Dallas Fort Worth Insurance Lawyer Blog

Most people do not understand that there are two main kinds of law. The first, most people are familiar with, and we will call statutory law. This is the law that is written down by the legislative branch of government. For purposes of Insurance Law, it is the Sections, Chapters, and Subchapters of the Insurance Code.

The other kind of law, which most people are not aware of, is called the "common law". The common law is the law that applies to situations even though the law is not specifically written down in a book somewhere.

Under Texas law, there is a "common law" duty for an insurance company to deal with one of its insureds in certain ways. This is called the the duty of good faith and fair dealing. When an insurance company does not honor its common law duty of dealing with one of its insureds in good faith, it is called "bad faith". This concept was discussed by the Texas Supreme Court in 1987, in the case Arnold v. Nat. County Mut. Fire Ins. Co.

In July 1997, the Texas Supreme Court, more or less redefined bad faith in a trio of cases; The Universal Life Ins. Co. v. Giles, United States Fire Ins. Co. v. Williams, and State Farm Lloyds v. Nicolau. After these cases the new standard said the insured must show that the insurance company denied the claim after liability became reasonable clear. For an insured to show that liability had become reasonably clear he must show the insurance company had no reasonable basis for denial of the claim. Taking this a step further, the insured must also show the insurance company knew or should have known there was no reasonable basis for denial of the claim.

The bottom line is an experienced Insurance Law Attorney will tell you that the end result of these cases is that there is a lot of litigation over clarifying what "lack of reasonable basis" means. One thing it means is that just looking in hindsight is not good enough. The Courts will look at, what were the facts existing at the time the claim was denied.

This blog does not try to spend time on the health care debate occurring on the National scene. Rather the focus here is to make people aware of their rights as they relate to their dealings with insurance companies and why they need an experience Insurance Law Attorney when faced with a problem when dealing with an insurance company. The occassional news item is thrown in when it relates to a large number of people, some of whom may be in Texas.

Recent articles on the Chinese drywall, sold by Knauf Plasterboard Tianjin, affecting many residents along the Gulf Coast pointed out that new construction and remodeling done after hurricanes hit the areas on the Gulf Coast have left many homeowners in rough financial situations. This is because many insurance companies refuse to cover the losses resulting from using this drywall.

One recent article points out that the deadline for involvement in a national class action lawsuit against Knauf Plasterboard Tianjin expired on December 2. This lawsuit involves about 35,000 Florida homes where about 30 percent of the installations of this drywall are believed to have occurred.

The other article, from the Miami Herald, discusses some health problems resulting from the corrosion of the faulty Chinese drywall. The Consumer Product Safety Commission said there is a link between the imported material and problems with corrosion in homes that have it.

As for the health care debate, a report released by the office of Texas Senator John Cornyn says that health care costs for the average Texan will increase 61% over 5 years. This release cites an Oliver Wyman report.

Another article recently in the news from the Associated Press, has a title talking about limiting insurance company executive pay. The article also discusses many other issues in the health care debate that would be of interest to someone trying to stay informed on the health care debate.

A resident of Grand Prairie recently caught his insurance agent in Dallas committing fraud. The agent was taking the cash payments for the premiums from the resident and hand writing a receipt. Sounds okay so far. Next, the agent was pocketing the money rather than forwarding the payment to the insurance company. This could have happened in Arlington, Fort Worth, Weatherford, or anywhere else in Texas.

The agent would have continued to have got away with this except that the resident had an accident and got sued and when he turned the lawsuit papers over to the insurance company and was denied coverage the resident went to an experienced Insurance Law Attorney. A subsequent investigation revealed what was happening and a lawsuit is currently going forward against the agent.

Most of the time when people think of insurance fraud, they think in terms of someone staging a theft, an accident, or committing arson to recover monies from an insurance policy. This type of insurance fraud is defined and talked about in the Texas Penal Code, Chapter 35. Section 35.02, describes some of what constitutes an offense and also describes the penalty. The range of punishment is from a Class C misdemeanor, which is a ticket offense, all the way to a Felony of the First Degree, which is punishable by up to life in prison. The monetary cost includes fines up to $10,000, court costs, and restitution.

The Texas Insurance Code, Chapter 701, is another place where issues concerning insurance fraud are discussed. Section 701.001 says "Fraudulent Insurance Act" means an act that is in violation of a penal law and is: (A) committed or attempted while engaging in the business of insurance; (B) committed or attempted as part of or in support of an insurance transaction; or (C) part of an attempt to defraud an insurer.

The problem with both of the above laws dealing with insurance fraud is that they are focused on the person who may be trying to cheat an insurance company. The fraud that companies and agents commit are not the focus. When an insurance company or an agent commits fraud on one of its' insureds or customers there are things that can be done. But these things are less criminal in nature and more punative in a financial aspect. And this is where Insurance Law Attorneys are most helpful.

Even without an attorney a person can act on their own by turning in the company or agent to the Texas Department of Insurance. Most attorneys would discourage any actions being taken until you have first spoken with an experienced Insurance Law Attorney so that any complaint forms or other types of complaints filed are done so in a proper manner and that nothing that would jeopardize the case is handled in an incorrect manner.