Dallas Fort Worth Insurance Lawyer Blog

An insured in Grand Prairie, Dallas, Fort Worth, Coppell, Richardson, Duncanville, Aledo, Arlington, or anywhere else in Texas may ask this question: When does the life insurance policy become effective? Here is some guidance.
Most life insurance policies expressly state the "effective date" of coverage. This date may be earlier than, or later than, the date the first premium is paid or the dates the policy is issued or delivered. Often, an insurance policy may have an effective date, an issue date, and a policy date -- and they may all be different, causing confusion or misunderstanding. If the dates differ, disputes may arise over when the policy actually took effect or terminated. The effective date can be important in setting the due date for subsequent premiums and thus the date of any lapse for failure to pay a premium.
An example to think about is found in the case, Life Insurance Company of the Southwest v. Overstreet. This is a Texas Supreme Court case decided in 1980. Here is a brief summary of the case:
A life insurance policy provided that its effective date was March 15th and each annual premium was due on the anniversary of that date. The insured did not pay his first premium until April 18th. Two years later, the insured died while his premium was due. If the effective date was measured from March 15th, he died outside the grace period and had no coverage. If measured from April 18th, he died within the grace period, and within coverage. The Supreme Court held there was no coverage, following the majority rule that "a definite statement in the policy of the date on which annual premiums will be due is the due date. Such a statement of the due date controls even over a provision stating that a policy will not be in force until it is initially delivered and the first premium is paid during the good health of the insured."
Interpretation of contract law as it relates to life insurance policies, and effective dates, premium dates, issued dates, delivery dates, inception dates, etc., make it necessary for an insured to consult with an experienced Insurance Law Attorney whenever they are dealing with an insurance company on a life insurance claim.
The next question is: What happens when there is death or change in health before the effective date?
The Texas Supreme Court, said in 1950, "If the insured dies before the policy becomes effective, there is no coverage."
The Texas Supreme Court, said in 1979, that a policy may also contain a "good health" clause that requires that the insured be in good health at the time the policy is issued or the coverage will not take effect. That court and the Court of Appeals, Amarillo, has said, "A good health clause renders the policy void if the insured was not in good health." In contrast, a false representation of good health provides a defense only if other elements, such as intent to deceive, are proved.
Another question that comes up is: When does coverage terminate? This answer can be discussed with an experienced Insurance Law Attorney.

What are clauses that are illegal / prohibited? Someone from Grand Prairie, Arlington, Mansfield, Burleson, Crowley, Lake Worth, or other places in Texas may ask that question. Here are a few examples of clauses / provisions that are illegal in Texas when they are included in a life insurance policy.
The following provisions cannot be included in life insurance policies:
1. Per Texas Insurance Code, Section 1101.053, a policy cannot limit the time to sue to less than two years. Section 1101.053 reads: "A life insurance policy may not include a provision that limits the time during which an action under the policy may be commenced to a period of less than two years after the date the cause of action accrues."
2. Per Texas Insurance Code, Section 1101.054, a policy cannot purport to take effect more than six months before the original application date, if that would qualify the insured for a rate based on a younger age. Section 1101.054 reads:
"(a) Except as provided by Subsection (b), a life insurance policy may not contain a provision under which the policy is issued or takes effect on a date more than six months before the date of the original policy application if the provision causes the insured to rate at an age that is younger than the age of the insured on the date of the application. ...
(b) An insurer of a life or endowment insurance policy or annuity contract may, with the consent of the policyholder or contract holder, exchange the policy or contrct for, or convert the policy or contract into, a policy of another insurance plan of insurance or an endowment or annuity contract as of a date not earlier than the effective date of the original policy or contract.
(c) If an exchange or conversion is made under Subsection (b) and the newly written policy or contract is issued as of a date earlier than the date of the application for exchange or conversion, the amount of life or endowment insurance or annuity provided under the newly written policy or contract may not exceed the greater of:
(1) the amount that the premium paid for the original policy or contract would have purchased on the plan of the newly written policy or contract for an individual the age of the insured on the effective date of the original policy or contract; or
(2) the amount of the original policy or contract."
3. Per Texas Insurance Code, Section 1101.055, a policy cannot limit benefits, except if the death resulted from suicide, stated hazardous occupations, or aviation activities. Section 1101.055 reads:
"(a) Except as provided by Subsection (b), a life insurance policy may not contain a provision for a settlement at maturity that is less than the amount insured on the face of the policy plus the amount of any dividend additions to the policy minus the sum of any amount of debt to the company that issues the policy and the amount of any premium that may be deducted from the settlement under the terms of the policy.
(b) A life insurance policy may provide for settlement that will be less than the amount required under Subsection (a) if the death of the insured is:
(1) by the insured's own hand regardless of whether the insured is sane or insane;
(2) caused by following a hazardous occupation that is stated in the policy; or
(3) the result of aviation activities under conditions specified in the policy and approved by the department under Chapter 1701."
4. Per >Texas Insurance Code, Sections 705.003 and 705.004, a policy cannot contain any provision that statements or answers in the application, if untrue or false, render the policy void. These sections should be read by anyone who thinks they may apply to them. However, the better thing to do would be to consult with an experienced Insurance Law Attorney. He would know how the law applies and would be able to apply the facts of any one case to the law to give the best advice.

No matter if you live in Dallas, Fort Worth, Mesquite, Garland, Duncanville, De Soto, Hurst, Bedford, Aledo, or anywhere else in Texas, any insurance policy you purchase must have certain provisions in it. The following are some of those provisions.
The Texas Insurance Code, Sections 1701.002 thru 1701.151, says life insurance issued in the State of Texas must be approved by the Texas Department of Insurance. Policies must contain these provisions:
1) Benefits shall be payable in currency. See Texas Insurance Code, Section 1102.002. The Texas Department of Insurance can withdraw approval of policies that offer payment in foreign currency that is less stable than United States curerency.
2) The policy must provide for payment of premiums in advance at the insurance company's home office or to an agent. See Texas Insurance Code, Section 1101.004.
3) A grace period of at least a month must be given. Texas Insurance Code, Section 1101.005. The Texas Administrative Code can also come into play here in determining the dates that may apply.
4) The policy and application shall constitute the entire contract. See Texas Insurance Code, Section 1101.003.
5) The policy must contain a provision that the policy is incontestable after two years, except for non-payment of premiums. See Texas Insurance Code, Section 1101.006. These incontestability clauses severely limit an insurer's ability to contest coverage.
6) All statements by the insured shall, in the absence of fraud, be deemed representations and not warranties. See Texas Insurance Code, Section 1101.003. This distinction means the insurance company must show a false statement was material and was made with intent to deceive, before the insurance company can assert the insured's misstatement as a basis for denying benefits.
7) If the insured's age is misstated, the amount payable will be adjusted based on the correct age. See Texas Insurance Code, Section 1101.008.
8) After three years of premium payments, the insurance company must agree to loan the insured the accrued cash value, if any. See Texas Insurance Code, Section 1101.009.
9) The policy must contain certain nonforfeiture provisions. See Texas Insurance Code, Section 1101.010.
10) When the policy becomes a claim upon the insured's death, settlement shall be made within two months. See Texas Insurance Code, Section 1101.011.
11) With certain conditions, policies must allow for reinstatement if the lapse was due to the insured's mental incapacity. See Texas Insurance Code, Sections 1106.002 thru 1106.006.
Anytime one of these provisions in not in a policy and the insurance company denies coverage based on the provision not being in the policy it is important that the advice of an experienced Insurance Law Attorney be obtained.

People in Grand Prairie, Arlington, Dallas, Fort Worth, Weatherford, Irving, Carrolton, and other places in Texas usually find out the hard way about areas of dispute in their insurance policies. Below is some information to be aware of.
Life insurance coverage is fairly straightforward. If the insured person dies during the policy term, the insurance company pays the benefits. The following are some ways that disputes may arise:
1) An agent may misrepresent the benefits of his insurance company's policy to induce the insured to switch from another company. See Texas Insurance Code, Section 541.061.
2) An agent may fail to disclose that health conditions may cause the insured's application to be rejected. If the insured was induced to let a rival policy lapse based on the expectation of replacement coverage, the insured may have no insurance. See Texas Insurance Code, Section 541.051(5).
3) The agent may fail to obtain coverage in time, and the insured dies without coverage. This violates many laws.
4) The agent may present information or illustrations in a way that creates certain expectations about premiums or cash value, and then the policy does not perform as represented. See Texas Insurance Code, Section 541.051(2).
5) The insured may have certain medical conditions that would be material to the insurer's decisions whether to offer insurance and at what price. Because the agent fills out the application and wants the policy issued so she can earn a commission, the agent tells the insured that the answers are not important, or the agent simply puts down wrong answers. When the insured dies, the insurance company learns of the false answers and denies coverage. See Texas Insurance Code, Section 541.061.
6) The insured may have certain medical conditions that would be material to the insurer's decisions whether to offer insurance and at what price. Because the insured wants coverage and fears being rejected, the insured provides false, more favorable answers to health questions in the application. When the insured dies, the insurer learns of the false answers and denies coverage. Sometimes this is relevant and sometimes it is not.
7) The insured may give erroneous health answers that are material to the insurer's risk but are not made with any intent to deceive. Again, sometimes this is relevant and other times it is not.
8) The insurance company has several products -- some more affordable, others that cost more but accrue cash value. The agent fails to adequately explain the different options to the insureds, so they pay more for a policy that provides less coverage. Or they buy a policy they cannot afford and it lapses, leaving them uninsured. See Texas Insurance Code, Section 541.061(2) and (3).
9) Although the insured was seemingly healthy at the time of the application and gave truthful answers, the insured's health becomes materially worse before the policy is issued, thereby increasing the insurer's risk. See Texas Insurance Code, Section 541.060(3).
10) The insurance company receives a death claim, but suspects the insured is not really dead. This would be fact specific as to what can be done.
11) The insurance company receives a death claim from a beneficiary who lacks an insurable interest. See Texas Insurance Code, Section 541.060(7).12) The insurance company may believe the beneficiary killed the insured. See Texas Insurance Code, Section 541.060(7).
13) The insurance company receives competing claims by different putative beneficiaries. If this happens the insurance company will file an "interpleader" in a court, usually a federal court.
14) The insured's death may be from an excluded cause, such as suicide. If this happens, an experienced Insurance Law Attorney and possibly an investigator are needed.
15) The insurance company may wrongfully deny the claim, or may take too long to pay. See Texas Insurance Code, Section 541.060(4).

What types of insurance are available to people in Grand Prairie, Arlington, Mansfield, Cleburne, Weatherford, Granbury, or other places in Texas? The answer is the same where ever a person may live in Texas.
Common life insurance types are term, whole life, and universal life.
"Term" policies simply provide a death benefit in return for a premium payment. At the end of the policy year, or "term," the insurance ends, and the policy has no value. Term policies do not accrue cash value. Because the insured is only paying for the death benefit, term policies are cheaper in the early years. As the insured gets older, the risk of death increases and so does the premium, so term may become more expensive than the other types. Insurance companies typically sell term policies that promise a fixed premium for a set number of years. For example, an insurer may sell a 10 year term policy that the insured may purchase and renew for the same annual premium during those years, without having to re-qualify.
"Whole life" policies typically charge more in premiums than term policies, so that the premium pays for the death benefit and provides an excess that allows the policy to accrue a "cash value." This cash value is an investment, in addition to the benefits if the insured dies. The policies derive their name from the fact that the insurer offers to insure the insured for her "whole life" -- based on a certain stream of premiums. An insurance company may offer illustrations at the time the policy is sold showing how much cash value will accrue based on the premium payments, if the certain interest rates apply. The illustrations usually project the expected value of the policy over time, and often contain disclaimers and numerous assumptions, making comprehension difficult. This complexity causes insured often to rely heavily on oral explanations by the agent, which may be inaccurate or misunderstood. This can be a source of trouble if the policy's actual performance does not match the insured's expectations.
One feature of whole life is that enough value may accrue so that future premiums can be paid from the accumulated cash value, without the insured having any more out of pocket expense. This is an effective marketing tool, showing the insured that after a substantial initial outlay, the insured will have coverage without making further payments. This too can be a trouble-spot if the actual performance does not live up to the projections.
Another feature of the accrued cash value is that the insured may borrow against the policy. If the insured does not pay back the "policy loan," the loan is repaid from the cash value and policy benefits at the time of death.
"Universal life" works like whole life, except the rate of return on the investment portion may be tied to stocks or mutual funds, instead of a certain interest rate. This product was developed so life insurance companies could compete with other investments by offering more competitive rates of return.
Dividends are another potential feature. If the policy pays dividends, the insured may elect to receive them as a refund, or the dividend may be applied to buy additional coverage or to reduce the next premium.

A person living in Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, Burleson, or anywhere else in Texas may wonder when an insurance policy actually goes into force.
From a legal standpoint, an application is a request for a contract of insurance that, as a mere proposal, can become a contract only by the insurance company's acceptance. This was stated in the 1980 case, Durham Life Insurance Company v. Cole, in an opnion written by the Texas Court of Appeals in Eastland. Another case said, "There is no contract unless and until the application for insurance is accepted by the insurance company." This was stated by the Houston Court of Appeals (1st) District, in 1996.
Here is an example from the Texas Court of Appeals, Amarillo, in 1960. The case is American Bankers Insurance Company v. Carpenter. Here, Carpenter applied for insurance on his boat while it was rented. The policy that was issued did not cover the boat while rented. Carpenter rejected the contract. The boat was damaged. There was no insurance coverage, because the contract was never accepted.
Courts have held that because an insurance company has no legal obligation to contract, there can be no tort or contract liability based on delay in processing an application. There are many cases supporting this proposition. However, these cases predate the passage of consumer protection statutes that may give rise to liability if the delay constitutes an unfair, deceptive, or misleading insurance practice. The Texas Insurance Code, Section 541.061(2), prohibits an insurance company from failing to provide information that is necessary to make other statements not misleading. Also, the Texas Business & Commerce Code, Section 17.46(b)(2) prohibits causing confusion or misunderstanding as to the source. sponsorship, approval, or certification of goods or services.
In 1986, the Texas Court of Appeals, Fort Worth, said, "An insurer may be statutorily liable for misrepresenting that coverage has taken effect when it has not." In this case, the agent had said that "we got you covered" and thus the insurer was liable.
Insurance companies must give applicants a written statement of the reasons for declining, canceling, or not renewing certain insurance policies. This is per Texas Insurance Code, Sections, 551.002, 551.055, and 551.109. Insurers and agents are not liable for any statements, disclosures, or communications made in good faith under Section 551.002, except they are not immune from liability for disclosures known to be false, or made with malice or willful intent to injure any person.
An insurer's written statement giving the reason or reasons for cancellation, declination, or nonrenewal of an insurance policy required by provisions of the Insurance Code must fully explain a decision that adversely affects an applicant or policyholder by denying the applicant or policyholder coverage. The statement shall:
(1) state the precise incident, circumstance, or risk factor or factors applicable to the applicant or policyholder that violate the guideline or guidelines;
(2) state the source of information the insurer relied on regarding the incident, circumstance, or risk factor or factors; and
(3) specify any other information deemed relevant by the commissioner.
These three requirements are found in Section 551.002(c).

Policy holders in Grand Prairie, Mansfield, Arlington, Crowley, Grapevine, Hurst, Dallas, Fort Worth, and all across the state of Texas will be amazed at the different ways they can have claims denied based on the langauge in the policy. For instance, what does the term "theft" mean in an insurance policy?
The Fifth Circuit Court of Appeals in Dallas, decided a case on July 2, 2010, where the main issue was the meaning/definition of the word "theft". The style of the case is, Nautilus Insurance Company v. Francis Steinberg and Morton Rudberg. This case originated in the 95th Judicial District Court, Dallas County, Texas. The opinion in this case was issued by Justice Morris.
Central to this case is the meaning of the word "theft" as used in an insurance policy that excludes "damage caused by or resulting from theft."
Here are relevant facts. Steinberg and Morton were the insured parties under a commercial property insurance policy issued by Nautilus Insurance Company. The policy covered a building located in Dallas, Texas. Among the policy's provisions was coverage for "vandalism," which was defined as "willful and malicious damage to, or destruction of, the described property." The vandalism coverage provision also contained a "theft" exclusion, which stated: We will not pay for loss or damage caused by or resulting from theft, except for building damaged caused by the breaking in or exiting of burglars.
On March 26, 2007, Leonard Heard climbed onto the roof of the building, opened the air conditioning units and removed copper pipes and electrical wiring. While on the roof, he was found and arrested by the Dallas police. The police report showed he was arrested for theft but he was indicted for criminal mischief and pleaded guilty and was convicted of that offense.
Nautilus was notified of the damage to the building. Nautilus then denied the claim because there was no coverage under the policy for "theft."
Nautilus was then sued by the policyholders.
The court discussed various issues in the case but in relevant part stated how the relevant exclusion in this case states that Nautilus will not pay for losses and damages caused by or resulting from "theft." The term "theft" is not defined in the policy. In the case of the word "theft" the Texas Supreme Court has held that the term is to be given the same meaning in an insurance policy that it has under the criminal law.
Texas Penal Code, Section 31.03(a), states that a person commits theft when he "unlawfully appropriates property with intent to deprive the owner of property." Section 31.01(4) says to "appropriate" property, a person must "acqure or exercise control over property other than real property." The courts then devotes much more discussion into the definitions of property and what it means to appropriate property and other issues.
Next the court stated, "To show theft under Texas law, it is not necessary to establish that the property was removed or carried away from the premises. Any removal of the property, no matter how slight, from its customary location is sufficient to show control over the property for purposes of theft." They then stated, "The undisputed evidence here shows that Heard removed the copper pipes from the air conditioning units. The act of removing the pipes was sufficient to show control over the property for purposes of theft."
In this case it was Nautilus's burden to show, that Heard had the intent to deprive the policyholders of the property. Intent is a question of fact to be determined by the trier of fact from all the surrounding circumstances.
Ultimately the appeals court remanded this case to the trial court to determine whether a "theft" had occurred based on the discussions in this case. That the trial court had mistakenly determined that the property had to be taken off the premises for a theft to occur and that this was the wrong standard to be using based on the discussion in the case.
This case serves as a perfect illustration of why an experienced Insurance Law Attorney must be consulted when a policyholder finds themselves in a position where their claim is being denied. The meaning and interpretation of the words and phrases in the insurance policy will often vary based on the circumstances surrounding the claim being made.

Property insurance for residents of Grand Prairie, Arlington, Weatherford, Dallas, Cleburne, Mansfield, De Soto, Duncanville, Lancaster, and other residents in Texas is not something most would be familiar with or how it works. So what is it?
Property insurance involves the indemnification of the insured by the insurance company for the loss of, or damage to, indentifiable property described either specifically or by general language in the policy. This is discussed in the Dallas Court of Appeals case, Cumis Insurance Society v. Republic National Bank of Dallas, decided in 1972. Coverage evaluations in the context of property insurance examine the relationship between perils covered under the policy and perils excluded under the policy. This is discussed by the Corpus Christi Court of Appeals case, Warrilow v. Norrell, a 1989 decision.
Property insurance policies are intended solely to indemnify the insured for his or her actual monetary loss, and unless the insured has sustained an actual loss, the insurance company has no liability. This is stated in Highlands Insurance Company v. City of Galveston, by the Houston Court of Appeals, 14th District, decided in 1986.
The most popular types of personal property insurance are auto insurance and homeowners insurance. Although both of these types of policies provide liability coverage, they also insure the property of the insured.
Commercial property insurance includes all forms of insurance covering property loss exposures of both business and non-profit organizations. The most common commercial property coverages are provided under standard forms developed by Insurance Services Office, Inc. (ISO) or the American Association of Insurance Services (AAIS). In many instances, an organization's property insurance is provided through a "package policy." A package policy ordinarily provides different types of coverage (e.g., property insurance and liability insurance). A monoline policy, in contrast, provides only one distinct type of coverage. The most common form of commercial property insurance is the Commercial Package Policy printed by ISO since 1986. Commercial property insurance can consist of:
1) Building and contents insurance: Provides coverage on insured buildings and the property contained in such buildings.
2) Machinery insurance: Covers steam boilers, pressure vessels, and various types of machinery such as air conditioning equipment, air compressors, turbines and all types of production machines.
3) Commercial crime insurance: Covers causes of loss generally excluded by building and contents insurance, including losses caused by employee dishonesty, forgery, theft, burglary, robbery, and extortion. Crime insurance usually covers both money and securities.
4) Commercial inland marine insurance: Covers a wide range of loss exposures, which usually involve some element of transportation or communications. Examples of inland marine exposures are property in transit, mobile equipment, property being installed by a contractor, bridges, and radio towers.
5) Farm insurance: Covers the famer's residential loss exposures (dwelling and household personal property) and business loss exposures. Farm buildings and farm personal property, including livestock, are usually insured under one form.
6) Other property coverages: Other coverages include aircraft insurance, marine vessel and cargo insurance, condiminiums, builders risk insurance, business income, commercial flood, commercial credit, commercial title, and differences in conditions insurance.
What is relevant here is that there are many different types of insurance for damage to property. In addition to the many different types of insurance there are many different policies with different language written into them. This multiplies the need for an experienced Insurance Law Attorney to help in these types of claims. Even when the claim is not denied there are often times other coverges within the property insurance policy that the insured is not aware of that he is paying for and can be of benefit to him.

Homeowners in Cedar Hill, Grand Prairie, Dallas, Fort Worth, Saginaw, Arlington, Burleson, Crowley, Weatherford, Azle, Aledo, Lake Worth, and all over the state usually know very little about their homeowners insurance except that if their house burns down the insurance is suppose to pay for it. Something else most homeowners insurance does is protect the homeowner when they are sued for certain reasons.
Most insurance carriers such as State Farm, Allstate, Farmers, Geico, Progressive, and many others provide this coverage. Although there are many different types of insurance policies that can insure a home, condominium, apartment, or other dwelling, the Homeowners Policy--Form B (HOB) is the homeowners policy sold to the largest number of homeowners in Texas. As such, the liability provisions of the HOB are most relevant to most homeowners.
An insurance agent is a source for learning about these policies, as is the Texas Department of Insurance. If ever, you believe there is a problem, you should seek the advice of an experienced Insurance Law Attorney.
The liability coverage provision of the HOB provides:
If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurence to which this coverage applies, we will:
(1) pay up to our limit of liability for the damages for which the insured is legally liable, and (2) provide a defense at our expense by counsel of our choice even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate.
This is generally discussed in, S.S. v. State Farm Fire & Casualty Company, a 1933, Austin Court of Appeals case.
It is notable that like most liability policies, the HOB policy provides both defense benefits and indemnity benefits if a claim is made by a third-party against an insured for bodily injury or property damage allegedly caused by the insured. The HOB does not contain a limitation on the amount of defense benefits an insurer must pay under the policy. Indemnity limits, in contrast, are subject to the "Coverage C" (Personal Liability) Limit of Liability for each occurrence. The HOB policy does not contain an aggregate limit.
There are limits on what a policy will cover.
The HOB policy contains the following exclusions:
1.a. bodily injury or property damage which is caused intentionally by or at the direction of the insured;
1.b. bodily injury or property damage arising out of or in connection with a business engaged in by an insured. But this exclusion does not apply to activities which are ordinarily incidental to non-business pursuits.
1.c. bodily injury or property damage arising out of the rental or holding for rental of any part of any premises by an insured.
1.d. bodily injury or property damage arising out of the rendering or a failure to render professional services.
1.e. bodily injury or property damage arising out of premises: (1) owned by an insured; (2) rented to an insured; or (3) rented to others by an insured; that is not an insured location.
1.f. bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of: (1) motor or engine propelled vehicles or machines designed for movement on land, including attached machinery or equipment; or (2) trailers, semi-trailers or mobile homes; which are owned or operated by or rented or loaned to an insured.
1.g. bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of watercraft.
1.h. bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of aircraft.
1.i. bodily injury or property damage arising out of: (1) the entrustment by an insured person; or (2) the negligent supervision by an insured of any person; with regard to the ownership, maintenance or use of any motor vehicle, watercraft or aircraft which is excluded in paragraph f., g. or h. above.
1.k. bodily injury or property damage arising out of the transmission of sickness or disease by an insured through sexual contact.
1.l. bodily injury to any person eligible to receive any benefits voluntarily provided or required to be provided by an insured under any workers' compensation law or occupation disease law.
Homeowners Liability Insurance is not discussed specifically in any one area of the Texas Insurance Code, rather the laws related to homeowners insurance are discussed through out the Insurance Code. Sometimes it is a specific topic that is most likely related to a homeowners situation but for the most part the relevant issues are mixed in with other areas of insurance law.

If a drunk driver hits someone from Bedford, Hurst, Euless, Granbury, Colleyville, Kellar, Fort Worth, Arlington, Grand Prairie, Dallas, or anywhere else in Texas, and the drunk driver does not have insurance, does the uninsured portion of an auto policy pay for the harm the drunk driver has caused? The answer is yes, and no.
Yes, the policy pays for some of the damages incurred because of the drunk driver. No, it does not pay for all the damages incurred by the drunk driver. Specifically, uninsured motorist coverage does not pay for exemplary damages.
The main Texas case on this issue is, Lolitha J. Milligan v. State Farm Mutual Automobile Insurance Company. This is a 1997, Houston Court of Appeals, 14th District, case.
The result of the case was the court's determination that uninsured motorist coverage does not cover exemplary damages.
The facts in this case were not in dispute. Ms. Milligan was injured in an accident caused by an uninsured drunk driver. Both Ms. Milligan and State Farm Mutual agreed that the drunk driver's conduct constituted gross negligence. The State Farm policy provided in relevant part as follows:
"We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person, or property damage caused by an accident."
The claim for actual damages was settled, but State Farm denied coverage for exemplary damages.
Milligan's attorneys argued that, Texas Insurance Code, Section 1952.106, provides that uninsured motorist coverage includes "payment of all sums ... as damages ... because of bodily injury." Therefore, Milligan is entitled to recover exemplary damages as a matter of law.
In discussing the law, the court recognized that uninsured motorist coverage is mandated by Texas Insurance Code, Section 1952.101. Specifically, the code provides that no auto liability policy can be issued without providing this coverage "in at least the limits described in the Motor Vehicle Safety-Responsibility Act ..."
The Texas Transportation Code, Section 601.076, states that an insurer must pay to the insured "all sums which the insured shall become legally obligated to pay as damages ... subject to limits ... " as set out in the law.
The court pointed out that the statutory definition of exemplary damages, found in Texas Civil Practices & Remedies Code, Section 41.001(5), as "any damages awarded as an example to others, as a penalty, or by way of punishment." That exemplary damages are assessed both to punish a wrongdoer and to serve as a deterrent to future wrongdoers. Neither deterrence of wrongful conduct or punishment of the wrongdoer is achieved by imposing exemplary damages against an insurance company in this situation.
In this court's decision, there was much discussion about how other courts have handled this matter and the reasoning behind the other courts decisions.
As the result of the decision reached in this case in 1997, there has not been a successful court ruling allowing recovery of exemplary damages in an uninsured mototist case. This is one of the few areas where it has been hard if not impossible, up to this point, to find an exception to the ruling handed down in this case.

Policy holders in Dallas, Fort Worth, Grand Prairie, Garland, Carrolton, Grapevine, Mansfield, Arlington, Weatherford, or any other place in this state usually do not have a very good understanding of the various benefits they have in their auto policy. In Texas, liability coverage is required to on automobiles traveling on Texas highways. The Texas Department of Insurance also requires that uninsured and underinsured coverage be offered on all auto policies. Personal Injury Protection (PIP) is also a required coverage unless it is rejected in writing.
But what about other types of coverage on an auto policy? Collision, towing, rental, etc. Here is one most people are not aware of: Medical Payments coverage, otherwise known as "med pay."
Med pay coverage is an optional coverage. Under this coverage, the carrier agrees to pay "reasonable expenses incurred for necessary medical and funeral services because of bodily injury caused by accident and sustained by a covered person." This insuring agreement uses the term "caused by accident" as opposed to the more specific phrase "auto accident" used in the liability insuring agreement. This coverage defines "covered person" as the named insured or any family member while occupying or being struck by a motor vehicle. Also, any other person occupying the named insured's covered auto is entitiled to med pay coverage. The coverage for those persons other than family members, however, is limited to occupancy in a covered auto.
Med pay coverage is generally broader than PIP coverage. This is discussed in the Waco Court of Appeals case, Dhane v. Trinity Universal Insurance Co., a 1973 case.
Unlike any other provision in the Texas Auto Policy, Texas courts have ruled that med pay benefits can be "stacked." This was stated in a 1969, Austin Court of Appeals case, Harlow v. Southern Farm Bureau Casualty Insurance Company. In other words, an insured may receive med pay benefits as if the benefits were being paid on two separate policies when a single policy covers two automobiles and the premium charged on the policy has been paid separately on each automobile.
There are similar exclusions under the med pay coverage and the liability coverage, most notable of which are the worker's compensation exclusion and the owned but not insured exclusion.
As for the workers compensation exclusion, the standard auto policy does not provide med pay coverage for any person for bodily injury occurring during the course of employment if worker's compensation benefits are available for the bodily injury. Thus, med pay coverage will apply only if the insured does not have worker's compensation benefits available to him or her.
As for the owned but not insured exclusion, like the liability coverage, med pay coverage does not extend to the named insured while he or she is occupying a vehicle, other than his or her covered auto, which is owned by him or her or furnished or available for his or her regular use. To extend such coverage would force the carrier to accept a greater risk without receiving a corresponding premium.
There are other elements of med pay but the one to be aware of is that med pay is subject to subrogation. The standard auto policy provides a general subrogation right to the insurer for all payments, except payments made under the PIP coverge. This specific right to subrogation of med pay benefits was recognized in Foundation Reserve Insurance Co. v. Cody, a 1970, Dallas Court of Appeals case.
The one thing about med pay that might be the most relevant is: Med pay is a much less expensive coverage than PIP, yet the differences between the two are not that great.

"Excluded Driver"? Someone in Grand Prairie, Dallas, Arlington, Fort Worth, Garland, Mansfield, Crowley, Benbrook, Cleburne, or anywhere else in Texas may ask what does that means.
An "excluded driver" is someone who not covered on an automobile insurance policy while that person is driving or operating an insured vehicle. In an automobile insurance policy this is usually referred to as a "515A endorsement" or a "515A exclusion". The Texas Department of Insurance allows insurance companies to exclude drivers from a policy but does require that anybody who is excluded to be named as an "excluded driver" and for there to be a signature by the person taking out the policy, to acknowledge the exclusion with their signature.
The most common situation where this occurs is when a child becomes sixteen and it is time to add them to the policy. The parents get a bill that is substantially higher than what they are use to paying and when they discover the reason for the increased rate is their teenage son or daughter they complain to the insurance agent. The agent then lets the parents know that they can keep their older / cheaper rates by not having the teenager on the policy. But because the teenager lives in the same house as the parents, there is a belief that the child will have access to the insured vehicles. Since the teenager usually exposes the insurance company to a greater risk and the child has access to the family vehicles the insurance agent will inform the parents that the only way they can not include the teenager in the rates being charged is to have the parents sign the "excluded driver" document. This document says there is not coverage for any damage the "excluded driver" does to the insured vehicle nor will there be coverage for any damage the "excluded driver" does to others.
This exclusion is enforceable with very few exceptions. One exception is found in the case, John DiFrancesco and DSS Partnership v. Houston General Insurance Company. This is a 1993, case decided by the Texarkana, Court of Appeals. In this case the language in the Houston General Insurance Company policy, plus the facts in the case allowed a ruling that required Houston General to pay the claim.
It is important to keep in mind that the exclusion applies only while the "excluded driver" is driving or operating the vehicle. In other words, if the "excluded driver" is a passenger in the insured vehicle he is still covered for any other benefits that may apply.
An experienced Insurance Law Attorney would know the few ways that exist for defeating this exclusion, if it can be done. A person should never just give up or take only what the insurance company tells them. They should seek legal advice. It is not uncommon for attorneys to discover fraud and forgeries concerning these exclusions. Plus the agent who sold the policy will often times make mistakes that an attorney can exploit to get coverage for the policyholders.