Dallas Fort Worth Insurance Lawyer Blog

Business persons in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, Burleson, Cleburne, Weatherford, Mesquite, Garland, Richardson, or any other location in Texas will usually have a commercial insurance policy covering their business. The policies they have are usually referred to as commercial general liability (CGL) policies. The following case looks at a problem one insured had with coverage and serves as an example of why a business person should try to understand what the coverages and exclusions are in any policy of insurance that money is spent on.
The Court of Appeals, Dallas, issued an opinion on November 22, 2010, styled, Frito-Lay, Inc. v. Trinity Universal Company, Trinity Universal Insurance Companies, Trinity Lloyd's Insurance Company, and Unitrin Property and Casualty Insurance Group. In this case the court eventually ruled in favor of the various insurance companies and against Frito-Lay based on exclusions in the insurance policy.
Here is some background. Adampac, a food packaging company, obtained a CGL policy from Lloyd's and a commercial excess policy from Universal. During the policy period, Frito-Lay hired Adampac to repackage a Frito-Lay food product to be used in consumer testing. During the repackaging process, the Frito Lay product became contaminated or adulterated with a foreign substance from another product Adampac was packaging for another customer. The foreign substance was a wintergreen flavoring used in a non-tobacco product similar to snuff. Because of the contamination, the Frito-Lay product could not be used for consumer testing.
Frito-Lay sued Adampac for negligence and breach of contract. In the lawsuit, Frito-Lay and Adampac eventually stipulated to the court that: (1) Frito-Lay engaged Adampac to repackage finished food products to be used in a consumer testing program, (2) Adampac agreed to ship and deliver to Frito-Lay non-adulterated and non-contaminated food product, (3) Adampac agreed to maintain sanitary conditions at Adampac's plant at all times, (4) Frito-Lay's food product became adulterated and contaminated with a substance from another customer's product while the Frito-Lay product was being opened and repackaged, (5) Adampac guaranteed its services would meet the standard of care in the performance of services for Frito-Lay including only shipping to Frito-Lay non-adulterated and non-contaminated food, and (6) Adampac had the duty to deliver Frito-Lay's finished products in a good and merchantable condition and fit for the purpose for which they were intended - a consumer food taste survey. The parties stipulated Frito-Lay suffered $393,500.00 in damages because of the adulteration and contamination of its food product.
After a hearing the trial court found Adampac breached the standard of care required of a person engaged in the repackaging of food products and that Adampac's acts and conduct proximately caused Frito-Lay's damages. That the food product became contaminated while in Adampac's "sole and exclusive" possession. And entered judgment for $393,500.00.
Frito-Lay attempted to collect the judgment against Adampac's insurance companies who are the parties in this lawsuit.
The insurers denied coverage based on an exclusion in the CGL policy which said coverage did not apply to damages to "personal property in the care, custody, or control of the insured." The parties had agreed that the damage to Frito-Lay's food product occurred while the product was within Adampac's "sole and exclusive possession and control."
Frito-Lay took the position that the exclusion does not apply because the negligence that caused the damages did not relate to work performed on Frito-Lay's product, but rather concerned work performed on the snuff product.
In ruling for the insurance companies the court stated:
"Here, the policy states plainly that it does not apply to damage to personal property in the "care, custody, or control of the insured." It is undisputed that the property damage to Frito-Lay's product occurred while the product was in Adampac's possession while at Adampac's facilities. Adampac was in exclusive actual physical control of both the facility where the product was damaged and the product that was damaged. In such cases, the phrase "care, custody, and control" allows no further interpretation. We conclude Lloyd's conclusively established Adampac's liability was for damage to personal property in Adampac's care, custody, and control. Therefore, the exclusion applies."
The court did not seem to have a hard time reaching a decision in this case and in fact, the way it reads, the court seemed to be upset that this case had progressed far enough as to get to them.

Can I sue the insurance company? Someone in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, De Soto, Irving, Mesquite, Garland, Carolton, Farmersville, Weatherford, or anywhere else in Texas might ask that question. The answer is the same lawyer answer that a person gets on most legal questions: It depends.
When someone talks of sueing an insurance company that can usually mean one of two things. First, when a person wants to sue their own insurance company, that is something that can be done, assuming the insurance company has committed some wrong against you. This is called a "first party" claim.
When a person has a "third party" claim, then they cannot sue the insurance company. The most normal scenario for this is a car wreck. Usually someone causes a wreck with you, they give you their insurance information, you contact that insurance, that insurance company starts giving you the run around. The result of all this is that you want to sue the guys insurance company. You can't. This is a third party claim and if you want to sue someone, then you have to sue the person who caused the wreck - not his insurance company. This is a "third party" claim.
The Dallas Court of Appeals issued an opinion on a case dealing with this issue on November 18, 2010. The style of the case is, Tommy Hamilton v. Farmers Texas County Mutual Insurance Company, Isabella G. Bezerra, and Kim Recer. This is an appeal from the 134th District Court, Dallas County, Texas.
In this case the Judge granted papers filed with the court by Farmers Texas County Mutual Insurance Company (Farmers) to have the Judge dismiss the case against Farmers. Hamilton who was a pro se appellant filed this appeal.
Here are some facts. Hamilton sued Farmers, Bezerra and Recer for personal and property injuries suffered by Hamilton as a result of an automobile accident on or about July 5, 2007. Hamilton stated that his car ran out of gas and was stalled on the side on the road when another vehicle hit the rear of his car, causing personal injury to him and damage to his car. The other vehicle was owned by Bezerra and insured by Farmers. Recer was an agent for Farmers.
Farmers filed paperwork on November 4, 2008, called a "motion for summary judgment" asking the court to dismiss Hamiltion's claim against them based on the old Article 21.21 of the Texas Insurance Code. This Article says that a third party (Hamilton) may not maintain a direct cause of action against the insurance carrier of an insured defendant. The court granted Farmers motion.
When you think about it, this makes sense. Here is why. It was the third party who caused the damages. The insurance company did not do anything wrong itself. It was just who insured the third party who caused the accident. In a lawuit, it is the person or thing that caused you harm that you sue. The insurance company's job is to pay the damages their insured caused, but only those damages that can be proved. The insurance company does not owe any responsibility to the injured person, their responsibility is to financially compensate their insured for anything the insured owes to someone else as the result of an accident.
There are exceptions to the above. An experienced Insurance Law Attorney will know and understand these exceptions. He can look at the facts in any given situation and apply those facts to the law and give advice as to whether or not it is worth pursueing the claim directly against the insurance company.
As a side note, there is one state in the United States that does allow a person to sue the other person's insurance company, even in a third party claim. That state is Lousiana. In fact, in Louisiana, it is the insurance company that is sued, not their insured.

What if someone in Mesquite, Garland, Keller, Flower Mound, Haslet, Newark, Benbrook, Hutchins, Dallas, Fort Worth, Arlington, Grand Prairie, or Rockwall is involved in an accident with a driver from Arkansas or some other state? Does that other state insurance have to pay a claim here in Texas if the driver is a family member and the other state's policy allows an exclusion for family members? Let's see what Texas says.
The best guidance for the above situation is found in a 1992, Austin Court of Appeals case. The style of the case is, National County Mutual Fire Insurance Company and Consumers County Mutual Insurance Company v. Randall Johnson.
The question in the case for the court to decide was: Does a family-member exclusion in an automobile insurance policy contravene the public policy set forth in the Texas Safety Responsibility Act, which requires liability insurance coverage for all damages that arise out of the operation of a motor vehicle?
The general rule is that a policy of insurance issued in another state to one of its insured's immediately converts to the minimum of what Texas requires when the out of state driver enters Texas. With this in mind, look at what the court did in the above case.
Randall Johnson was driving his car when he caused an accident wherein his passenger, his wife, was injured. His insurance company, National County Mutual Insurance Company (National) denied his wife's claim for benefits and his claim for coverage based on the National policy excluding coverage for family members.
Reading from the case, National rebuffed demands from Johnson and informed him they would not unconditionally defend him. Rather, its defense would be subject to a reservation of its rights to deny coverage and payment of any judgment rendered against him.
Johnson advised National that he would not accept any reservation of rights and repeated his demand for a full and unconditional defense. He asserted his rights under the Texas Safety Responsibility Act which requires that an owner's automobile liability policy pay "all sums which the insured shall become legally obligated to pay," and that their spousal / family member exclusion was invalid. The trial court and this appeals court upheld Johnson's position.
The Texas Safety Responsibility Act requires that "all sums" in that act means nothing less than all sums, ruled the court.
The following are a couple of quotes from the court.
"When the legislature specifies a particular extent of insurance coverage, any attempt to void or narrow such coverage is improper and ineffective." "Past attempts by the State Board of Insurance to narrow a legislatively prescribed scope of coverage have been invalidated." They then said the endorsement in this policy is an attempt to narrow coverage in contravention of the law and therefore is invalid.
So, the answer to the opening question is yes, there is the same coverage provided, though it would be the minimal amounts in Texas. Even though the other state, in our example Arkansas, may not have to provide coverage for family members if an accident by an insured occurs in Arkansas, if the accident occurs in Texas there is coverage. It is just limited to the minimum amounts required by Texas laws.
Accidents with drivers who are from out of state but are in Texas for work, vacation, or any other reason, who have an accident here complicates matters for the injured Texan. An experienced Insurance Law Attorney can help navigate this unfamiliar area so that the Texan does not get mislead and taken advantage of by the out of state insurance company.

Anybody with life insurance in Dallas, Fort Worth, Grand Praire, Arlington, Weatherford, Garland, Mesquite, Mansfield, or anywhere else in Texas who has life insurance would have had to fill out an application for that insurance. So what happens if the life insurance company denies benefits under that policy and cites the reason as there being a misrepresentation in the application for the policy? Continue reading to get some guidance as to what might happen.
For a life insurance company to establish misrepresentation by the insured as legally sufficient grounds for denying benefits, the life insurance company must prove five elements in any lawsuit brought trying to get the benefits paid to the benficiary. Here are those five elements:
1) the making of a misrepresentation;
2) the falsity of the misrepresentation;
3) reliance on the misrepresentation by the life insurance company'
4) intent to deceive on the part of the insured in making the misrepresentation; and
5) the materiality of the misrepresentation.
The preceding is the law as stated by the Texas Supreme Court in the 1994 case, Union Bankers Insurance Company v. Shelton.
The Texas Insurance Code has relevant statutes that come into play when there are allegations by the life insurance company that the insured made misrepresentations in obtaining the life insurance coverage. These statutes are, Sections 705.001 to 705.004 and Sections 705.101 to 705.105.
The 1991 case styled, Betty Flowers v. United Insurance Company of America, decided by the Fourteenth District Court of Appeals in Houston, provides some further insight into how a misrepresentation claim will be handled.
In the Flowers case the trial court ruled against the beneficiary but the appeals court reveresed the judge and sent the case back for a trial.
The basic facts of the case are not in dispute. In November 1987, Betty Flowers and her husband, Edward Flowers, applied for and were issued a joint life insurance policy with United Insurance Company of America (United). In the application for the policy, Mr. Flowers was asked a series of questions regarding his health history. In pertinent part, the question asked:
10. Has any Proposed Insured or Payor to be covered ever had:
a. High blood pressure?
b. Disease or disorder of heart or circulatory system?
......
11. .....
a. Have you ever had a physical examination, consulted a physician, or been in a clinic, hospital or institution for surgery, diagnosis or treatment within the past 5 years?
Mr. Flowers answered "no" to each health question. He did not give any explanations of health problems in the space provided. Mr. Flowers executed the application stating "I certify that I have read all the questions and answers on this application." As it turns out, three years before applying for the life insurance, Mr. Flowers was incarcerated in the Texas Department of Correction (TDC). On the TDC medical intake form Mr. Flowers stated that he had high blood pressure. While in prison Mr. Flowers took medication for the condition for approximately two years. Further, while he was in prison, he was admitted to the hospital for an injured wrist; and during hospitalization he was diagnosed with borderline cardiomegaly, enlargement of the heart.
In 1998, approximately a year after the life insurance policy was taken out, Mr. Flowers was killed in a motor vehicle accident. Ms. Flowers, as beneficiary, brought the lawsuit to collect benefits.
In reversing the trial court, this appeals court stated that United failed to prove the five elements above. The appeals courts centered on there being no proof by United that Flowers "intended" to deceive United when he filled out the application. The court stated that while there was some evidence of the intent to deceive there was not enough conclusive evidence for the judge to dismiss the case without allowing Ms. Flowers the opportunity to prove the point to a jury.
Important to know from this case is that just because there is a misrepresentation in a life insurance policy, that by itself is not usually sufficient to justify a denial of benefits. Each of these situations need to be evaluated on an individual basis. To make sure that a person's rights are properly protected, it is important to seek the advice of an experienced Insurance Law Attorney.

Does anybody in Dallas, Fort Worth, Grand Prairie, Arlington, Irving, Mesquite, Garland, Cedar Hill, Duncanville, De Soto, Lancaster, or anywhere in Texas have a pilot's license? The answer is yes. So the next question is, "Are they covered in their life insurance policy if they die in an airplane crash?" The answer to that is, "It depends."
All insurance policies are going to have "exclusions". These exclusions will limit the responsibility of the life insurance company to pay death benefits when these exclusions may apply.
This issue came up in the case, American Home Assurance Company v. Loretta Anne Brandt. This is an older case which was decided in 1989 by the Texarkana Court of Appeals. The exclusion in this case excluded coverage by the following provision: "LIMITED AIR TRAVEL COVERAGE: Insurance provided under the policy includes riding as a passenger, but not as a pilot or crew member in, including boarding or alighting from, or being struck by, any aircraft."
American Home Assurance Company (American) appealed this case from a jury verdict in favor of Lorretta Anne Brandt. American prevailed on appeal based on a technical error in the trial court and was sent back to the trial court for a new trial.
Here are some facts in the case.
On January 24, 1982, a twin-engine Cessna 402 aircraft, owned by Vernon Myers, crashed during an attempted landing in Laredo, Texas, killing all seven people aboard. When the plane crashed, Myers occupied the left pilot's seat; Robert Brandt occupied the right pilot's seat. The purpose of the flight was pleasure -- a shopping trip to Mexico. Myers' aircraft was certified by the Federal Aviation Administration as requiring a crew of one, the pilot. Myers met FAA regulations to fly his aircraft without supervision and could legally carry passengers. Dow Chemical Company employed Brandt as a pilot. Dow Chemical held a life insurance policy for the benefit of its employees, through American. After the crash, American contended that Robert Brandt was acting as a pilot or crew member during the flight and was thus excluded from coverage by the provision cited above.
At trial, there was little evidence with regard to who performed what duties in the cockpit of the airplane, partly because those in the plane were killed and not able to tell about it. Through various documentary exhibits, Loretta Brandt showed that Myers owned the airplane and operated it and that he occupied the left, or pilot's, seat at the time the plane crashed. She showed that Robert Brandt could not legally act as a flight instructor. Loretta Brandt also introduced a report filed by the National Transportation Safety Board, which reflected that Robert Brandt was the pilot in command, although this designation was apparently a result of the fact that Robert Brandt was a more highly qualified and experienced pilot than was Vernon Myers. In addition to the documentary evidence, Loretta Brandt called an expert witness, Hughes A. Moorer, Jr., a flight instructor, who testified with regard to various matters within his expertise, including custom, the fact that the pilot of the plane occupies the left seat in the cockpit, and that the plane involved would not normally have any crew members other than the pilot. Based upon his expertise and review of documents related to the investigation, Moorer opined that at the time of the disaster Robert Brandt was not acting as pilot or a crew member, but was a passenger in the plane. American chose not to produce any evidence other than a report from the Federal Aviation Administration concerning the qualifications of Robert Brandt as a pilot, but rather relied upon the notation in the National Transportation Safety Board's report that Robert Brandt was pilot in command of the plane.
The relevance of this case is that the court upheld the right of a life insurance company to maintain in its policies an exclusion commonly called "Pilot exclusion."
Anytime there is an exclusion in a policy that a life insurance company is relying on for denying coverage to a beneficiary under a life insurance policy, the beneficiary should seek the advice of an experienced Insurance Law Attorney before accepting the final determination of the self serving interests of the life insurance company.

Insureds in Weatherford, Aledo, Arlington, Azle, Grand Prairie, Dallas, Fort Worth, Mansfield, Bedford, Hurst, Euless, Grapevine, and any other place in Texas will be upset to find out that their insurance rates are going up again. And it is going up in spite of record profits the insurance companies are making. It's not like they are losing money.
The Austin American Statesman published an article on Wednesday, December 15, 2010. The title of the article is, "Allstate Raising Homeowner Insurance Rates." This article appears to be reprinted from the Associated Press.
The article informs the reader that Allstate Insurance has notified the Texas Department of Insurance that it will increase homeowner rates. Some of the increases will be up to 10 percent.
One of the Allstate companies is Allstate Texas Lloyds. There are about 450,000 homeowners covered by this company. They will see a rate increase of 5.4 percent, that goes into effect on January 20, 2010. Another Allstate company, Allstate Texas Fire and Casualty, will increase the rate for their estimated 175,000 homeowners 9.7 percent. This is according to the documents filed with the Texas Department of Insurance.
TDI will review the rate increases to make sure that they are justified and have the authority to order a reduction if the review indicates the rates are excessive.
Allstate is giving several reasons for justifying the rate increases. Chief among these reasons is the increased costs for construction and damage caused by destructive Texas weather. This destructive weather in the form of hail and wind storms have increased in severity in recent years causing an increase in claims. The increasing cost of roofing materials is also a big factor according to the article.
One interesting factor missing from the articles in the Austin paper and the Associated Press article is that there is not any blame for the rate increase being put on lawyers and lawsuits. Even though insurance companies often times try to place blame on lawyers and lawsuits for justification in rate increases the reality is those are not real reasons.
The increase being talked about now by Allstate will increase Allstate Texas Lloyds customers an average of $64 annually. Allstate Fire and Casualty customers will see an average increase of $115 per year.
Farmers Insurance plans a rate increase for its homeowners policy holders of 3.9 percent in March effecting nearly half its Texas policyholders.
These increases are causing a spokesman for the consumer group, Texas Watch, to say, "Here we go again. It seems like every time one of the major insurance carriers raises rates, they all raise rates."
Allstate company spokeswoman, Kristen Beaman, told reporters, "We don't take pricing lightly. We understand we have a responsibility to offer consumer products at a fair price, but it needs to be one that reflects risk as adequately as possible."
A representative of consumers, The Office of Public Insurance Counsel, has sent a letter to TDI opposing the planned Allstate increases.
Other consumer groups are requesting the 2011 State Legislature to return to a system of prior state approval of all rate hikes for auto and homeowners insurance.

How much coverage does someone in Dallas, Fort Worth, Arlington, Grand Prairie, Mansfield, Cleburne, Mesquite, or anywhere else in Texas have on their automobile policy? The answer would depend on what type of coverage you are talking about. There are different coverage amounts based on what a person wants and what is available. Let's look at just auto liability coverage.
The Austin American Statesman published an article that ran on December 13, 2010. The title of the article is, "Mandatory Auto Liability Coverage to Rise in New Year." The article was written by Tim Eaton.
According to a 2007 law, authored by former State Senator Kip Averitt, the minimal liabilty coverage that can be sold in Texas raises to $30,000 for each injured person, $60,000 per accident and $25,000 for property damage.
Prior to this bill the mimimum limits had been $20,000 for each injured person, $40,000 per accident and $15,000 for property damage.
After passage of the bill the limits had risen in April 2008, to $25,000 for each injured person, $50,000 per accident.
Effective January 2011 the new legal minimum goes into effect. The law requiring this minimum limit to be offered by auto insurance companies can be found in the Texas Transportation Code, Section 601.072.
According to the Texas Department of Insurance this raise in limits is necessary because the previous limits are too often insufficient to cover damages incured in an automobile accident.
The article tells us that state insurance regulators report the increased coverage should not amount to significantly higher insurance bills. A spokesman for the Texas Department of Insurance reports that fifty per cent of all vehicles in Texas, or about 7.5 million, are insured for the minimum amount. They also report that about 1 in 5 vehicles do not carry any liability insurance.
According to the article, neither the insurance industry or consumer advocacy groups such as Texas Watch, are opposed to the increased minimum limits. According to Texas Watch executive director, Alex Winslow, the group actually supports the move.
State law requires drivers to carry auto liability insurance to pay to repair or replace the vehicle of the person who is not at fault in an accident. It also covers at least a portion of the medical expenses of the driver who is not at fault. It does not pay to repair or replace the at-fault driver's car or to treat the at-fault driver's injuries. It is important to point out that this extra coverge can be purchased if the driver wants it.
The limits to what can be sold a person for auto liability coverage is stated above. The maximum really does not exist except in the context that some companies will limit their coverage thereby forcing a person who wants higher amounts of coverage to find a company that offers the higher amounts.
As to other forms of coverage available on an auto insurance policy, here are some of them:
1) personal injury protection (PIP)
2) medical payments benefits (Med Pay)
3) towing
4) rental coverage
5) underinsured / uninsured coverage (UM/UIM)
6) collison (should include, hail, flood, vandalism, etc)
7) life insurance
There is even more than stated but the best source for learning about these coverages and what is available would be to talk with an insurance agent. However, an experienced Insurance Law Attorney is the best source to seek out for someone who thinks they are not being treated properly as it regards their coverage.

When someone in Grand Prairie, Fort Worth, Dallas, Benbrook, Crowley, Cedar Hill, Newark, Cedar Hill, Weatherford, Aledo, Azle, Lake Worth, or anywhere else in Texas buys a car or truck on credit, the dealership will always offer the purchaser the option of getting a credit life and disability insurance policy. The purpose of this type of insurance policy is to pay off the loan if the purchaser dies before paying off the loan or makes the loan payments if the borrower becomes disabled while the debt is still owing.
A case from the Court of Appeals of Georgia issued an opinion on June 30, 2010, where this type of policy was the subject of a lawsuit. The style of the case is Resource Life Insurance Company v. Buckner et al. This was a class action lawsuit.
Here is some background. In early 2001, Dorothy Buckner purchased a car and financed it with a loan. As part of that transaction, Buckner bought both a credit life and a credit disability insurance policy from Resource Life Insurance Company (Resource). In November 2001, Buckner's automobile was totaled and her debt on the car was extinguished, thereby triggering the automatic cancellation of the Resource policies. At that time, Resource owed Buckner a refund of her unearned premium in the amount of $1,213.60. Based upon an alleged mathematical error by the automobile dealer who issued the refund on Resource's behalf, Buckner did not receive the entire amount she was owed.
The underlying issue in this case was whether Resource's failure to refund unearned premiums constituted a breach of the insurance contract and / or constituted a negligent or wilful breach of a legal duty owed its insureds.
To be clear; a credit life insurance policy pays the insured's car loan in the event of the insured's death; a credit disability policy makes an insured's payments on such a loan during the time the insured is totally disabled.
The record for the court to review showed that Resource credit insurance policies were sold by automobile dealers, who acted as Resource agents. The term of any given policy was synonymous with the term of the loan it covered - i.e., the insurance is in effect only so long as money remains due on the loan. Premiums are calculated based on the length of the loan. Rather than being paid on a quarterly, semi-annual or annual basis, however, these premiums were paid in their entirety, at the time the insured obtained his or her car loan.
In the event a loan terminated "early", the insured was, as a matter of law, entitled to a refund of the unearned premiums. Specifically, the "Resource Life Credit Insurance Guide," which was apparently provided to the automobile dealers that acted as Resource agents stated:
In the event an account is prepaid, a timely refund must be made. Under this circumstance, refunds are to be made without the Insured's written request. Notification of such pre-payment can be made directly by the lender or by reference to a debit on the reserve account statement.
With respect to "Cancellation Procedures," this Guide provided:
TERMINATION: Credit insurance is considered terminated when either the customer requests cancellation of the coverage or the loan is paid in full or refinanced for any reason before maturity. When Credit Insurance is terminated, a refund of unearned premium becomes due. It is the responsibility of the Group Policyholder / Agent to promptly compute and refund the unearned premium and prepare the necessary paperwork to notify the Insurance Company. FAILURE TO REFUND PREMIUM WHEN REQUIRED IS A VIOLATION OF INSURANCE LAW.
NOTICE OF CANCELLATION AND DISTRIBUTION OF REFUNDS:
Written notice by the Insured is not required to effect the cancellation when the indebtedness is paid in full or refinanced prior to the scheduled expiry date.
Dispite its legal obligation to refund unearned premiums, however, the Resource policies made such refunds contingent upon its receipt of written notice, either by or on behalf of the insured, that the insured was owed such a refund. Specifically, the policies provided, in relevant part:
Refunds: If the insurance stops before the end of the Term of Insurance, We will on written notice refund any unearned premium. We will pay it to the Creditor to reduce or pay off the Debt. Any remainder will be paid to You ... Refunds will be computed as of the date the insurance stops.
This case is based on Georgia law but Texas has law almost exactly the same. The Texas statute is found in the Texas Insurance Code, Section 1153.202.
These credit life and credit disability policies are often times the subject of litigation because many times the policy applications are filled out by salesmen whose only real goal is selling the policy so as to get a commission, rather than filling them out properly. If you have problems with one of these types of policies it is important that you seek the advice of an experienced Insurance Law Attorney as soon as possible.

Anyone in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, De Soto, Richardson, Garland, Mesquite, Burleson, or anywhere else in Texas, who purchases a disability insurance policy may be interested in the reasoning and interpretation of the following case.
On November 29, 2010, the United States Court of Appeals for the Fifth Circuit issued an opinion in the case styled, Bruce Leipzig, M.D. v Principle Life Insurance Company.
From a legal standpoint this case was won by Principle Life Insurance Company (Principle) at the trial court and then was appealed by Dr. Leipzig. He lost on appeal.
For starters, anyone having a disability claim denied should seek the advice of an experienced Insurance Law Attorney. Reading a case like this one will lend some insight into how the courts interpret disability insurance policies.
Here are some relevant facts:
Principle denied Leipzig's claim for disability insurance benefits. However, this was after he had been receiving the benefits for a while.
Leipzig is a 62 year old surgical otolaryngologist, or ENT, who maintains a practice in Brownwood, Texas, which has a population of 20,000. Brownwood also has 2 other surgical ENT's and patient demand is limited.
Leipzig purchase the Principle disability policy in 1993. The relevant part of the policy reads as follows:
A Member will be considered Disabled if, solely and directly because of sickness, injury, or pregnancy ... one of the following applies:
(a) The member cannot perform the majority of the Substantial and Material Duties of any Gainful Occupation for which he or she is or may reasonably become qualified based on education, training, or experience.
(b)The Member is performing the Substantial and Material Duties of his or her Own Occupation or any occupation on a Modified Basis and is unable to earn more than 66 2/3% of his or her Indexed Predisability Earnings.
The plan defines the term "Substantial and Material Duties" to mean "the essential tasks generally required by employers ... in a particular occupation that cannot be modified or omitted." The Plan defines "Own Occupation" to mean "the occupation the Member is routinely performing ... as performed in the national economy." And finally, "Modified Basis" means "working to his or her full medical and vocational capacity on a part-time basis."
In 2005, Leipzig was diagnosed with double vision and crossed eyes. By April 2006, he had ceased performing surgery and sold his practice. Principle approved his disability claim effective June 15, 2006.
In February 2007, Leipzig resumed work on a limited basis and Principle continued pay on a reduced basis.
In September 2007, a Dr's report was generated which stated Leipzig "is seeing patients in his office, so obviously he is not disabled performing all duties as a medical doctor." Shortly thereafter Principle ceased paying benefits effective June 14, 2008.
Principle informed Leipzig by letter that Leipzig did not meet the definition of "totally disabled," because he was capable of working full-time, and his income would be 100% of his pre-disability earnings if he did.
Principle said the only reason Leipzig was not working full-time was because there was not enough patients for him to justify full-time work and that did not qualify him for disability benefits.
The court focused on the words in the policy, "solely and directly", to imply that a claimant's "sickness, injury or pregnancy" must be the sole cause of his inability to earn more than 66 2/3% of his pre-disability earnings. Principle agreed that Leipzig was not earning that amount but insisted it was because of demand for his services and not because a disability kept him from the earnings.
In finding for Principle in this case the court stated, "The issue is whether Leipzig's medical condition can be considered the sole cause of his reduced income, or whether, instead, his inability to obtain full-time employment on account of local market conditions is a contributing factor. The plain meaning of the Plan language implies the latter. But for his inability to find full-time employment as a non-surgical ENT in Brownwood, Leipzig is capable of working full time and earning more than 66 2/3% of his pre-disability income. His inability to do that is therefore not "solely and directly" caused by his medical condition."
This case is much longer than appears here and a reading of it gives more insight into how the courts interpret these disability insurance policies.

Suicide by someone in Arlington, Dallas, Fort Worth, Grand Prairie, Keller, Roanoke, Aledo, Burleson, Granbury, or anywhere else in Texas. Does that negate an insurance policy?
The first thing anybody should know about life insurance and suicide is that if life insurance benefits are denied because the cause of death was a suicide, the intended beneficiary should seek the advice of an experienced Insurance Law Attorney.
The Texas Insurance Code, Section 1101.055(b), says in part:
"A life insurance policy may provide for a 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; ..."
As stated in the 1982 Houston Court of Appeals [14th Dist] case, Parchman v. United Liberty Life Insurance Company, "Life insurance policies typically exclude suicide as an assumed risk." In the Parchman case, the policy excluded suicide as an assumed risk for two years from the policy date and provided a reduced benefit of the return of all premiums paid if death resulted from suicide within that period.
In the 1986 Amarillo Court of Appeals case, Southern Farm Bureau Life Insurance Company v. Dettle, another example is provided for the law saying a life insurance policy can deny or limit benefits when the cause of death is suicide. In Dettle, Southern Farm Bureau Life Insurance Company denied benefits and the court upheld their decision. The policy at issue said: "If the insured within two years from the date of issue of this policy shall die by his own hand or act whether sane or insane, the liability of the Company shall be limited to an amount equal to the premiums actually paid, without interest."
When a denial of benefits is challenged by an intended beneficiary and a lawsuit is filed, the result could be that a jury ultimately decides whether or not the death actually resulted from a suicide or some other reason. If this happens then the jury, in reaching its decision is given a definition of suicide by the Judge of the court. In the Dettle case, the court ruled that the court's definition of "suicide" should include an "intentional" component.
The rational of this ruling in Dettle was that in the case the Judge commented that if the court charge in the policy language (If the Insured ... shall die by his own hand or act whether sane or insane") and if the policy language were interpreted literally, the insurance company could avoid liability even in instances of pure accidents; for example, a pure accidental death at one's own hand would be excluded by a literal interpretation of the policy language.
From a legal standpoint, there is a presumption against a person having taken their own life. This legal presumption may be rebutted, and if rebutted, then a jury gets to decide. Because suicide is a defense for the insurance company, the insurance company has the burden of proof in these types of cases. This was the ruling in the Beaumont Court of Appeals in 1988, in the case, Massachusetts Indemnity & Life Insurance Company v. Morrison.
In the Morrison case, Morrison died in a one-car collision with a tree. There was evidence that Morrison was depressed, had health problems, and had trouble at work. A suicide note was found. On the other hand, there was conflicting evidence on whether the note was in Morrison's handwriting, and there was expert terstimony that it would have been extremely difficult for Morrison to intentionally drive his car into the tree. The conflicting evidence allowed the jury to find Morrison's death did not result from suicide.

Here's a question someone in Fort Worth, Dallas, Arlington, Grand Prairie, Mansfield, Lake Worth, Azle, Grapevine, or anywhere else in Texas might ask. When is someone considered dead for purposes of collecting on a life insurance policy?
Let's start with this. For an intended beneficiary under an insurance policy to collect death benefits the insured must be dead. But what if there is no body? Also doubt about the death may arise when there is uncertainty over the identity of a body. This was the case in a 1987 Texas Supreme Court case styled, Davidson v. Great National Life Insurance Company. This was also an issue in the 1892 United States Supreme Court case, Mutual Life Insurance Company of New York v. Hillmon.
Legal presumptions can aid in determining whether a death has occurred. In the Texas Civil Practices & Remedies Code, Section 133.001, some help is found. This section says, "Any person absenting himself for seven consecutive years shall be presumed dead unless it is proved that the person was alive within the seven-year period.
Section 133.002 states, "If a branch of the armed services issues a certificate declaring a person dead, the date of death is presumed to have occurred for all purposes as stated in the certificate. The certificate must be admitted in any court of competent jurisdiction as prima facie evidence of the date and place of the person's death."
In the above Davidson case, the insured traveled to Tel Aviv, leaving behind some questionable financial dealings. A badly disfigured body was found near the hotel where he was registered. His wife claimed the body was his, and she sought death benefits. The insurance company, Great National Life Insurance Company, asserted there was a conspiracy to commit fraud and to fake the insured's death. Relevant evidence included testimony from an Israeli police officer identifying photos of the body as being photos of the insured.
The second example, which is the Hillmon case from above, was that Hillmon headed west but never returned. Someone's body was buried, and there was some evidence that the body was Hillmon. There was also evidence that the body might have been Walters. The jury found for Hillmon's wife. The United States Supreme Court held that the insurers should have been allowed to introduce letters from Walters showing his intent to travel with Hillmon, because that tended to corroborate the idea that the body was Walters.
The seven year statute becomes relevant and the 1945, San Antonio Court of Appeals case, American National Insurance Company v. Dailey, makes for interesting reading. The opnion in that case reads in part, "An honored and upright citizen, who, through a long life, has enjoyed the fullest confidence of all who knew him, -- prosperous in business and successful in the accumulation of weath; rich in the affection fo wife and children, and attached to their society; contented in the enjoyment of his possessions, fond of the association of his friends, and having that love of country which all good men possess, -- with no habits or affections contrary to these traits of character -- journeys from his home to a distant city and is never afterward heard of. Must seven years pass, or must it be shown that he was last seen or heard of in peril before his death can be presumed? No greater wrong could be done to the character of the man than to account for his absence, even after the lapse of a few short months, upon the ground of a wanton abandonment of his family and friends. He could have lived a good and useful life to but little purpose, if those who knew him could even entertain such a suspicion. The reasons that the evidence above mentioned raises a presumption of death are obvious; absence from other cause, being without motive and inconsistent with the very nature of the person, is improbable."

Victims of crime in Dallas, Fort Worth, Arlington, Grand Prairie, Mansfield, Bedford, Hurst, Euless, Burleson, Granbury, or other places in Texas might wonder, What happens if I get injured when I am the victim of a crime? The answer is a lawerly answer: It depends.
The Pittsburg Tribune-Review published an article on December 1, 2010, that gave some insight into a possible answer to the above question. The article was authored by Rich Cholodofsky and is titled, "Firm Denies Benefits To Mt. Pleasant Township Family of Slain Samaritan."
According to the article, an Erie insurance company asked a Westmoreland County judge for permission to withhold benefits to the family of a Good Samaritan who was shot to death as she tried to assist the wife and daughter of her alleged killer.
The Erie insurance company is Erie Insurance Exchange. Erie says the policy benefits should not have to be paid because the policy which is an automotive insurance policy, does not cover the type of loss incured by the insured. The insured, Stacey Feiling of Mt. Pleasant Township was killed after being shot in the face. She was driving her car when she was flagged down by an injured woman seeking help. The woman and her 16 year old daughter had been shot by her husband, who has since been charged with 1st degree murder and other offenses.
Erie says the benefits should be rightfully denied because the death of Stacey Feiling did not arise out of the use or maintenance of a motor vehicle or from a motor vehicle accident and resulted from the use of a weapon. This was the language in the policy. Because of this the estate of Stacey Feiling are precluded from recovering first-party benefits according to Erie.
In this case the insurance laws of the State of Pennsyvania will apply.
This blog deals primarily with Texas insurance laws. Based on the facts described in the article in the Pittsburg Tribune-Review, Texas law would probably not allow recovery for the death of Stacey Feiling. However, this is a general statement and no one should walk away without making the claim for benefits. Consultation with an experienced Insurance Law Attorney is vital before giving up.
In Texas, the Texas Supreme Court has already ruled in a case wherein the claimant was a passenger in a vehicle when the claimant was injured in a drive-by shooting. The insurance company denied first-party insurance benefits and the Texas Supreme Court ruled in favor of the insurance company when they upheld the denial of benefits.
In another case involving a shooting the courts in Texas allowed a claim for first-party benefits. The facts in that case were that a child was climbing into a pickup truck when he accidently caused a gun in the pickup truck to discharge and cause injury.
What is relevant is that each case has it's own fact pattern to be looked at and in conjunction with the facts of any given case the policy language has to be carefully read to see if there are any benefits that may be available to the claimant.

Young athletes in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, Irving, Cleburne, Mesquite, Garland, Weatherford, and other places in Texas, usually have some sort of insurance coverage in case they get injured when involved in school sporting events. But exactly what does this coverage provide?
A student athlete in Clark County School District in Nevada, is finding the answer to be "not enough." This is in an article published by the Las Vegas Sun and written by Steve Green. The article, titled, "High School Football Injury Sparks Lawsuit Over Insurance Coverage" was published on December 1, 2010. The athlete is LaQuan Phillips, who was a Green Valley High School football player who got injured in a game on September 5, 2008. Phillips suffered a spinal injury and has incurred more than $195,000 in medical expenses, which does not include future medical expenses and rehabilitation recommended by his medical providers. This figure also does not include compensation for Phillips pain and suffering and/or lost quality of life.
The insurance policy at issue in this case was issued by National Union Fire Insurance Company of Pittsburg, Pa. The policy is issued to the school district and is suppose to cover student athletes, cheerleaders and students in non-sports extracurricular activities and provides up to $2.5 million in coverage.
According to the article, attorneys for Phillips filed suit against National Union and the school district after a demand was made for the policy limits of $2.5 million.
The lawsuit alleges breach of contract and the implied covenant of good faith and fair dealing. It also charges a violation of the state Unfair Claims Practices Act, saying "defendant violated (a) fiduciary duty to plaintiff by seeking and interpreting medical evaluations of the plaintiff's condition in a manner best calculated to deny benefits, and failing to look to facts and interpretations which would enable a finding of coverage."
The school district was hit by a claim of negligence for allegedly failing to ensure that a policy purchased for providing catastrophic coverage was structured to cover injuries other than - or less than - total paralysis of a limb or limbs.
Both defendants were also accused of "unconscionability" for knowing that students and parents would have no advance knowledge of the policy's coverages, exclusions and deductibles, but nonetheless defined terms in the policy in "impermissable and unconscionably narrow and restricted ways, resulting in premiums being paid for insurance which would pay no benefit for injuries reasonably understood to be paralyzing or 'catastrophic', thereby creating an illusion of coverage where none existed."
As a side note, in Texas, the Texas Business & Commerce Code, Section 17.45(5) defines "Unconscionable action and course of action" as "means an act or practice which, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree."
The case described in the Las Vegas Sun article deals with Nevada law.
The insurance company lawyers are currently concentrating on getting the case moved to Federal Court.
The school district says that Phillips is trying to impose a duty on the school district that the law does not impute to them.
The essence of what is to be drawn from this case is this. A person has got to understand what protections are provided by them in any insurance policy they have or that another, such as the school district has, that may provide coverage for them. A copy is usually easy to get and if it is not easy to read then an experienced Insurance Law Attorney should be consulted. It is hard to say what the outcome of this case may be and of course it is Nevada law, not Texas law, that will be applicable to the case.

Ask someone in Dallas, Fort Worth, Arlington, Grand Prairie, Mansfield, Duncanville, Azle, Crowley, Cedar Hill, Saginaw, Flower Mound, or any other place in Texas, what an insurable interest in a life insurance policy is, and the chances are that they will not be able to tell you. This has been discussed in a couple of earlier blogs.
As stated before, those who have an insurable interest in the life of another falls into three general classes:
1) one so related by blood or affinity that he or she wants the other to continue to live, irrespective of monetary considerations;
2) a creditor; and
3) one having a reasonable expectation of pecuniary benefit or advantage from the continued life of another.
Well, what about corporations? Do they have an insurable interest?
The answer is yes, according to the Texas Supreme Court. They decided a case in 1942, wherein that was the answer. The case is, McBride v. Clayton. The court said corporations may name themselves beneficiaries of policies they buy on the lives of their important officers, directors, and stockholders, but that insurable interest does not survive the relationship that created it, and if the relationship has been terminated or the business entity no longer exists, the proceeds go to the insured's estate. This was also held to be the case in the 1998, Tyler Court of Appeals case, Stillwagoner v. Travelers Ins. Co. Historically, this type of insurance has been called "key man" coverage, because the business has an economic interest in those officers, directors, and shareholders that are "key" to the operation of the business.
Also stated in the Stillwagoner case, a corporation does not have an insurable interest in all its officers and employees, only those of "extensive experience and skill on whom the corporation depended for its continued success."
The Texas Supreme Court has also said that a tenant holding property or an estate during the life of another has an insurable interest in the latter's life. For this example, see, Empire Life Ins. Co. v. Moody, decided by the Texas Supreme Court in 1979.
But what happens if the insurance company finds out the insured did not an insurable interest? Does the insurance company get away without having to pay? This was answered in the Stillwagoner case and an 1894 Texas Supreme Court case.
The answer is, no the insurance company does not get away without having to pay on the policy. In saying this, Texas courts have said generally that while Texas law requires that the designated beneficiary have an insurable interest, it is not essential to the validity of the contract, and the insurance company may not raise the beneficiary's lack of an insurable interest as a defense to payment. When an insurer issues a policy to someone without an insurable interest, the insurer still must pay, and the law will decide who gets the proceeds.
As recently as 2009 there were many thousands of disputes about whether or not someone was entitled to the proceeds of a life insurance policy. When, or if you find yourself in a position regarding who should receive the proceeds, you should consult with an experienced Insurance Law Attorney.

Business people in Dallas, Fort Worth, Arlington, Grand Prairie, Mansfield, Keller, Coppell, Irving, Mesquite, Garland, Richardson, or anywhere else in the State of Texas might want to read the case below. It illustrates why it is important to know what your commercial insurance policy covers and how to interpret it.
The United States Court of Appeals for the Fifth Circuit issued a decision on November 24, 2010, in a case styled, Atlantic Casualty Insurance Company v. Horatio Gonzalez. This is appeal from a district court where the district court had ruled in favor of the insurance company. This appeals court upheld the ruling of the district court.
In this case Atlantic Casualty Insurance Company (Atlantic) insured PV Roofing Corp. (PV). PV was sued by Gonzalez when Gonzalez was injured at a site where PV was performing roofing work.
In this case there was uncontroverted evidence in the record that shows PV engaged Bernardo Mejia as an independent contractor to complete a job for PV. Mejia was a personal friend of Gonzalez. On the day of the accident, Mejia went to do his final inspection at the job site and took Gonzalez with him. Mejia got on an aluminum ladder to make a repair. When he finished, he climbed down the ladder and moved around the house to make another repair. Gonzalez followed him with the ladder. Mejia asked Gonzalez to hand him the ladder; when Gonzalez did so, it came into contact with a high voltage power line and Gonzalez was electrocuted. Gonzalez was not paid by Mejia or PV for any services, and PV was not aware that Gonzales would be at the job site.
Atlantic argued that they had no duty to defend or indemnify. This arguement was based on the policy exclusion which states:
This insurance does not apply to:
(i) "bodily injury" to any "employee" of any insured arising out of or in the course of:
(a) Employment by any insured; or
(b) Performing duties related to the conduct of any insured's business
(ii) "bodily injury" to any "contractor" arising out of or in the course of the rendering or performing services of any kind or nature whatsoever by such "contractor" for which any insured may become liable in any capacity ...
The definitions part of the policy stated:
"Employee" shall include, but is not limited to, any person or persons hired, leased, loaned, contracted or volunteering for the purpose of providing services to or on behalf of any insured, whether or not paid for such services and whether or not an independent contractor.
As used in this endorsement, "contractor" shall include but is not limited to any independent contractor or subcontractor of any insured ... and any and all persons working for or providing services and or materials of any kind for these persons or entities mentioned herein.
In making its ruling in this case the court stated as follows:
The question in this case is whether Atlantic's policy excludes coverage to PV for Gonzalez's claim based on the exclusion. Although Gonzalez alleges that he was not an employee or a contractor, there are no facts supporting the allegations.
The Gonzalez allegations "contain no facts describing what Gonzalez was actually doing when he was injured, or the nature of his relationship with PV or Mejia."
Gonzalez testified that he does not remember what happened after arriving at the job site with Mejia. According to Mejia, Gonzalez moved the ladder at Mejia's request so Mejia could make a roof repair as part of his subcontracting work for PV. This has not been contested.
The court then said that despite Gonzalez's arguements that he was not an employee of PV because he received no payments from Mejia or PV, had no relationship with PV, and did not volunteer to help PV, we agree with the lower court that Gonzalez fell within the broad definition of "employee" in the policy's exclusion. Under this policy, a person is an "employee" if he is "volunteering for the purpose of providing services to or on behalf of any insured." Gonzalez "volunteered" to help Mejia. The policy does not require that Gonzalez have a direct, formal relationship with PV for his actions to qualify as a service "to or on behalf of" the insured. As a volunteer who was performing a service on behalf of PV, Gonzalez was an "employee", and the "employee" exclusion effectively excluded coverage to PV for Gonzalez injury.
These policy interpretation cases can be confusing and are always fact specific and policy language specific. Only an experienced Insurance Law Attorney can provide guidance on how these case will turn out.

Buyers in Dallas, Fort Worth, Grand Prairie, Arlington, Irving, Garland, DeSoto, Cedar Hill, Burleson, North Richland Hills, Hurst, Euless, Bedford, and any other place in Texas can find themselves being taken advantage of by a company they have purchased a product or service from. It appears that even a well known and respected company like Dell Computers will cheat a consumer and do it in a calculated way when they think they can get away with doing it.
This is illustrated in an article published in The New York Times. The article was published on November 18, 2010, and was written by Ashlee Vance. The title of the article is, "An Unsealed Lawsuit Indicates Dell Hid Faults of Computers."
The article starts out; "Documents unsealed Thursday in a three-year-old lawsuit against Dell have raised more questions about how the company handled an unprecedented number of faulty computers sold to governments, schools, and corporations from 2003 to 2005."
A Federal District Court in North Carolina unsealed hundreds of documents linked to a lawsuit filed by Advanced Internet Technologies that had accused Dell of trying to hide defects in its desktop computers from customers.
The article tells of governmental organizations and large well known businesses who had problems with Dell computers.
The documents show how Dell had resisted informing many of its customers about the extent of the problem. Despite widespread reports from the field, Dell salespeople and technicians were encouraged to keep customers in the dark about the known defects that left computers inoperable.
It appears Dell refused to recall systems and did what it called "proactive field replacements" for customers that met certain sales and failure rate thresholds.
As to the problems themselves, they appear to have been problems with the motherboards and capacitor issues. There also appears to have been data loss issues.
Dell says they have fixed the problems and in 2005 Dell took a $300 million charge tied to the cost of fixing and replacing troubled computers.
As for Texas consumers - The Texas Deceptive Trade Practices Act is a remedy for people and businesses (consumers) who find themselves being wronged by a company like Dell. The Texas DTPA, Section 17.45(4) defines consumers as ... "an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the term does not include a business consumer that has assets of $25 million or more, or that is owned or controlled by a corporation or entity with assets of $25 million or more."
Most people understand that when they as individuals are taken advantage of they can pursue the business that took advantage of them. Fewer people understand that even if they are a business entity, they also can pursue those who take advange of them, by using the DTPA as long as their assets are less than $25 million.
What is important about being able to pursue a legal remedy by way of the DTPA against a company that is deceptive and or cheats you in a business transaction is that the remedies available by way of the DTPA have more "bite" or strength than normal "breach of contract" claims or "negligence" claims that were available prior to adoption of the DTPA.
Section 17.50(b)(1) allows recovery of mental anguish damages when the illegal acts committed are found to be committed knowingly. If the acts are found to be committed intentionally then the consumer may be awarded up to three times his actual damages and mental anguish damages. Section 17.50(d) orders recovery of court costs and attorneys fees.
Bottom line is that the majority of the time that a consumer is taken advantage of by a company in selling its product or service, there is a remedy availble to the consumer. All one needs to do is seek out an attorney experienced in handling these types of matters.