was stated in DeWitt County Electric Coop., Inc. v. Parks), 3) The primary objective is to determine the parties' intent as reflected in the policy's terms. (This was stated in Don's Bldg. Supply, Inc. v. OneBeacon Insurance Co.)

The Court ultimately decided that the terms of the insurance policies were such that atleast one of the persons named in the lawsuit was not a covered person under the terms of the contracts. Then the Court found that the statements made against Martinez, were false statements when they were made and that the people making the statements knew they were false when they were made. As such, the policy exclusion applied, releasing Chrysler Insurance from liability under the policy.

These insurance contract interpretation cases can be very hard to understand even for an experienced Insurance Law Attorney. Whenever there is a dispute about what the insurance contract says or means, an attorney who handles there insurance matters should be consulted. Never just rely on what the insurance company says.

An incident happens. Maybe your house in Dallas has someone inside who falls down the stairs. Maybe your car in Arlington is involved in a wreck. Maybe your business in Grand Prairie suffers a loss due to someone falling on the steps. Maybe the life insurance policy you purchased on your Mom in Weatherford is now denying coverage, after the funeral. What if the disability policy you had on your wife's job in Fort Worth is denied, after she becomes disabled?

If any of the above happens you actually have two main things you can do. The first and most common is to just sue the insurance company for various violations of the Texas Insurance Code and violations of the Texas Deceptive Trade Practices Act. You can sue for breach of contract and fraud and misrepresentation and a few other things that are variations of the Insurance Code and DTPA causes of action.

The second thing that can be done is called a Declaratory Judgement cause of action. Attorneys refer to this as a "dec action". This is where an attorney files papers with a Court saying, "Judge, declare this thing we have before you as (fill in the blank)". A dec action is used quite often in insurance disputes. It is used both by attorneys for individuals requesting benefits under a policy and by insurance company attorneys asking the Court to declare that certain benefits do not exist within a policy.

A common scenario is where a person or company is sued. The person or company calls their insurance company, expecting the insurance company to take care of the matter. The insurance company investigates the claim, then determines that the claim being made falls outside of coverage provided within the policy for one reason or another and then refuses to do anything else because the claim being made is not of the type for which the policy provides any type of coverage. The result being that the person or company being sued is liable out of their own pockets for whatever the claim is that is being made against them. When an insurance company does this they usually send to the policy holder a letter saying why they are not providing coverage.

Other times they provide a defense, in that they pay for attorneys and court costs, but they mail to the policy holder a "Reservation of Rights" letter. This letter says that they will provide a defense for the time being but they are reserving their right to back out at any time. This may mean that in the event a judgement is taken against the policy holder that the insurance company will not pay the judgement.

When the above happens, either the insurance company or the entity being sued will file papers with the appropritate Court by way of a dec action asking the Court to make a ruling in their favor. So either the insurance company is asking the Court to declare that the policy does not provide the coverage being sought, or the entity is asking the Court to declare that there is coverage under the policy, which makes the insurance company come to the table, so to speak, with money. In other words, to either pay the claim or to defend the claim against the people who are sueing the policy holder.

Anytime, an insurance company tries to say that the insuance policy does not cover the loss that is being complained about, you should seek the advice of an experienced Insurance Law Attorney. An attorney who practices in this area of the law is going to be able to give sound adice as to whether or not to file the dec action or some other cause of action against the insurance company. There may be times when the insurance company takes a position that is sound under the law. If that is the case, you do not want to be wasting your time or money on a losing case. But if, the insurance company is taking a position that is contrary to the law, you need to know to take a stance.

Pretend for a minute that you are driving your car in the Dallas Fort Worth area going west. You drive through Grand Prairie and Arlington and are on your way to Weatherford to enjoy the "First Monday" market. All of a sudden a dog runs in front of you and you swerve to miss it and hit a telephone pole. You are lucky in that no one is injured, but your car has $3800 worth of property damage. You are lucky again because you have collision coverage on your automobile and they repair your car and you are only out a $500 deductible.

Sounds ok so far, right. Well think about it for a minute. Your car was only a year old because you sell your car every two to three years and buy a new one. When you sell this one you will either have to disclose to the buyer the wreck or they will easily find out. So what does that mean? It means this: Your car is worth less because of the wreck than it would have been had it not been involved in a wreck. This is called the "diminished value".

The nest question is: What can you do about it? This question was answered by the Texas Supreme Court in 2003. In 2003, the Court decided the case, American Manufacturers Mutual Insurance Company v. Schaefer. Maunufacturers was Schaefers insurance company. They fixed Schaefers car. Schaefer did not dispute the quality or adequacy of the repairs. But he did say that Manufacturers owed him an additional $2600 due to market perceptions that a damaged and subsequently repaired vehicle is worth less than one that has never been damaged. Again, this is called the diminished value and he expected Manufacturers to pay the extra money to compensate him for the lose.

In the Schaefer case, the Court got into a discussion about insurance polices and the ways to interpret them. This discussion dealt with the specific language in the policy talking about "repair or replace" and "value". They also looked at the part of the policy dealing with "exclusions" from coverage.

The Court spent a great deal of time discussing what other courts in other States have ruled and about rulings in other Texas courts in the past. They even looked up definitions in Blacks Law Dictionary.

Their final ruling was that the policy did not cover diminished value even though diminished value was an actual loss. You would have to read the case to fully understand this final ruling.

What is important to keep in mind is that this claim was a claim made by Schaefer against his own insurance company under the collision portion of his policy. If this claim were being made against someone else's insurance company, such as would be the case if another car had ran into him causing the damage, then the other person's insurance would have had to pay for the diminished value. This issue was ruled on by the Texas Department of Insurance in its Commisioner's Bulletin, No. B-0027-00 (April 6, 2002).

Diminished value claims are most applicable when you are talking about a newer model car. If you find yourself in a situation where you believe you are entitled to a claim for diminished value it would be prudent to seek the advise of an experienced Insurance Law Attorney to give you guidance. There are independent companies that exist which are able to establish the diminished value on an automobile.

In the State of Mississippi, a policy holder filed a lawsuit seeking access to Mississippi Insurance Department records. The lawsuit is seeking records that would show the dollar amount of Katrina claims denied by insurance companies.

The courts in Mississippi and other coastal areas have loaded up with lawsuits related to claims denials by insurance companies. The claims get denied for a range of reasons but a lot deal with issues of whether or not the damage to property is the result of floods, the result of winds, storm surge, or flying debris.

The person filing the lawsuit, a Kevin Buckel, is also trying to get passed into law in Mississippi, a Policyholders Bill of Rights. Each time this proposal has been introduced into the State Legislature, the legislation has died in committee.

An article about this issue has been written in the Sun Herald and is titled "Appeal Would Reveal Claims Denied".

Although the Mississippi Insurance Department is required to keep certain records and make them available to the public, this does not appear to be the case as it relates to the types of records dealing with claims denied. These are generally referred to as market conduct records and are exempt from public disclosure.

As part of this litigation, Buckel has got a few insurance companies to agree to pay more money on already paid claims. State Farm Insurance says they have paid an additional $88 million on 5,200 claims.

Yesterdays blog discussed actions that can be taken by the Texas Department of Insurance when a person commits a deceptive act or practice under Chapter 541 of the Texas Insurance Code or Section 17.46, Business & Commerce Code. Here the discussion will be about a persons' "private causes of action".

Texas Insurance Code, Section 541.151, says that a person who sustains actual damages may sue the other person (insurance company or agent) who caused the damages. If the other persons' actions are defined by Subchapter B to be an unfair or deceptive act or practice in the business of insurance or an unlawful deceptive trade practice in Section 17.46(b), Business & Commerce Code, then an action may be brought against that person.

A person who prevails is entitled to the amount of the actual damages suffered, plus court costs and reasonable and necessary attorney's fees, according to Section 541.152. Plus, if the person committing the acts did so knowingly, then there may be an award in an amount up to three times the amount of actual damages.

To pursue an action against the person, company, or agent doing wrong, it would be necessary to seek the assistance of an experienced Insurance Law Attorney. This is because Section 541.154 requires a person seeking damages to provide a 60 day written notice of the claim. The notice must advise the person of, 1) the specific complaint, 2) the amount of actual damages including attorney's fees. There are atleast two exceptions to this that rarely apply.

If the 60 day notice is not given as required by Section 541.154, Section 541.155 allows the lawsuit to be abated. Sometimes this abatement can be automatic and sometimes there is a hearing on the matter.

The person or entity that receives the notice required by Section 541.154 may make a settlement offer during the notice period. Further, the person receiving the notice can make a demand for mediation per Section 541.161. The appointment of a mediator and the mediation process would have to be in compliance with Section 154.023, Civil Practices and Remedies Code and Subchapters C and D of Chapter 154.

The contents of the settlement offer are governed by Texas Insurance Code, Section 541.157. The settlement offer must separately state, 1) the amount of money offered, and 2) an amount to compensate the claimant for reasonable attorney's fees as of the date of the offer. The purpose here is to encourage settlement.

Per Section 541.158, the offer is considered rejected unless both parts of the offer are accepted within 30 days. The effect of rejecting the offer is set out in Section 541.159. It says that if the amount finally awarded the claimant is substantially the same as or less than the amount of damages found by the trier of fact, then the claimant cannot recover any excess amount or excess attorney's fees.

The above is a prime example of why an experienced Insurance Law Attorney needs to be involved in the claim process against the insurance company or its agents who violate provisions of the Texas Insurance Code.

Subchapter C, of the Texas Insurance Code deals with how the Texas Department of Insurance examines, investigates, and determines whether a person engaged in the business of insurance has engaged in an unfair method of competition or unfair or deceptive act or practice prohibited in the business of insurance. This is not a private cause of action, rather this is where the department is taking action.

Texas Insurance Code, Section 541.102, states that when the department has reason to believe a violation has occurred that it shall issue and serve on the person, 1) a statement of the charges, and 2) at least a six day notice of the hearing on the charges, including the time and place for the hearing. This hearing is required before the department issues a cease and desist order to the person.

Section 541.104 sets out the hearing procedures to be followed. Section 541.105 requires that a record be made of the hearing.

At the hearing, Texas Insurance Code,Section 541.107, requires the department to determine whether, 1) the method of competition or the act or practice is considered to be an unfair method of competition or a deceptive act or practice, or whether it is a false, misleading, or deceptive act or practice under Section 17.46, Business & Commerce Code, and 2) whether or not the person against whom the charges are filed actually engaged in the method of competition or act or practice in violation of the Insurance Code or the Business & Commerce Code.

If it is determined that a violation has occurred, then the department shall make a written finding and issue and serve on the person an order requiring the person to cease and desist. This is per Section 541.108.

Violations of the cease and desist order are discussed in Section 541.110 and 541.111. They are also discussed in Chapter 84. Section 84.022 allows up to a $25,000 penalty and sometimes more. The amount of the penalty is based on, 1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the violation, plus the hazard or potential hazard created to the public, 2) the economic harm to the public interest, 3) past history of previous violations, 4) the amount necessary to deter future violations, 5) efforts to correct the violations, and 6) the intentional nature of the violation.

Keep in mind, that all of the above deals with actions taken by the Texas Department of Insurance against a person in violation of its rules. The above does not deal with the recourse a private person has against those who may have committed the wrongs. For a private person to seek recourse for these wrongs they would need to seek the advise of an experienced Insurance Law Attorney.

Insurance Fraud is a crime in Texas. A person can go on-line to the Texas Department of Insurance to get a lot of information about insurance fraud.

According to the National Insurance Crime Bureau (NICB), insurance fraud is one of the most costly white collar crimes in America, ranking second only to tax evasion. NICB also says that 10% of all property and casualty insurance claims are fraudulent.

NICB has figures showing that property and casualty based insurance fraud costs Americans about $30 billion each year. To make a comparison, Hurricane Andrew, which was a devastating storm, only cost about $17 billion. Further if you added all types of insurance claims that are thought to be fraud, then the number jumps to $120 billion each year. What these numbers mean to the person buying insurance is an average of $200 to $300 each year in increased premiums. The hidden costs in the form of higher goods and services makes the costs to the average family about $1,000 per year.

Examples of insurance fraud are, 1) staged accidents, like car wrecks, 2) paper accidents, situations where no accident actually occurred but photos of previously damaged vehicles or building are submitted to the insurance company as claims, 3) exaggerated or inflated damages, 4) organized fraud rings involving attorneys, doctors, runners, body shops, 5) fake theft or robbery reports, 5) workers compensation claims where the injured emplyoyee was really injured somewhere besides work, 6) health care fraud, and the list goes on.

Chapter 35 of the Texas Penal Code makes insurance fraud a crime. Section 35.02 spells out the ways a person can be convicted of insurance fraud. Sub-part (c) defines the classification of the offense from a Class C ticket to a first degree felony punishable by up to life in prison. Sub-part (e) requires the convicted person to make restitution or in other words pay back all monies or benefits received by way of the fraud.

All the above speaks to the individual putting a fraud over on the insurance company. Keep in mind that a number of the topics on this and other blogs deal with how an insurance company commits fraud on its policy holders and the punishments faced by the companies when they are caught.

Here are a few ways to keep an eye on insurance companies. Insure the company and agent you are dealing with is licensed. This can be done by going to the Texas Department of Inusrance web-site. Consult with an experienced Insurance Law Attorney whenever you think something isn't quite right.