Dallas Fort Worth Insurance Lawyer Blog

The United States Court of Appeals for the Fifth Circuit, decided another case this month dealing with the duty of an insurance company to defend a lawsuit filed against one of its insureds. The decision on this case was handed down by the court on January 4, 2010. The case was an appeal from the United States District Court for the Southern District of Texas. The Fifth Circuit, located in Louisiana, handles appeals that would arise out of Dallas, Fort Worth, Arlington, Grand Prairie, small towns like Weatherford, and all other places in Texas.
In the opening paragraph of the decision the court makes the following statement, "We have occasion once again to take up the seemingly simple task of determining whether an insurance company owes a duty to defend an underlying liability lawsuit, and because the insurer in this case indeed has such a duty, it is also an occasion to again remind: when in doubt, defend." As stated in this blog in the past, the courts draw a distinction between the obligation of an insurance company to defend an insured who has been sued and the obligation of an insurance company to pay a claim.
The case at issue here is styled, Essex Insurance Company v. Hines. The policy was a "Commercial General Liability Coverage" and another one called a "Commercial Property Coverge" policy. The facts here are relevant to deciding the existence or lack there of, as it relates to coverage in the wording in the policy. What Essex was failing to see was how Texas law applies in the difference between the duty to defend and the duty to pay under a policy of insurance.
Under Texas law, an insurer has a duty to defend a policyholder in actions brought by a third party who asserts claims "potentially" covered by the insurance policy. The key word here being, "potentially." When determining whether an insurance company owes a duty to defend its policyholder, Texas courts follow the "eight corners" rule, which directs the court to examine only "the allegations in the pleadings" which is the first four courners, and "the language of the insurance policy", which is the second four corners.
The insurance company argued that the policy did not cover the type of loss the third party was sueing about. The court was saying that maybe the insurance company was right, but the allegations in the lawsuit were sufficient to raise the possibility that coverage would be triggered and thus the insurance company should be providing a defense to Hines.
Anytime someone is sued and they have a policy of insurance that "might" provide coverage, they should take the lawsuit papers to their insurance company. If the insurance company refuses to defend the lawsuit then an experienced Insurance Law Attorney should be contacted.

Lucky for the homeowners in the Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, and surrounding areas, the Chinese drywall cases are a non-issue. But for many of the people along the Texas Gulf Coast and other Gulf Coast areas, it is a major and expensive problem.
WCI Communities is a homebuilder in the Southeastern United States. They had to file bankruptcy in 2009 because of issues related to Chinese drywall. This situation is discussed in the Insurance Journal. The article in the Insurance Journal is titled "WCI Chinese Drywall Trust Files Suit Against 14 Insurers". The WCI Drywall Trust was formed in July 2009, after the bankruptcy of the homebuilder WCI Communities and its subsidiaries. Its purpose is to assume liability for claims alleging harm from Chinese drywall installed in homes built by WCI. More than 700 homeowners may seek recovery through the Trust.
The Trust filed suit against 14 insurance companies in the United States District Court, Eastern District of Louisiana, seeking indemnification for losses arising from claims for the development and sale of homes allegedly containing defective Chinese manufactured drywall.

The following case was decided in Louisiana. It is relevant for two reasons. One is, Texas courts will look to other courts and their rulings for guidance on cases. The second reason, is the United States Court of Appeals for the Fifth Circuit is the Federal Court most Texas case will end up being appealed to when the case is in Federal Court.
The case is Stephen Williams; Vanessa Williams v. Allstate Indemnity Company. In this case the William's home suffered a serious property damage loss during Hurricane Katrina. The William's home was insured under a homeowners' policy issued by Allstate that provided $123,000 in coverage for the primary structure, $12,300 in coverage for other structures, and $61,500 in coverage for the home's contents.
The William's reported the loss on August 31, 2005 and Allstate inspected the property on October 17, 2005 and ultimately paid the William's a total of $134,762.43. These payments were made at various times until the last was paid in March 2007. The William's sued for the full policy limits. The trial level court ruled for Allstate and this appeal was filed.
The 5th Circuit Appeals Court affirmed the trial court decision. In affirming the trial courts' decision, the Court of Appeals got into discussions concerning the burden of proof.
The relevance of this case beyond what is discussed in the opening paragraph is realizing and understanding the burden of proof on a person who is filing a lawsuit. In an insurance case the requirements to prevail in a trial will vary from what is required in other types of lawsuits. It is important that an experienced Insurance Law Attorney is consulted for claims against insurance companies.

A lot of insurance contracts have written into them an appraisal clause or paragraph. Whether you bought the policy in Grand Prairie, Arlington, Dallas, Fort Worth, or out in Weatherford, Texas, you could be forced to submit to an appraisal process if the insurance company insists on enforcing that portion of the insurance contract.
A recent case, JM Walker, LLC v. Acadia Insurance Company, is an example of how these situations are sometimes handle. Each case would be different depending on the wording of the appraisal provision in the contract and the facts of the case.
In this case, Walker was the owner of five building in North Richland Hills, Texas. The roofs of the building suffered damage from a hailstorm. Walker submitted a claim to Acadia, but Acadia denied coverage after its adjuster determined that the roofs did not need to be replaced and that the damage that did exist, was less than the $5,000 deductible that applied in the case.
Walker contested the adjusters findings and Acadia invoked its contractual right to appraisal. Walker then filed a lawsuit, but the Judge compelled the parties to submit to the appraisal process.
The umpire in the appraisal process found on behalf of Walker and found the cost of repair to be $423,053.96. Acadia paid the amount.
Walker filed an appeal in the United States Fifth Circuit, which is the case written about here. Walker wanted more money for his damages, plus was seeking monies for the "bad faith" conduct of Acadia and their handling of the claim.
The Court in its decision stated that under Texas law, "appaisal awards made pursuant to the provisions of an insurance contract are binding and enforceable, and every reasonable presumption will be indulged to sustain an appraisal award." The Court wrote that an otherwise binding appraisal may be disregarded in three situations: "(1) when the award was made without authority; (2) when the award was made as a result of fraud, accident, or mistake; or (3) when the award was not in compliance with the requirements of the policy."
Walker argued all three points and was shot down on all three points. The case is a good place to look to get an idea of how the courts look at these appraisal processes and how they are handled.

Let's pretend your sister in Dallas, is driving her brothers car, who lives in Fort Worth. The car is insured on hthe parents Safeco auto policy that was bought in Grand Prairie. Your sister has a wreck in Weatherford, Texas. Your sister also had insurance with Allstate on her own car she had purchased in Arlington. Your sister is at fault and the other driver suffers personal injury and property damage. Both Allstate and Safeco refuse to settle the claim being asserted against you and your sister because they believe the other company should be paying the claim or paying the claim on a pro-rata basis.
This can be a very frustrating position for someone to find themselves involved and is referred to as an "other insurance" issue. The above is roughly what happened in the case, Safeco Lloyds Insurance Company v. Allstate Insurance Company. This case was tried and then appealed to the Court of Appeals of Texas, San Antonio.
The general rule in the past has been that auto insurance coverage goes with the vehicle. If the coverage on the vehicle is not sufficient to pay all the lose incurred then, the driver of the vehicle who has separate coverage has this separate coverage kick in as secondary coverage. However, the laws have changed and each insurance policy has to be looked at and compared with the other policy that may provide coverage to see what the result may be in any particular situation.
There are three types of "other insurance" clauses in an auto insurance contract. (1) a pro-rata clause, which restricts liability upon concurring insurers to an apportionment basis, (2) an excess clause, which restricts liability upon an insurer to excess coverage after another insurer has paid its policy limits, and (3) an escape clause, which avoids all liability if other insurance exists. The court went into detail in the opinion of this case explaining the different "other insurance" clauses and how they worked with each other, depending on the facts of each situation.
When it was argued by Allstate that the law in Texas is the insurer of a car provides primary insurance and the insurer of the driver provides excess insurance, it was argued by Safeco that nowhere in Texas law does a court espouse a black-letter rule that insurance follows the vehicle.
In this case it was decided by the court that the costs of the wreck should be shared on a pro-rata basis. The bigger lesson is that these situations can be complicated and when a person finds themselves in a situation where the insurance companies are argueing among themselves about who should be paying the claim, then its time to find an experienced Insurance Law Attorney.

The Texas Insurance Code requires an insurance company to pay a claim within 60 days of receiving all the information it needs to make a determination of whether or not a claim should be paid and the amount to be paid. The requirement is found in the Texas Insurance Code, Section 542.058. In the event of a weather-related catastrophe, as defined by the Texas Commissioner of Insurance, the period is extended to 75 days. This is found in Texas Insurance Code, Section 542.059. The law here applies to all residents of Texas including those in Dallas, Fort Worth, Arlington, Grand Prairie, or even out in Weatherford or Parker County.
Section 542.059 was recently part of a lawsuit in a case decided on December 15, 2009. The case was styled, Philadelphia Indemnity Insurance Company v. C.R.E.S. Management, L.L.C.
In this lawsuit, CRES owned five properties that suffered multiple losses. Philadelphia had paid all claims on three of the properties but still disputed losses on the others. On the two properties that the dispute existed, Philadelphia did not dispute that they owed atleast part of the claim but not all of the claim. On the part not disputed, Philadelphia did not pay until after the applicable 75 day deadline.
CRES sued for the 18% interest due on the late paid amount. Philadelphia argued that they should not have to pay the penalty interest because they acted in "good faith" in trying to adjust the large, complex claims. Philadelphia then went into great detail explaining all they had done to try to settle and pay the claim as soon as possible.
The court ruled for CRES and ordered Philadelphia to pay the penalty and attorney's fees. The court reasoned that the relevant insurance code provision said what it said, and pointed out that there were excuses written into the code that allowed for extra time if needed and the requirements to be entitled to the extra time. Philadelphia did not argue that it satisfied any of the requirements to get the extra time.
This case is a good case for pointing out to policy holders that the law is on the policy holders side when an insurance does not promptly and properly pay a claim.

Almost all insurance disputes are going to have situations where an attorney is involved. Too many times these disputes end up in lawsuits. Prior posts on this blog have shown how most situations are going to require the insurance company to pay or reimburse attorneys fees where the policy holder prevails in their claim.
In 2007 a case, Lamar Homes, Inc. v. Mid-Continent Casualty Company, the Texas Supreme Court ruled that Section 542.060, Texas Insurance Code, applied to not just the underlying claim at issue in a lawsuit but to also attorneys fees in situations where the insurance company did not pay for attorneys on behalf of the insured persons or business.
Section 542.060 assesses an 18% annual penalty on the attorneys fees that the insurance company did not pay for.
This issue on the unpaid attorney's fees was fought again and re-stated in a case decided in December 2009. This case, Nautilus Insurance Company v. International House of Pancakes, Inc., was mainly a dispute as to how much the attorney's fees were and how much of the time, and thus, the fees were attributable to the case at issue, rather than another case.
International House of Pancakes argued that the fees of $14,973.55 were 95% related to the case and based on that number, the 18% penalty to be paid by Nautilus totaled $15,804.49. Furthermore, there was an additional $119,674.34 in attorney's fees for the present litigation. Nautilus Insurance Company did not agree with the time and money that was claimed to have been spent of the case and the lawsuit ensued.
The important thing for policy holders to take from this is that the insurance companies do get punished for their wrongful handling of claims and that with the assistance of an experienced Insurance Law Attorney, the insurance company can be forced to pay on claims they are suppose to pay and be forced to re-imburse the policy holder for attorneys fees plus penalties for their wrongful conduct.

Here is a case that was originally filed in a State District Court in Dallas, Texas. The case was removed to Federal Court and promptly dismissed.
The style of the case is "Kenneth McQuinne v. American Home Assurance Company". The only important issue in the case was whether or not a self insured vehicle was "uninsured" for purposes of the American Home Assurance Company policy argued about in this case.
The facts in this case are that McQuinne was involved in a wreck with a person named Sapkota. Sapkota was driving a vehicle owned by Enterprise Leasing. McQuinne reached a settlement with Sapkota's insurance company for the policy limit of $50,000. McQuinne alleged that his damages exceeded that amount and consequently filed a claim with American seeking additional benefits under the policy American had issued on his employer, Turfgrass.
The American policy excluded uninsured motorist coverage for vehicles that were self-insured. The Enterprise vehicle was self-insured. McQuinne argued that since the Enterprise was self-insured that it was uninsured and thus American should be made to pay benefits under the uninsured portion of the policy.
American argued that the Enterprise was a self-insurer under the Texas Motor Vehicle Safety Responsibility Act. As such the car is expressly excluded from coverage under the policy.
The court got into an analysis of contracts, insurance policies, and the words used in the context of both. They decided that as a matter of law that American won the case.
This case points out the creative efforts of the attorney for McQuinne to try and obtain relief for his client. It also restated contract and insurance policy language that the courts are not going to change.

The United States Court of Appeals for the Fifth Circuit is a federal court located outside of Texas. Cases that originate in Texas, including the Dallas, Fort Worth, Arlington, and Grand Prairie areas will end up in this Fifth Circuit Court when it is on an appeal.
A case decided in late December of 2009 discusses "notice" provisions in insurance policies. These provisions are important for the people or businesses who have these policies to understand.
The case is styled, "East Texas Medical Center Regional Healthcare System v. Lexington Insurance Co".
East Texas Medical Center Regional Healthcare System had various policies of insurance to provide coverage in the event they had claims or lawsuits made against them.
Lexington Insurance Company provided to East Texas a "claims-made" policy. A claims-made policy is a policy of insurance that provides coverage only for claims made during the term of the policy regardless of when the actual claim arose.
In this case, East Texas received notice from an attorney for one of its patients that they may be sued for wrongs they may have committed. East Texas sent to Lexington a "loss run" document before the Lexington policy had expired which was suppose to be notice to Lexington of the potential claim. About 11 days before the policy expired, East Texas was sued by its patient. It was 7 months later before East Texas notified Lexington of the lawsuit. Lexington denied coverage to East Texas.
There were several issues argued to the court. One of these was whether or not the loss run document was sufficient notice to Lexington of the claim. The court decided in East Texas favor on this issue. The next was whether or not East Texas had immediately or "as soon as practicable", notified Lexington of the lawsuit. This was a requirement under the policy of insurance. On this issue the court decided against East Texas.
Once the court had decided that East Texas had violated the policy provision related to notifying Lexington about the lawsuit then the burden to prove that the East Texas failure to promptly notify them of the lawsuit, hurt Lexington, or as the court put it; that Lexington was prejudiced by East Texas not notifying Lexington as soon as practicable. On this issue the court remanded the case to the trial court.
The lesson learned on this case is really pretty simple. Whenever a claim or even a potential claim is being made against a person or business that has insurance coverage, it is vital that the insurance company is notified. And just a phone call is not sufficient. The notice needs to be in writing and the notice needs to be immediate. And lastly, there needs to be constant and immediate follow-up of all further communications related to the claim.

Very few people doubt that the face of America is changing in that more and more companies are changing the way benefits are provided to employees. The automotive industry is probably the biggest example of this change. Along with the automotive companies themselves, the changes effect all the companies that are intertwined with the big auto companies.
But it is not just the automotive companies. The same is happening in the airline industry, other transportation companies, and all phases of manufacturing. These changes include changes to wages, health care, retirement, and other benefits.
NewPage Corporation is a company that makes paper products. The Dayton Daily News recently ran an article wherein it reports on a change being made by NewPage in the way it handles health-care benfits for its premiums as it relates to their retirees.
The Dayton Daily News article is titled "Retirees sue NewPage Corp. over health benefits". The article reports that retirees of NewPage have filed a class-action lawsuit in federal court against NewPage over its plans to phase out subsidies for their health-care premiums. The lawsuit alleges that NewPage's decision breaches collective bargaining agreements for workers in its Wisconsin paper mills.
What appears to be the reason for the lawsuit is that NewPage is reducing the subsidies that employees over 65 years old and who retired after 1985. In 2010, retirees will receive 66% of the premium subsidy they received this year, then 33% in 2011 and then will disappear in 2012.
The company says these changes are required for the company to stay in business.

Residents of Dallas, Fort Worth, Arlington, Grand Prairie, and surrounding areas are fortunate in that they are not having to deal with the difficulties being faced by homeowners in the Gulf Coast areas of Texas, Louisiana, Mississippi, Alabama, and Florida. The damages following hurricanes Ike, Katrina, and others are causing nightmares for homeowners who are trying to get their insurance companies to properly and promptly pay the claims for damages to their homes.
The Sun Herald ran an article on December 21, 2009, that addresses more of the continueing problems these Gulf Coast residents are having with their insurance companies. The title of the article, "State Farm pays up, but argues award was in error", doesn't tell the whole story.
State Farm Fire & Casualty Company, recently paid a couple $179,100.31 for Katrina damage, but the check came to late to save the home of Henry and June Kuehn. The now years old claim of the Kuehn's, was ordered to be paid by a U.S. District Judge, back in August of 2009. This ordered payment was based on an appraisal award reached by an appraiser for each side, State Farm and the Kuehn's, and an umpire, who said the amount they considered was only for damage above the second-story water line in the house.
It appears the Kuehn's are going to lose their home due to the passage of time resulting in deterioration in their home.
Litigation is on-going in this case. State Farm is not agreeing that they owe the money that they were ordered to pay. The Kuehn's are seeking more monies for other damages plus monies for State Farms "bad faith" handling of the claim.
A jury trial is scheduled.

The Supreme Court of Texas issued an opinion on a case on December 11, 2009, that will make insurance companies who have issued commercial policies, to take a second look before denying a claim in certain situations.
The case involved here is titled, D.R. Horton-Texas, LTD. v. Markel International Insurance Company, LTD. This case came out of the Texas Court of Appeals in Houston. It could have been a case arising out of the Dallas or Fort Worth or surrounding areas like Arlington, Grand Praire, or Irving.
In this case, a couple, the Holmes, purchased a home from the builder, D.R. Horton-Texas, LTD. Defects in construction were discovered and as a result of these defects, mold had infested the home. The Holmes sued Horton, saying Horton was responsible for the problems Holmes was experiencing. It appeared ,a sub-contractor, Ramirez, was the person who caused the problems. Ramirez had an insurance policy from Markel International Insurance Company, LTD. Horton sought coverage from Markel, based on the Ramirez policy wherein Horton was an additional insured. Markel refused to get involved and Horton eventually settled the case, then sought reimbursement of defense costs and the settlement payment from Horton, the result of which was this lawsuit.
Well established law in Texas is as follows: In liability insurance policies generally, an insurer assumes both the duty to indemnify the insured, that is, to pay all covered claims and judgments against an insured, and the duty to defend any lawsuit brought against the insured that alleges and seeks damages for an event "potentially" covered by the policy, even if groundless, false or fraudulent. However, the duty to defend and the duty to indemnify are distinct and separate duties. In other words, one duty may exist without the other and the duties enjoy a degree of independence from each other.
It is well settled in Texas law that facts established in a lawsuit control the duty to indemnify. The duty to defend in a lawsuit, however, is established according to the eight-corners doctrine. This is looking at the four-corners of the insurance contract and the four-corners of the lawsuit pleadings.
The Court in this case ruled that the lawsuit pleadings may not have invoked a duty of the insurance company to defend the lawsuit but the reality that the Markel policy covering Ramirez named Horton as an additional insured brought up the issue that Markel may have had a responsibility to indemnity Horton.

For those of us living in the Dallas, Fort Worth, Arlington, and Grand Prairie areas of Texas, National Flood Insurance programs are not usually an issue. But this type of insurance is available and sold in Dallas, Tarrant, Parker, and other counties throughout the State of Texas. Knowing a little bit about these programs is helpful and will put you more in the drivers seat when talking with your insurance agent when considering buying this type of insurance.
As with a lot of Federally controlled programs, the consumer is limited in his available remedies when he is mis-treated by the companies administering these programs. The Houston Chronicle ran a story recently giving an example of how these Federal Flood Insurance programs can be nightmares for the consumers involved. The article is titled "Ike Case HIts A New Obstacle", and illustrates some of the problems homeowners experience when making a claim for coverage.
When there is a dispute, the insurance adjuster will try to get the homeowner to agree to going to arbitration as a way to settle the insurance dispute. Most people will jump at this option thinking to themselves that this will result in a quick settlement and save time and money, including attorneys fees. It turns out that the arbitration process is not necessarily quick nor cheap.
The Chronicle article highlights one family that had waited nearly six months for a resolution to their claim and spent more than $25,000 on fees for an appraiser to represent them in front of the arbitrator. Of course most people cannot afford the costs of an attorney, nor an appraiser. Nor is it practical for them to wait for months to get a resolution to their claim. These people making the flood loss claim have lives to live and need to get their housing situation worked out. Of course the adjusters know this and thus know they can get away with low-balling claimants.
The company involved in the Chronicle story is Harleysville Mutual. The appraisal umpire decided that the homeowner should be awarded $267,000, but it is still unclear whether or not this is going to be paid.

The following is a short discussion of a case trying to interpret Missouri law, in part. The relevance to people in Dallas, Fort Worth, Arlington, or Grand Prairie areas is that the case was heard in a Texas Court in the Southern District of Texas and that the appeal was to the United States Court of Appeals for the Fifth Circuit, which is a Court that makes decisions regarding lots of Texas cases.
The case is Westchester Surplus Lines Insurance Company v. Maverick Tube Corporation. The opinion of the Court was issued on December 10, 2009.
The dispute involved the application of Missouri state law in determining if an insurance "occurrence" and the duty of the insurance company to indemnify existed.
In this case, Maverick had purchased insurance policies from Westchester. The policies purchased provided for indemnification for "property damage" resulting from an "occurrance". An "occurrance" was defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
In 2006, Maverick sold a specific casing, P-110, to Dominion Exploration and Production Company for use and operation in its gas wells. In September 2006, Dominion experienced catastrophic failure in four gas wells that were using the P-110 casing. A subsequent investigation showed the P-110 casing to be the cause of the problems Dominion was experiencing.
Dominion made a written demand for its losses to Maverick and eventually settled for a substantially less amount of money. Maverick then asked Westchester to indemnify per the insurance policy and Westchester refused. The lawsuit followed.
The Court got into more specific issues in this case and a discussion of Missouri law. The more relevant issues in an insurance law context were also discussed and these included an insurance companies duties to not only pay claims but their duty to defend claims asserted against their insured in some situations regardless of whether or not the insurance company may or may not have to later pay on the claim. These issues in part, were breach of contract claims, warranties, performance issues, DTPA causes of action, failure to perform cases, etc.
The case is another illustration of some of the complex situations that can arise in an insurance context. The wording of the insurance contract, the facts of the claim, and the existing insurance law, all have to be looked at together to get an understanding of what may be the final outcome in a particular case.

The Chinese drywall cases that have been in the news the last year or so, are primarily affecting home owners along the Gulf Coast. If you live in Texas you are not likely to be affected by the claims resulting from these defective drywalls. Especially if you live in the crowded Dallas and Fort Worth areas. However if you live in areas such as Louisiana and Mississippi, these cases are attracting a lot of attention.
The Times-Picayune recently ran a story that addressed the drywall cases that have been causing problems since the hurricanes in recent years. This story informs its readers that New Orleans Saints coach Sean Payton is the lead plaintiff in a 591-page class action Chinese drywall suit. The company being sued is Knauf Plasterboard Tainjin Co. Ltd., a Chinese company manufacturing company producing the drywall.
The drywall at issue in this case is supposedly causing homes to corrode and making people sick. In the context of homeowners insurance, a lot of insurance companies are refusing coverage for the losses caused by this drywall being installed in the homes.
There has been difficulty in determining just how many people have been affected by the installation of this drywall in their homes. One reason for making Sean Payton the lead plaintiff in the lawsuit is to draw attention to the problem so that others affected by this faulty drywall will step forward. As a result of people coming forward it will be easier to not only determine the number of people affected, but to also be able to determine more of what all the problems are that this drywall causes.
The effects of this drywall, not only causes people to feel ill, but is linked to causing problems in televisions, computers, and electrical equipment failures.

The Texas Department of Insurance has recently released the Commissioners Order regarding State Farm Homeowners rate reduction and refund fight.
This order is the result of a re-hearing . The original reduction order was first issued in 2003, but was remanded by the Third Court of Appeals in Texas in 2008 to the Texas Department of Insurance for further proceedings due to their finding that a portion of the underlying law enacted in 2003 was unconstitutional.
The total amount of the refund, including interest, is estimated to be about $310 million. Individual amounts will vary among policyholders, with differences based, in large part, on the length of time with the company and the amount of premium paid to State Farm. Further information regarding refunds or premium credits to policyholders, both current and former, will be made available pending any appeal of the order.
The actual heating phase took place on separate days beginning on March 30, 2009, and not ending until May 2, 2009.
The evidence, testimony, transcripts and exhibits numbered in the thousands of pages. In the succeeding months, time was taken to review the record and all admissible evidence, as well as drafting the order.
In the 2009 rate hearing, the Texas Department of Insurance staff withdrew their -12% reduction due in part to State Farm Lloyd's premium calculation error that became known after the original september 2003 rate hearing. There was insufficient evidence in the record to sustain the -12% rate reduction originally recommended by the Texas Departmant of Insurance in 2003.
The Insurance Commissioner found State Farm's rates were excessive and is ordering State Farm to pay refunds amounting to 6.2% of premium for policyholders insured with State Farm Lloyd's from September 2003 thru August 2004. The estimate of the total refund ordered is estimated to be $257 million.
There are various interest calculations in accordance with applicable statutes. And State Farm is suppose to be paid within 60 days unless an appeal is filed.