Dallas Fort Worth Insurance Lawyer Blog

Homeowners in the Dallas, Fort Worth, Grand Prairie, Arlington, and Metroplex areas are not as affected by what appears to be a mass settlement for homeowners in the Gulf Coast area of Texas. But it is still a victory, and a victory for one should be considered a victory for all when the insurance company finally does the right thing by accepting responsibility for the homeowners policies it issues.
The Beaumont Enterprise, a newspaper published in Beaumont, Texas, recently ran an article disussing the above topic. The article is written by Mike D. Smith and was published on July 13, 2010. The title of the article is, Mass settlement offered in Ike windstorm cases.
The article tells how the wait could be over for countless Bolivar Peninsula property owners locked in a group stalemate with the Texas Windstorm Insurance Association over Hurricane Ike damages.
It is interesting to note that the Texas Windstorm Insurance Association has been in the news recently for wrongs and improper practices it has been caught commiting.
According to the article, within the next month, homeowners involved in the insurance fight should get notices from their respective attorneys about whether they want to accept a slice of a $189 million "mass settlement" with the state windstorm insurance pool.
One attorney involved in the litigation stated that the offer is substantially more than what was previously offered in these cases.
The settlement involves "slab" cases, or buildings where Ike's winds and storm surge left little behind. Another attorney said the settlement would be a triumph for "slab" owners and the Galveston County economy.
It appears attorneys for the homeowners were able to counter arguements by the insurance industry of whether damage was caused by water or wind by using weather modeling and weather experts. The result of this being that the insurance association agreed to pay full negotiated amounts to the property owners and to pay attorneys fees.
"These slab claims were very complicated and numerous, and they required a great deal of time and analysis in determining the impact from wind and storm surge damage since Texas Windstorm Insurance Association policies only cover direct loss caused by wind," insurance association general manager jim Oliver said in a released statement. "We hope that this global resolution will help those families rebuild their lives and homes. TWIA recognizes the important role that windstorm coverage and the recovery of policy benefits will have on economic development in Galveston County, and we are proud to help this vibrant community and help ensure its stability during future storms." It is kinda ironic for them to be saying this now, after fighting it for so long.
It is reported that one of the above attorneys is still working about 5,000 Ike lawsuits mainly in the Houston and Galveston areas. After about a year of fighting, mediation is speeding up settlements on about 98 percent of those cases and are moving much quicker that the Hurricane Rita cases.
The main difference between the two storms is that Ike hit more heavily in a much more populated area.

No matter where you live - Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, De Soto, Duncanville, or anywhere else in Texas, you have to keep your eye on insurance companies. If you don't, they will cheat and try to get away with doing people wrong.
A few weeks ago on this blog there was an article talking about the Texas Windstorm Insurance Association. Well, they are back in the news.
One of our favorite reporters, Purva Patel, with the Houston Chronicle, did a follow up story on the Texas Windstorm Insurance Association. This article was published on July 7, 2010, and is titled, "State criticizes windstorm insurer." Purva Patel has had a number of articles describing wrongs committed by insurance companies. In the article published on July 7, about the Texas Windstorm Insurance Association, he writes about poor record keeping procedures that Texas Winstorm evidently does not have. Of course, this is wrong. The Texas Insurance Code, Section 542.005(b), says:
"An insurer shall maintain a complete record of all complaints received by the insurer during the preceding three years or since the date of the insurer's last examination by the department, whichever period is shorter. The record must indicate:
(1) the total number of complaints;
(2) the classification of complaints by line of insurance;
(3) the nature of each complaint;
(4) the disposition of the complaints; and
(5) the time spent processing each complaint."
According to Patel's article, the Texas Windstorm Insurance Association hasn't logged consumer complaints or complied with its own internal hiring procedures. This is from a report released by state regulators.
This is a Texas Department of Insurance report of TWIA's operations from January 2006 to December 2008.
The TWIA is a state-created insurance company that sells wind insurance coverage to coastal homeowners who can not buy it elsewhere. They have been the target of over 2,000 lawsuits over how it handled Hurricane Ike related claims.
Coupled with the above TWIA has been the subject of state investigations about allegedly deceptive claims handling practices.
TWIA is refusing to talk about the wrongs it is being accussed of.
Here are a couple of examples of complaints against TWIA:
Permitted conflicts of interest by hiring family members.
Did not have claims managers in the field to train adjusters and handle problems.
Did not update pricing guidelines.
This is one company with one little niche of the insurance market. There is no excuse for this behavior.
Any time someone is having to make a claim with an insurance company, it would be good advice to consult with an experienced Insurance Law Attorney. A little consultation can prevent a lot of heartache and trouble.

What can someone in Grand Prairie, Arlington, Mansfield, Bedford, Hurst, Euless, De Soto, Duncanville, Fort Worth, or anywhere else in Texas do when they are being "jerked around" by an insurance company? Answer number one - Find an experienced Insurance Law Attorney to consult with. Answer number two - file a complaint.
Seeking the aid of an experienced Insurance Law Attorney is sometimes hard to do. There are a lot of attorneys that help victims of accidents. These attorneys are usually referred to as Personal Injury Attorneys. These types of claims are called third party claims. The other type of claim is called a first party claim. This is a claim against your own insurance company. There are not that many attorneys that have experience in handling these types of claims. These attorneys are usually referred to as Insurance Law Attorneys.
The majority of the time an attorney is going to be able to get you the money you are entitled to plus more depending on how wrong the conduct of the insurance company has been in handling the claim. Consultations are usually free and there is nothing to lose by having an attorney look at your situation.
As to "answer number two", filing a complaint, the Texas Department of Insurance has a website that a consumer can go to for filing a complaint. After studying the complaint, the consumer protection division sends the insurance company a copy and asks for a detailed written response to the complaint. The Texas Department of Insurance is understaffed for properly supervising insurance companies but one way for an insurance company to get their attention is to not respond to the complaint. As a result a response is almost gauranteed. The problem is that once the response is received, very little else is done. As you could assume, the insurance company response is going to be self serving.
What next happens is the Texas Department of Insurance staff determines if the claim or any other issue was handled properly under the policy. Again, the response from the insurance company is self serving and there is little ever done.
The Texas Department of Insurance staff also reviews the file to assess whether laws were violated. Most these laws are found in the Texas Insurance Code. If violations are found, the department institutes an enforcement action that can result in sanctions ranging from a fine and restitution to revocation of the insurance company's state license.
As previously stated, usually nothing is done as long as the insurance company files a response. Failing to file a response results in an investigator going to the insurance company. Based on the response received, the normal outcome is that the department communicates with the person complaining saying that there seems to be an honest dispute between the person and the insurance company and that the person complaining should seek an attorney. Thus, we are back to answer number one.
It should be remembered that filing complaints is still important. If legal action by an attorney is commenced against an insurance company it sure helps the case for the attorney to be able to get his hands on copies of the complaints filed against the insurance company.

It would be fair to say that most residents of Grand Prairie, Arlington, Mansfield, Coppell, De Soto, Duncanville, Fort Worth, Weatherford, and all other places in Texas, are responsible and conduct themselves in fair and proper ways in their dealings with others. Unfortunately that is not the way insurance companies always conduct their affairs.
The Dallas Morning News recently ran an article showing misconduct by two insurance companies doing business in Texas. The article is titled, "2 Texas auto insurers top complaints list, face investigation." This article ran on June 5, 2010, and was authored by Terrence Stutz. Almost any experienced Insurance Law Attorney could tell you the names of the insurance companies that treat people right most of the time and the ones that treat people wrong most of the time. Further, even the "good" companies will do people wrong too many times.
In the article, Terrence Stutz gives some examples that are typical problems with the two companies named. The insurance companies are Loya Insurance and Old American County Mutual. These two companies were at the top of the list after an analysis of the Texas Department of Insurance figures showed that 10 of the 25 largest auto insurers in the state had worse than average customer service records. The above companies were at the top of the list.
One example cites where a driver, Larry Randal, was in an accident that was not his fault. His vehicle was sideswiped and forced off the road. The driver at fault had tried to flee the scene. Randal's damages were $1,700, but the insurance company, Loya Insurance, offered to pay only $270.
Another example cited in the article involved a hospital administrator who was offered a low ball figure for damages to her car that was more than a $1,000 less than was what was needed to fix her car even though the other driver admitted fault.
A third example showed a Loya insured driver running a stop sign and broadsiding a lady named Arlene Gillespie and her three year old daughter. The driver was suspected of drinking and ran from the scene, but dropped his wallet and cell phone allowing the police to determine his identity. She got the run-around from Loya who eventually compensated her for her car but still had not taken care of the leg injuries that were sustained in this broadside collision.
Other examples are cited in the article. All the examples are situations where the insurance company should just take care of the claim and allow the not at fault drivers to get on with their lives.
Complaints to the Texas Department of Insurance should not be discouraged but rarely will anything be done. The Texas Department of Insurance cannot make or force a company to pay a disputed claim if there is no violation of the law nor can they decide who is at fault. The only positive outcome to filing a complaint is that records are kept and this information is then available to other prople and sometimes can be used in litigation against these companies.
It is companies like this, conducting their business with total disregard of the consequences to those who are harmed by their conduct, that force victims to seek legal help in situations that should be worked out without the need of seeking an attorney.

What if you live in Grand Prairie, Arlington, Mansfield, Weatherford, Fort Worth, or anywhere else in Texas and you do not have the insurance coverage you think you have? Can the insurance company still be liable for bad faith?
Different courts have said that because the absence of coverage provides a reasonable basis to deny the claim, the general rule is that the absence of coverage also negates liability for breach of the duty of good faith and fair dealing. This was stated by the Texas Supreme Court in 1995, in the case, Republic Insurance Company v. Stoker, and again in 1996, by the Texas Appeals Court in Houston [1st Dist.], in the case, North American Shipbuilding, Inc. v. Southern Marine & Aviation Underwriting, Inc.
But there are other important rulings where the courts have stated that the absence of coverage, does not necessarily excuse the insurance companies failure to investigate. This raises the possibility that an insurance company may be liable for breach of its duty of good faith and fair dealing, even though the claim is not covered. In the case, First Texas Savings Association v. Reliance Insurance Company, a 1992 case, decided by the Federal 5th Circuit Court of Appeals, the court remanded the case to the trial court to determine whether the duty had been breached, even though the court found no coverage. Later cases have continued to recognize the possibility of bad faith liability without coverage. One was another 5th Circuit case, Burditt v. West American Insurance Company, decided in 1996. Another was Jimenez v. State Farm Lloyds, a 1997 case decided by the Federal Court in the Western District of Texas.
Some courts have limited this possibility to cases where the insurance company commits "some extreme act that causes injury independent of the policy claim and arises to the level of bad faith." This was stated by the Dallas Court of Appeals in 1996, in the case, Howard v. INA County Mutual Insurance Company. This was also stated by the San Antonio Court of Appeals in 1996, in the case Tivoli Corp. v. Jewelers Mutual Insurance Company. Also interesting is the case, Toonen v. United Service Automobile Association, another San Antonio Court of Appeals, case decided in 1996. In Toonen the court found there was no breach of the duty of good faith and fair dealing absent breach of contract, without evidence of an extreme act act causing injury independent of the policy claim, or failure to timely investigate the insured's claims.
These types of cases are further examples why an experienced Insurance Law Attorney needs to be consulted. There is no way of being sure of whether or not the insurance company has breached its duty of good faith and fair dealing without a complete investigation and review by an attorney who handles these matters.

An earlier question on this blog was, How does someone in Grand Prairie, Dallas, Fort Worth, Arlington, Keller, Azle, Coppell, Sasche, Bedford, or anywhere else in Texas know if they are experiencing conduct of bad faith by their insurance company? Let's look at the current standard for judging this issue.
In 1997, the Texas Supreme Court, issued an opinion in the case, The Universal Life Insurance Company, AIA Services Corporation, and AIA Insurance, Inc. v. Ida M. Giles. In this case the court adopted as the liability standard the statutory language in Article 21.21, Section 4(10) of the Texas Insurance Code. (The current version is Texas Insurance Code, Section 541.060(a)(2)(A)). Under that standard, an insurance company breaches its duty of good faith and fair dealing by "failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear."
This statutory standard adopted in the Giles case takes the place of the common-law standard for unreasonable denying a claim or unreasonably delaying payment. The court's analysis in the Giles case also supports adopting the statutory standard for failing to conduct a reasonable investigation. That standard is found in the Texas Insurance Code, Section 541.060(a)(7), which prohibits "refusing to pay a claim without conducting a reasonable investigation with respect to the claim."
Section 541.060 of the Texas Insurance Code is titled, "Unfair Settlement Practices" and any violation of the provisions found within this statute are probably violations of the insurance companys duty of good faith and fair dealing to the people and businesses it insures.
The same arguement can be made regarding Section 541.061, which is titled, Misrepresentation of Insurance Policy.
Furthermore, violations of Subchapter A, titled, "Unfair Settlement Practices", lists lots of actions and inactions that can get an insurance company in trouble. These statutes start at 542.001.
Another section of the Insurance Code, that when violated by an insurance company can be considered bad faith, is Subchapter B, titled, Prompt Payment of Claims Act, and starts at Section 542.051 and goes through 542.061.
A reading of the Giles case and scanning the statutes listed above will give someone a small understanding of how the laws related to the duty of good faith and fair dealing works in Texas. But the only way to be sure is to consult with an experienced Insurance Law Attorney. As in almost all matters legal in nature, a good understanding of the facts in a particular situation have to be looked at along with a careful reading of the applicable statutes and case law in order to properly advise someone on a course of action.

How does someone in Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, Keller, Azle, Coppell, Sasche, Bedford, or anywhere else in Texas know when the insurance company is acting in "bad faith"? The answer is not easy, but to understand, it helps to know the history a little.
When reviewing the theory of the duty of good faith and fair dealing, understanding the history aids in understanding its current form. But first, when in a situation where you suspect something "ain't right", you should consult an experienced Insurance Law Attorney. Even experienced attorneys will argue over this theory and how it applies to the facts of a particular situation.
The Texas Supreme Court, in 1983, in the case, English v. Fischer, is where the development of the common-law duty of good faith and fair dealing in Texas began. There, the plaintiff's asked the court to recognize an implied covenant, or promise, of good faith and fair dealing that would require the insurance policy proceeds to be paid contrary to the terms of the contract. The court declined. But, the justices on the court pointed out that in other circumstances a duty of good faith and fair dealing arises from a special relationship between the parties. Insurance was one area where such a duty had been recognized.
After the ruling above, some lower courts then recognized this common-law duty of good faith and fair dealing. This happened in the case, Aetna Cas. & Sur. Co. v. Marshall, which is a 1987, Court of Appeals, Houston [1st Dist.] case.
Eventually, in Arnold v. National County Mutual Fire Insurance Co., the Texas Supreme Court held there is a duty of good faith and fair dealing, which is breached, or broken, when the insurance company denies or delays payment of a claim with no reasonable basis or fails to determine whether there is a reasonable basis. The basis for recognizing this duty was stated this way:
In the insurance context a special relationship arises out of the parties' unequal bargaining power and the nature of insurance contracts which would allow unscrupulous insurers to take advantage of their insureds' misfortunes in bargaining for settlement or resolution of claims. In addition, without such a cause of action insurance companies can arbitrarily deny coverage and delay payment of a claim with no more penalty than interest on the amount owed. An insurance company has exclusive control over the evaluation, processing and denial of claims. For these reasons a duty is imposed that "an indemnity company is held to that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business."...
Later, in 1988, the Texas Supreme Court, in the case, Aranda v. Insurance Company of North America, restated the above elements to recognize a cause of action when there is no reasonable basis for denying benefits and the insurance company knew or should have known that there was not a reasonable basis for denying or delaying payment of the claim.
In 1994, in Union Bankers Insurance Company v. Shelton, the Texas Supreme Court expanded the duty to include liability for canceling a policy without a reasonable basis for doing so.
Over the following years, the courts struggled with how to look at and review these cases. When reviewing courts found any evidence of a reasonable basis for denying the claim, a jury verdict finding a breach of the duty of good faith and fair dealing would be reveresed. This happened in the case, Lyons v. Millers Casualty Insurance Co., a 1993 case.
Finally, in 1997, the court reevaluated the theory in the case, Universal Life Insurance Company v. Giles. Read about this more on Saturday.

If you have an insurance agent in Grand Prairie, Arlington, Mansfield, De Soto, Aledo, Duncanville, Bedford, Fort Worth, Weatherford, or anywhere else in Texas, you might wonder if the guy was being completely honest with you when he sold you the insurance policy on your car or auto.
Lawyers.com defines false representation as an untrue or incorrect representation regarding a material fact that is made with knowledge or belief of its inaccuracy.
In the Texas Supreme Court case, DeSantis v. Wackenhut Corp., a 1990 case, the court said a false representation must involve an existing or past material fact, rather than a statement of opinion, judgment, probability, or expectation in order to constitute actionable fraud. Statements concerning future events, sales talk, "puffing," and other similar statements are not considered actionable misrepresentations. This was stated by the Texas Court of Appeals in Tyler, in 1978, in the case, Hicks v. Wright. Similarly, representations concerning future events are not actionable unless at the time the statement or promise was made, the person making it did not intend to perform. This was stated by the Dallas Court of Appeals in 1976, in the case, Stone v. Enstam.
The Texas Insurance Code has a statute dealing with misrepresentations of insurance policies. Texas Insurance Code, Section 541.061, is titled "Misrepresentation of Insurance Policy." It says:
It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to misrepresent an insurance policy by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make other statements made not misleading, considering the circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or
(5) failing to disclose a matter required by law to be disclosed, including failing to make a disclosure in accordance with another provision of this code.
So now, what happens if false representations are discovered?
The 1977, Corpus Christi Court of Appeals case, Neuhaus v. Kain, says, anyone may sue for damages who has suffered injury in reliance on a misrepresentation made to them.
Next, the Fort Worth Court of Appeals, in 1960, in R.O. McDonnell Dev. Co. v. Schlueter, said that all persons who commit fraud are liable for the consequences of such fraud.
With regard to a principle - agency relationship, a principle may be held liable for the fraudulent representations of an agent if an agency relationship existed and if the acts committed by the agent were within the scope of the agent's authority. This was spelled out in a 1970, Houston [14th] Court of Appeals case, Pasadena Assoc. v. Connor. This means that not only is an insurance agent liable for his misrepresentations but so is the insurance company.
The best thing to do is seek the assistance of an experienced Insurance Law Attorney when you feel like you have had false representations made to you. All these situations are fact specific in determining whether or not there is a case worth pursuing.

How does a person in Grand Prairie, Arlington, Mansfield, Aledo, Burleson, Bedford, Euless, Lancaster, Hurst, Fort Worth, or any other city in Texas know when their insurance company or agent is committing fraud? The problem with fraud is that a person usually does not know when it happens.
USLegal defines fraud as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.
The Texas Supreme Court, in 1977, defined fraud in the case, Stone v. Lawyers Title Insurance Corp., saying:
A fraud cause of action requires proof of the following elements:
(1) a material representation was made;
(2) the representation was false;
(3) the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion;
(4) the speaker made it with the intention that it should be acted on by the party;
(5) the party acts in reliance upon it; and
(6) the party suffered injury.
In Stone, the purchaser of a tract of land sued Lawyers Title Insurance Corp. on an owner's policy covering the tract for damages sustained due to the failure of the policy to show pipeline easements as exceptions. The Court held the title-agency president's statement that "everything was squared away" constituted some evidence that he represented that there were no easements on the property. As a result, the Court found evidence of actionable fraud against the title agency and its president.
Another example of fraud is found in, Pankow v. Colonial Life Insurance Co. of Texas. This is a 1996, Amarillo Court of Appeals case.
In Pankow, Pankow sued Colonial Life Insurance Co. of Texas, a credit life insurer, after it failed to pay policy proceeds on grounds that the policy had not been reinstated before the insured's husband died. Pankow alleged that employees of Colonial misrepresented that the policy would be reinstated and that they would secure the transfer of monies from an escrow account to pay outstanding premiums. These were actionable representations, as they involved misrepresentations of a future act which could be performed in compliance with policy terms.
Celestino v. Mid-American Indemnity Co., is an example of a case where the court said there was not any fraud. This is a 1994, Corpus Christi Court of Appeals case.
In Celestino, an employer's excess policy contained an exclusion for punitive damages. The declaration page, which specified that the umbrella policy conferred one million dollars in excess employer's liabiity coverage, did not amount to a fraudulent misrepresentation merely because the Mid-American Indemnity Co. policy contained the punitive damages exclusion. Celestino alleged that, by virtue of the exclusion, the policy in essence provided no employer's liability coverage at all. But the court stated that it could not isolate a general provision within a contract and label it a misrepresentation merely because subsequent exceptions preclude the effect of that provision. Furthermore, the language of the exclusion was plain, and its placement was prominent.
With the examples given above, it can be seen that each case is fact specific and has to be looked at closely to see if the allegation of fraud applies.

How does the policyholder in Grand Prairie know if his insurance company is acting in bad faith? This same question might be asked in Arlington, Aledo, Mansfield, Fort Worth, or anywhere else in Texas.
When an insurance company denies a claim it should be obvious that there are times when they have a good reason for doing so. But how do you know if their reason is a good reason or not? What the courts ask or look for is, "proof that the insurance company had a reasonble basis to deny the claim, delay payment, or cancel the policy." Legally, this is often times called the "bona fide dispute" defense, an insurance company will use to escape some of the liability accusations that are tied to bad faith cases. Another way of putting this is, an insurance company is not liable merely for being wrong on a coverage issue, only for being unreasonable. Even an experienced Insurance Law Attorney will often times have trouble knowing for sure whether the actions and conduct of the insurance company rise to the level of bad faith. Some cases are easy to call, but some are not.
A Texas Supreme Court case, decided in 1994, styled, Transportation Insurance Company v. Moriel, states:
Evidence that merely shows a bona fide dispute about the insurer's liability on the contract does not rise to the level of bad faith ... Nor is bad faith established if the evidence shows the insurer was merely incorrect about the factual basis for its denial of the claim, or about the proper construction of the policy.
Here is an example where the Texas Supreme Court, in 1997, in the case styled, U. S. Fire Insurance Company v. Williams, said there was no bad faith. U S Fire Insurance Company was faced with competing claims for life insurance benefits. Nathaniel Williams married Essie Williams in 1957. They separated in 1978 but never divorced. From 1978 until his death in 1992, Nathaniel lived with Lessie, but they never married. When Nathaniel Williams died in a car wreck, the injury report identified his spouse as "Lessie." U S Fire determined that Essie was deemed to have abandoned Nathaniel, under Worker's Compensation laws, so they paid Lessie. When Essie filed a claim for benefits with the Worker's Compensation Commission, she ultimately prevailed. Essie then sued U S Fire for bad faith in denying her claim. The court concluded that there was no evidence of bad faith. U S Fire simply relied on an erroneous interpretation of the rule. U S Fire's interpretation was at least arguable, because they initially prevailed before the Worker's Compensation Commission.
Attorneys who have handled very many of these cases and who keep up with the new cases as they are decided, can discuss a persons specific facts and give a reliable opinion as to the probable outcome of a particular fact situation.

Who has "standing" to sue an insuance company for bad faith. Does someone living in Grand Prairie, Arlington, Mansfield, Keller, Colleyville, Fort Worth or Dallas?
USLegal defines "standing" this way:
Standing is the ability of a party to bring a lawsuit in court based upon their stake in the outcome. A party seeking to demonstrate standing must be able to show the court sufficient connection to and harm from the law or action challenged. Otherwise, the court will rule that you "lack standing" to bring the suit and dismiss your case.
The common-law duty of good faith and fair dealing extends protection to the insured, whether the insured obtained the coverage directly or coverage was obtained for the insured. The Texas Supreme Court, in Arnold v. National County Mutual Fire Insurance Co., recognized in 1987, a common-law duty of good faith and fair dealing owed to an insured, which arises from the "special relationship" established by the insurance contract. The court expanded this duty of good faith and fair dealing to a worker insured under a workers' compensation policy purchased by his employer in the 1988 case, Aranda v. Insurance Company of North America.
In the case, CNA Insurance Company v. Scheffey, the Texarkana Court of Appeals, in 1992, held that an insurance company does not owe a duty of good faith and fair dealing to third-party beneficiary. In this case, the third-party beneficiary was a treating physician. A similar result was found the same year by the Fort Worth Court of Appeals in, Transportation Insurance Company v. Archer, when they denied mental anguish damages to a spouse as the result of the insurance companies breach of its duty to an employee.
These cases can be contrasted with a decision by the Court of Appeals in El Paso, that in 1992, held that an insurer does owe a duty of good faith and fair dealing to a third-party beneficiary of an insurance policy. This was followed by another 1992 case decided by the Court of Appeals, Houston, 1st District, saying an HMO owes a duty of good faith and fair dealing to health care providers.
As can be seen, these cases can be all over the board on outcomes. An Insurance Law Attorney can usually distinguish the facts in these cases but even for an experienced attorney the reasoning can be confusing at times.

When a house burns in Grand Prairie, Arlington, Colleyville, Keller, Mansfield, Fort Worth, Azle, Aledo, or Weatherford, or anywhere else in Texas; What happens when the house catches on fire? Will the insurance company pay for the damages?
In, State Farm Fire & Casualty Insurance Company v. Simmons, the answer was no until the case went to court. At that point, State Farm Fire & Casualty Company (State Farm) was eventually ordered to pay the damages. This is a 1998, Texas Supreme Court case. In this case, the Simmons had moved into a new home and spent monies improving the property and buying items for the inside of the house. Their house had been burglarized in the middle of the day and later those responsible were located.
Mr. Simmons, a construction supervisor, had experienced down time from work and the Simmons had missed house payments. They later refinanced the house. They continued to experience problems with vandalism and other strange occurrances around the house.
Eventually, one day they left the house for a trip and the house burned down. They made a claim to State Farm for benefits. State Farm denied the claim. State Farm asserted that the Simmons burned down their own home on purpose.
The Simmons sued State Farm for breaching its duty of good faith and fair dealing, violations of the Deceptive Trade Practices Act (DTPA) and punative damages. The jury found in favor of the Simmons and awarded $275,000 in actual damages and $2 million in punative damages. The Supreme Court took away the punative damages.
In supporting the jury finding that State Farm violated its duty of good faith and fair dealing the court pointed out the following;
1) the earlier burglary claim, which State Farm said was suspicious, later the culprits were found and Mr. Simmons returned merchandise to State Farm that State Farm had paid for when the police returned it to Simmons, yet State Farm still considered this "suspicious."
2) State Farm refused to investigate for other suspects in the fire even when there was evidence that others may have been involved;
3) State Farm's claims supervisor conceded that State Farm's investigation was not properly conducted;
4) on expert testimony of eight reasons why people commit arson, six did not apply to the Simmons; the seventh had to do with people removing furniture and personal items from the property and even though they had taken some of the kids summer clothes out of the house, other items, some very personal in nature were not taken, and the eigth reason dealt with financial burdens. Here, the Simmons had always had problems but State Farm relied on the Simmons burden of a $1,343 monthly house payment. The evidence showed they had refinanced and that their actual burden was $540 a month less;
5) the Simmons mortgage obligation exceeded the policy limits on their homeowners insurance by several thousand dollars, thus leaving them still in debt;
6) conflicts in the investigation process which could have been addressed by talking to the Simmons were never resolved because State Farm did not talk with them.
The bad law in this case is the court setting a high standard for punative damages by way of the Texas Civil Practices & Remedies Code, Section 41.001.
The court did allow for the damages under the Texas DTPA, and remanded the case to the trial court for a finding on those damages.

There are homeowners in Grand Prairie, Arlington, Mansfield, Weatherford, Aledo, Fort Worth, and everywhere else in Texas. 95% of those homeowners have insurance. So how do you know if your insurance company is violating the "bad faith" laws in Texas?
Here is a 1997, Texas Supreme Court case to read to give some insight into the above question. The case is, State Farm Lloyd's v. Ioan and Liana Nicolau.
In the insurance claim giving rise to this dispute, the Nicolau sought coverage for extensive foundation damage to their home. The homeowners policy, issued by State Farm Lloyds, (State Farm) generally excludes losses caused by "inherent vice," or by "settling, cracking, bulging, shrinkage, or expansion of foundations." Under an express exception, however, these exclusions do not apply to losses caused by an "accidental discharge, leakage or overflow of water" from within a plumbing system.
The Nicolau suspected damages for an extended period of time and had it investigated before turning to State Farm. They hired a foundation repair contractor and a structural engineer with Maverick Engineering. After much time went by and numerous tests, they finally concluded the problem was the result of a substantial leak in the plumbing system.
State Farm, hired an adjuster with ABJ Adjusters, Inc., who submitted two reports expressing doubt about the foundation problem being the result of the plumbing leak. State Farm then hired Haag Engineering Company who did a report concluding that the leak was not causing the foundation problems. Based on this report State Farm denied the claim made by Nicolau.
The Nicolau then hired Trinity Engineering Testing Corporation (Tetco) who filed a professional and detailed report stating the foundation problem was the result of the leak and detailing why that conclusion was reached.
The Nicolau then sued State Farm, asserting breach of contract and several extracontractual claims based on State Farm's conduct. The jury found for the Nicolau and State Farm filed this appeal.
At the trial of this matter, evidence was introduced that Haag worked almost exclusively for State Farm. That they always found in favor of State Farm in ways to exclude coverage on the policy. That in the two cases where they had made finding against State Farm that the employees responsible for the findings were terminated.
In ruling in favor of the Nicolau the jury also assessed punative damages against State Farm. The Texas Supreme Court took away some of these punative damages but remanded the case to the trial court for findings of damages under the Texas Deceptive Trade Practices Act.
The relevance of this case is seeing how the appeals court looks at these bad faith cases to determine whether or not the insurance company has actually acted in "bad faith." An experienced Insurance Law Attorney is very helpful in understanding how the courts in Texas look at these cases. He can advise as to the best course of action to get a remedy for the wrongs that are committed.

What if a resident of Grand Prairie is involved in a wreck on his motorcycle with an uninsured driver? Any difference if he is a resident of Fort Worth, Arlington, or Dallas? Answer - not for anyone in Texas.
This is what happened in the 1987 case, Glen Arnold v. National County Mutual Fire Insurance Company. This Texas Supreme Court case is an insurance contract dispute. Arnold was severly injured when the motocycle he was operating was struck by an uninsured motorist. Arnold had uninsured motorist benefits protection on the policy he had with National County Mutual Fire Insurance Company (National). Arnold made a demand for payment and the independent adjusting firm hired by National recommended the claim be paid. In spite of this, National refused to pay.
Arnold sued and won a judgment exceeding the policy limits then sued National for breaching its duty of good faith and fair dealing.
National had refused to initially pay benefits because they believed that potential jurors would be prejudiced against Arnold because he was a "motorcyclist."
In this case, Arnold raised the issue of whether there is a duty on the part of insurers to deal fairly and in good faith with their insureds. The court held that such a duty of good faith and fair dealing did exist. The court stated, "While this court has declined to impose an implied covenant of good faith and fair dealing in every contract, we have recognized that a duty of good faith and fair dealing may arise as a result of a special relationship between the parties governed by a contract." This was stated in the 1984, Texas Supreme Court case, Manges v. Guerra.
The court further stated, "In the insurance context a special relationship arises out of the parties' unequal bargaining power and the nature of insurance contracts which would allow unscrupulous insurers to take advantage of their insureds' misfortunes in bargaining for settlement or resolution of claims. In addition, without such a cause of action insurers can arbitrarily deny coverage and delay payment of a claim with no more penalty than interest on the amount owed. An insurance company has exclusive control over the evaluation, processing, and denial of claims. For these reasons a duty is imposed that an indemnity company is held to that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business." This in part cites the famous Stowers case.
An expereinced Insurance Law Attorney is going to be familiar with this case and others like it. In this regard, he is in position to give advice on the facts he may be presented with by clients having difficulties with their insurance company.

Information residents of Grand Prairie, Keller, Azle, Arlington, Fort Worth, Mansfield, and other cities in Texas should know. Information about "bad faith" insurance.
The Texas Supreme Court, in 1997, adopted as the liability standard, the statutory language in Section 541.060(a)(2)(A), Texas Insurance Code, in the case, Universal Life Insurance Company v. Giles. Under this standard, an insurance company breaches its duty of good faith and fair dealing by "failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear."
The standard adopted in Giles takes the place of the common-law standard for unreasonably denying a claim or unreasonably delaying payment. Texas Insurance Code, Section 541.060(a)(7), which prohibits "refusing to pay a claim without conducting a reasonable investigation with respect to the claim," is also supported in the Giles case.
The state of the law now is that an insurance company may be in violation of its duty of good faith and fair dealing by:
1) failing to attempt in good faith to effectuate prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear. See, Universal Life Insurance Company v. Giles;
2) refusing to pay a claim without conducting a reasonable investigation with respect to the claim. Also, see Giles;
3) canceling a policy without a reasonable basis. See Union Bankers Insurance Company v. Shelton, a 1994 Supreme Court case.
For whatever it may be worth, the Court of Appeals, El Paso, has held that an insurer does not owe a duty of good faith and fair dealing to its insured in the calculation and payment of premiums. See Garrison Contractors, Inc. v. Liberty Mutual Insurance Company. This case was affirmed by the Texas Supreme Court in 1998, however, on other grounds.
One thing is certain, each of these cases have to be looked at on an individual basis and apply the current law to the fact situation. An experienced Insurance Law Attorney can look at the case, ask a few questions, and be able to give a reliable opinion as to the probable outcome of a case. The worst thing someone can do is, nothing.