Dallas Fort Worth Insurance Lawyer Blog

An insured in Weatherford, Mineral Wells, Aledo, Azle, Willow Park, Hudson Oaks, Brock, Millsap, Peaster, Cool, Springtown, or anywhere else in Parker County may wonder how much they are suppose to do to help the insurance company when a claim is submitted for coverage. The answer is - quite a bit.
As for homeowners policies in Texas, the form and wording of the majority of policies follow what is called the Texas Homeowners Policy - Form B ("HOB").
The HOB Policy requires that the insured cooperate with the insurer's investigation of the claim by promptly submitting notice of the claim, completing an inventory of the damaged property, providing access to the damaged property and records, and signing a sworn proof of loss form. These requirements on the insured constitute a condition precedent to coverage under the policy. A United States, 5th Circuit case styled, Griggs v. State Farm Lloyds, decided in 1999, said absent the insured's compliance with the conditions precedent to coverage, the insurer has no duty to provide benefits under the contract.
The standard HOB policy says:
Section 1 -- Conditions, Section 3 places the following duties on an insured after a loss:
Your Duties After Loss. In case of a loss to covered property caused by a peril insured against, you must:
(1) give prompt written notice to us of the facts relating to the claim;
(2) notify the police in case of loss by theft;
(3) protect the property from further damage;
(4) make reasonable and necessary repairs to protect the property;
(5) keep an accurate record of repair expenses;
(6) furnish a complete inventory of damaged personal property showing the quantity, description and amount of loss. Attach all bills, receipts and related documents which you have that justify the figures in the inventory;
(7) as after as we reasonably require:
(a) provide us access to the damaged property;
(b) provide us with pertinent records and documents we request and permit us to make copies;
(c) submit to examination under oath and sign and swear to it;
(8) send to us if we request, your signed sworn proof of loss within 91 days of our request on a standard form supplied by us. We must request a signed sworn proof of loss within 15 days after we receive your written notice, or we waive our right to require a proof of loss. Such waiver will not waive our other rights under this policy:
(a) This proof of loss shall state, to the best of your knowledge and belief:
(i) the time and cause of loss;
(ii) the interest of the insured and all others in the property involved including all liens on the property;
(iii) other insurance which may cover the loss; and
(iv) the actual cash value of each item of property and the amount of loss to each item.
(b) If you elect to make a claim under the Replacement Cost Coverage of this policy, this proof of loss shall also state to the best of your knowledge and belief:
(i) the replacement cost of the described dwelling;
(ii) the replacement cost of any other building on which loss is claimed; and
(iii) the full cost of repair or replacement of loss without deduction for depreciation.
What is important for people to know who find themselves in a situation where they are making a claim for benefits is that their duty to cooperate does not relieve the insurance company of the responsibilities they have to promptly and properly investigate the claim and pay damages. Nor does your duty to cooperate mean that you have to do the adjusters job for them. Someone who believes the claim process is not being handled properly and quickly should consult with an Insurance Law Attorney.

People in Weatherford, Mineral Wells, Aledo, Azle, Springtown, Willow Park, Brock, Hudson Oaks, Millsap, Cool, Peaster, Palo Pinto, and other places in Parker and Palo Pinto Counties may wonder: How long does the insurance company have to pay the claim?
The "Prompt Payment of Claims statute" is found in the Texas Insurance Code, Sections 542.051 thru 542.061.
The "Prompt Payment of Claims statute" imposes certain deadlines for an insurance company to acknowledge, investigate, and accept or reject a claim. An insurance company that violates the statute is liable for attorney's fees and an additional 18% per annum in addition to the amount of the claim.
The statute sets out the steps an insurer must follow when presented with a "first party" claim by an insured.
To recover a penalty under the statute act, an insured must establish that:
(1) the insured had a claim under an insurance policy;
(2) the insurer is liable for the claim; and
(3) the insurer has failed to comply with a requirement of the Act.
This was made clear in a 2001, Texas Supreme Court case styled, Allstate Insurance Company v. Bonner.
In the Bonner case, the Court considered whether an insurance company that did not comply with the claim acknowledgment deadline could be held liable under the statute even though the insurance company ultimately did not owe the claim. In that case, that insured was awarded less on her uninsured motorists claim that the insurance company had already paid in personal injury benefits. Nevertheless, Bonner argued that Allstate's violation entitled her to recover attorney's fees under the statute. The Court rejected this argument and held that for an insurance company to be liable under the Prompt Payment of Claims statutes, a party must establish the three elements listed above.
The Bonner case decision raises questions whether an insurance company can always disprove a claim thereby avoid liability for violating the statute, or whether the court's holding is limited to the circumstance presented in that case.
The statute's purpose is "to promote the prompt payment of insurance claims pursuant to policies of insurance." This per Section 542.054.
This statute, which was revised in 2005, made several changes compared to prior laws. It applies to more insurance companies and more kinds of insurance. It imposes more deadlines. It also imposes a bigger penalty -- 18% per annum, instead of a flat 12%. The statute was intended to enhance the protections for insureds and claimants, and strengthen the incentives for prompt claims handling by insurance companies.
An experienced Insurance Law Attorney is going to be needed to know whether or not the insurance company had violated the statute . The rule varies based on the type of claim and what the insurance company needs from the insured to properly investigate the claim. Many adjusters violate the provisions of this statute. These adjusters rely on the lack of knowledge most people have regarding the proper way for these claims to be handled.

If someone in Grand Prairie, Arlington, Crowley, Mansfield, Benbrook, Burleson, Keene, or anywhere else the metroplex area reads their homeowners insurance policy, they will probably find an appraisal clause. This clause usually, is for the benefit of the insurance company. As a result, getting around that clause is a good thing.
The United States District Court for the Southern District of Texas, Houston Division, issued an opinion on October 13, 2011, that is insightful for understanding at least one way of beating the appraisal clause. The style of the case is, Sidney Sam, et al. v. National Lloyds Insurance Company.
Sam and others (Plaintiffs) were insured under a Standard Flood Insurance Policy (SFIP) issued by Lloyds pursuant to the National Flood Insurance Program (NFIP). Plaintiffs' apartment building was damaged by flood waters following Hurricane Ike. Plaintiffs submitted their claim to Lloyds, which determined that the flood damage to the building and its contents would require repairs in the amount of $100,622.67. Plaintiffs submitted a request for supplemental payment in the total amount of $249,000, or an additional amount of $148,377.33 beyond the amount offered by Lloyds. The additional payment included $39,000 for the presence of a "Commercial Superintendent on the site for 3 months for commercial restoration." On April 21, 2010, Plaintiffs demanded an appraisal. On May 3, 2010, Lloyds denied the request. Plaintiffs filed a Motion to Compel Appraisal on September 15, 2011.
As analysis, this court cited a 5th Circuit ruling in the case, Dwyer v. Fidelity Nat. Prop. and Cas. Ins. Co. saying, "Congress created the NFIP to offer flood insurance at rates that were uneconomical for private companies." The Federal Emergency Management Agency (FEMA), which administers the program, has established the SFIP.
The SFIP includes an appraisal provision, allowing either party to demand an appraisal "of the loss" if they cannot agree "on the actual cash value or, if applicable, replacement cost of the damaged property to settle upon the amount of loss." This appraisal clause can be invoked only to resolve disagreements between the parties regarding the actual cash value or, if applicable, replacement cost of the damaged property. "Congress expressly limited the application of the appraisal clause to matters where coverage is not at issue and the only dispute remaining between the parties is the quantum of loss ...." Where the insured requests compensation for items that the insurer asserts are not covered by the SFIP, the dispute is outside the ambit of the appraisal clause.
In a Florida case cited by the plaintiffs, the Florida court noted that the insured both challenged the extent of damage to items which were admittedly covered and requested compensation for additional items. As a result the Court in that case held that the dispute was "outside the ambit of the appraisal clause." Similarly, in this case, there are disputes regarding how badly a covered item was damaged and whether it needed to be repaired or replaced, as well as disputes regarding whether other items - such as the presence of the commercial superintendent - are covered at all. This inclusion of a coverage dispute places the case outside the appraisal clause of the SFIP.
In another case, virtually indistinguishable from the present case, the insureds sought supplemental payment for several items, including reimbursement for packing and storing the contents of their residence. The insurer argued that packing and storing the contents of the residence were items not covered by the SFIP. The Court noted that the dispute regarding the packing and storing charges was a dispute over coverage for those charges and, as a result, held that the appraisal clause was not implicated.
This court then said that the request for packing and storing charges in that case is similar to this case. This case seeks reimbursement for the cost of having a commercial superintendent on the property for three months. As a result, Lloyds asserted that the SFIP does not cover this expense. The dispute is whether this expense is covered, not whether $39,000 is a reasonable cost for the superintendent. Because the parties do not agree about whether this item is covered, the dispute does not relate exclusively to the actual cash value of the loss or its replacement value and does not implicate the appraisal clause.
End result - the court refused to order appraisal.

Everyone in Grand Prairie, Arlington, Fort Worth, Dallas, Irving, Mesquite, Garland, Carrolton, Duncanville, De Soto, and other places through out Texas need to know how to make sure they get paid properly and fully when making a homeowners claim.
One way is to see an experienced Insurance Law Attorney early in the claim. Another way is to make sure you have good records of your possessions.
The Wall Street Journal published an article on October 13, 2011, authored by Lori Bennett. The title is "Accounting for Disaster: Itemizing Your Home."
The article tells us that while fire and theft are always concerns for homeowners, that Mother Nature has been the challenge this past year. Mother Nature has delivered blizzards, tornadoes, floods, a hurricane and even an East Coast earthquake. Can you remember?
The Insurance Information Institute statistics report that insured catastrophe losses for 2011 already exceeded $13.6 billion reported in 2010.
What one needs to know is the best way to be prepared for natural disasters when it comes to re-couping those losses, is to keep careful records of belongings. Keeping those records somewhere besides the home is better than keeping them in the home.
The article is informative in listing several web-sites that assist in keeping these records. When these records are kept on a web-site or "in the cloud" they are there when and if you need them.
An experienced Insurance Law Attorney will tell you to take photographs of everything of value in your home. To also have a video. The video should start outside your front door showing a picture of the front of the house. This captures those items that are in front of the house such as any lawn furniture, wreaths on the door, little welcome signs and such. Then enter the house, going room to room. Open closet doors, open cabinets, drawers, and anything and everything that may be closed or shut. Don't forget the basement and attic. Then go into the backyard and capture on the video everything that is outside. Also, do not forget the garage, storage buildings, and anything you may have on the side of the house.
What seems like small items that add up when making a claim for a total loss are items in the kitchen cabinets and pantries and under the kitchen sink and such. Think how much that little container of a special spice costs in the store. Think about the price of all those containers of spice that need to be replaced!
Then the bathroom. What do all those cosmetics cost?
As can be seen, there are lots of everyday items that you will loss in a fire or other catastrophic loss that you would have a hard time thinking about if a loss occurred.
But thinking of all the items that can be lost is only part of the consideration if you find yourself having to do this. The other part is placing a value on these items and proving the value to the insurance company. That is where keeping receipts and good records comes into play. An examination of credit cards and business records helps but having that receipt is great.
Lots of items you will not have receipts for. So what do you do? Well, get on the internet and start looking up the prices on those items at the stores where you buy them.
Before a loss ever occurs, your insurance agent should be able to sit down with you and evaluate the amount of insurance coverage you need. There are always going to be items that require special coverage, such as antiques, jewelry, firearms, etc., otherwise you may not get full reimbursement for these items even though you have proof or their existence and value.
A few of the web-sites listed in the article are lockboxer.com, knowyourstuff.org, stuffsafe.com and Quicken Home Inventory Manager. These are either free or relatively cheap.

Anyone in Grand Prairie, Weatherford, Fort Worth, Dallas, Arlington, Aledo, or anywhere else in Texas may ask the question which is the title of this post. The answer is not as easy as one would hope it to be.
The Texas Insurance Code has a subchapter titled "Prompt Payment of Claims." This subchapter consists of eleven sections. To answer the question of how long an insurance company has to pay a claim, the section has to be read with the applicable policy and then apply both to the facts of the case.
A 1998, Fourteenth District Court of Appeals case styled, John A Daugherty, Jr. v. American Motorists Insurance Company, deals with the question. The case was decided by the trial judge in favor of the insurance company and then the decision was upheld by this appeals court. Here is the story.
Daugherty purchased a 1994 BMW 740IL on January 12, 1994. The price, including taxes and fees totaled $64,678.97. The car was stolen on February 15, 1994. Daugherty promptly reported the theft to American Motorists. On February 25, 1994, he submitted an affidavit of vehicle theft to American in which he claimed a loss of $68,895.42.
After an investigation, the adjuster called Daugherty's bookkeeper on March 16, 1994, and informed her that American had determined the cash value of the stolen vehicle to be $62,931.14, less a $500 deductible. Daugherty was out of town and was not communicated the offer. The next day, the BMW was recovered in Florida and the adjuster called the bookkeeper and rescinded the offer. Daugherty did not learn of the offer until after it had been withdrawn.
The recovered BMW was returned to Houston on April 4, 1994. An inspection found several problems which were estimated to be worth $1,901.50, and tendered this amount to Daugherty.
Daugherty refused the payment. He then bought another BMW that was identical to the stolen one for $62,355.34. He took delivery on May 30 and continued to make payments on both vehicles all the way to time of trial.
Daugherty filed a lawsuit seeking the $62, 431.14, initially offered by American, as well as additional damages for violations of the Prompt Payment of Claims chapter of the Texas Insurance Code.
Daugherty's contention was that American effectively notified him it would pay his claim when, on March 16, 1994, it informed his bookkeeper it had determined the value of his stolen BMW. He further argued American was bound by the terms of the auto policy to pay him within 5 days after notification. American contended the communication of March 16 was merely an "offer" to pay. Because the offer was rescinded before it could be accepted, American claims it was not obligated to pay the sum.
The policy contained an amendatory endorsement which provided, in pertinent part:
1) If we notify you that we will pay your claim, or part of your claim, we must pay within 5 "business days" after we notify you.
2) If payment of your claim or part of your claim requires the performance of an act by you, we must pay with 5 "business days" after the date you perform the act.
The policy amendment tracks, and effectively incorporates, the mandatory provisions of the Insurance Code, Section 542.057.
Both the policy and the Insurance Code, Section 542.055, provide that within 15 days after a claim has been filed, the insurer is obliged to begin an investigation of the claim and to request all items, statements, and forms the insurer reasonably believes will be required from the insured.
In this case, American, within 15 business days of receiving all the necessary information and forms from Daugherty, to accept or reject his claim in writing, told Daugherty's bookkeeper it had calculated the losses. The court said that, "Whatever can be said of this communication, it does not appear to be a 'notice of payment of claim.'"
First, both the policy and the Insurance Code indicate that a "notice of payment of claim" must be in writing. The policy states:
After we receive the information we request, we must notify you in writing whether the claim will be paid or has been denied ...
If we notify you that we will pay your claim, or part of your claim, we must pay within 5 "business days" after we notify you.
Since there was a discrepancy between what Daugherty was seeking and what American estimated, the call from the adjustor to Daugherty's bookkeeper appeared to be more in the nature of an offer than a notification that American was going to pay the claim.
In conclusion the court said, even if we were to find that the communication of March 16, 1994, was a "notice of payment of claim," such notice was grounded upon the fact that Daugherty's car had not been recovered. The court pointed out that nothing in the Insurance Code or the policy prevented American from withdrawing its notice of payment if the facts and circumstances changed significantly. In this case, the the change of circumstances, i.e., the recovery of Daugherty's BMW, favored the insurance company because the loss was not as great as had been previously calculated. However, the court stated, it is just as conceivable that changing circumstances could have favored the insured.
This writer does not agree with the conclusion reached by the court in this case. One thing that is certain is that an experienced Insurance Law Attorney should be consulted in these types of situations.

Arsons happen in Weatherford, Mineral Wells, Aledo, Azle, Millsap, Hudson Oaks, Willow Park, Brock, Peaster, Springtown, and all over Parker County and Texas. But that does not mean the person who owned the property committed the arson. And when the insurance company does an investigation and finds the property owner is having financial problems that does not mean the property owner burned the property either. After all the vast majority of people have financial problems.
Here is a case that deals with arson and the insurance company attempt to blame the arson on the homeowners. The case opinion was issued in 2000, by the Dallas Court of Appeals. The case is styled, Texas Farmers Insurance Company v. Cloteal L. Cameron, et al.
The jury found against Farmers for violations of the Texas Insurance Code, bad faith, violation of the Prompt Payment of Claims Act, mental anguish, violations of the Texas Deceptive Trade Practices Act, knowing and intentional conduct, and attorney fees. This appeals court reversed the finding regarding the mental anguish claim and part of the attorney fees claim and the calculation of interest on the claim.
Set out here, is only the factual aspect of the claim. This is to give an ideal of the way some claims are denied. Hopefully it is obvious that an experienced Insurance Law Attorney should be involved in the cases early.
On Sunday, March 19, 1995, around 4:00 a.m., a fire destroyed the Camerons' residence and most of its contents. Neither Alfred Cameron nor his wife Cloteal was present at the time. Farmers was the insurer, and the Camerons' insurance policy had limits of $60,000 for the residential structure and $36,000 for the contents. The evidence is overwhelming that the setting of the fire was arson, and even Paul Sanders, an expert witness who testified on the Camerons' behalf, agreed the fire was incendiary.
After the Camerons reported the fire to Farmers, Wendy High, a claims adjuster, drove past the remains of the house. Concluding that the Camerons would need temporary living expenses, High authorized a $500 advance for the Camerons. On Tuesday, March 22, High met with the Camerons, public adjuster Curtis Hordge, and two contractors. She gave the Camerons the $500 check. She did a walk through of the residence and a basic inventory, noting items that would have been worth more than $100. She also gave the Camerons the appropriate claim forms to fill out and explained the forms to them. On May 1, 1995, the Camerons executed a sworn proof of claim, which reflected that the actual cash value of the structure was $60,000, with a replacement value of $75,000. The Camerons claimed $60,000 for the loss or damage of the structure and $36,000 for the loss or damage to the contents, the full limits of the policy.
Hordge assisted the Camerons in compiling an itemized inventory of their losses. Hordge took about six weeks before submitting anything to High. High noticed some discrepancies between her own rough inventory and Hordge's. When High did her walkthrough, for example, she noticed two sofas; at the time, Cloteal told her that one sofa was worth about $1,000 and the other was worth between $1,500 and $1,800. Hordge's inventory, however, valued the sofas at more than twice those amounts.
Both Camerons had alibis for the time of the fire. Alfred had left Dallas around 7:00 p.m. on Saturday, March 18, to go to the Horseshoe Casino in Shreveport, Louisiana. A friend, John McCrumbly, accompanied him. The two men left the casino around 4:00 a.m. on Sunday, March 19, and arrived back home in Dallas around 7:00 a.m. Cloteal was at her daughter's apartment assisting her packing for an anticipated move. Cloteal arrived at her daughter's apartment around 6:00 p.m. on Saturday, March 18. The two women got take-out food from Colter's Barbecue and returned to the apartment. Because her daughter had only one bed, the two slept together. Between 7:00 and 8:00 a.m. the next morning, Alfred telephoned to tell Cloteal about the fire. McCrumbly vouched for Alfred's whereabouts, and Cloteal's daughter, Sheritrice Spencer, vouched for Cloteal's.
On August 3, 1995, McCrumbly executed an affidavit confirming Alfred's alibi. On August 11, Spencer executed an affidavit confirming Cloteal's alibi. The affidavits were forwarded to Farmers. Tony Poncio, the branch manager for Farmers, reviewed the affidavits. Without interviewing either McCrumbly or Spencer personally, he rejected the Camerons' claim. Poncio took the position that "their testimony was already in front of us signed and notarized. There was nothing else to look into about it."
On September 18, 1995, Poncio wrote the Camerons a letter informing them that Farmers was denying the claim. The reason given was that Farmers had "a good faith belief that the fire in question was caused intentionally by you or by persons instructed by you to set the fire." The letter went on to accuse the Camerons of making material misrepresentations when Farmers' representatives investigated the claim. Poncio quoted in full the policy provision concerning concealment or fraud, which stated that, in the event of an insured's intentional concealment or fraud relating to a material fact, "this policy is void." The text of Poncio's letter, however, did not actually declare the policy void; it simply stated that the Camerons' alleged misrepresentations were an additional reason for denial of the claim.
All this time, however, Farmers had been paying the Camerons temporary living expenses. Because High wanted to give the Camerons "enough time to figure out where they needed to go," checks for these expenses continued throughout the month of September, despite the rejection in mid-September of the Camerons' claim. From the days immediately after the fire through September, Farmers made nine payments for a total of $10,044.62. At the same time, High did not investigate further the discrepancies she noticed between her contents work sheet and the itemized list provided by Hordge. Although she normally would reinvestigate if there were discrepancies between her contents work sheet and a proof of claim submitted by an insured, she did not do so in the Camerons' case: by the time she "got her contents work sheet and investigation through management," Poncio had already denied the claim.
The Camerons then sued for all the reasons stated earlier.
In upholding the findings of violations of the Texas Insurance Code and bad faith, this court reviewed the evidence of lack of follow-up by Farmers on investigating the inventory discrepancies. The lack of interviewing alibi witnesses. The lack of any proof the Camerons were involved in the fire. Allegations of past financial problems the Camerons had but no mention that they were current on all obligations at the time of the fire. The fact that if Farmers had actually cancelled the policy, that a pro rate share of the premiums should have been refunded.
The case lists several other things Farmers did or failed to do to properly investigate this claim before denying coverage to the Camerons. It is good reading to understand how some of these arson cases are investigated and evaluated.

Insured's in Weatherford, Mineral Wells, Aledo, Azle, Hudson Oaks, Springtown, Willow Park, Brock, Millsap, Peaster, and other places in Parker County might wonder, what does "insurable interest" mean. Here is a case that talks about it.
The opinion in this case was issued in 2000, by the Corpus Christi Court of Appeals. The style of the case is, Colonial County Mutual Insurance Company v. Hector Valdez. Here is some background.
Colonial County Mutual Insurance Company (Colonial) appealed a judgment against them by Valdez, wherein Valdez was awarded damages. This court affirmed the judgment with some reformation. Early on, Colonial had filed a declaratory judgment action asking the court to rule there was no coverage in the case due to Valdez not having an "insurable interest." Factually here is what happened.
Hector Valdez bought a 1992 Plymouth Acclaim in November 1994, and arranged insurance for the car with Colonial through Diego Luna Insurance Agency. An employee of the insurance agency told Hector that the car was insured "against theft, against accidents, against medical expenses, everything concerning the insurance." A few months after obtaining this insurance, Hector sold the car to his son, Rene Valdez, for $7,000. Rene obtained a loan form Mercantile Bank in order to make the purchase. Hector called the Diego agency and told them Mercantile Bank would be calling them to make "changes" and "arrangements" on the insurance. Diego Luna testified that an employee of Mercantile Bank did call, and asked to verify insurance on the car for "a Mr. Valdez." The bank was told that "Mr. Valdez" had insurance. Hector continued to pay insurance premiums on the car while Rene owned it. It is undisputed that Hector never told Colonial or Diego that he had sold the car to Rene. It is also undisputed that Hector was never informed, orally or in writing, that he could only insure the car if he owned it.
In November 1995, Hector's policy was automatically renewed. On January 14, 1996, the car was stolen. Hector reported the theft and Colonial proceeded to investigate. During this investigation, Colonial discovered that Rene was the owner of the car. On March 19, 1996, Colonial sent Hector a letter informing him that "the handling of this claim is being conducted under a "Reservation of Rights" because Colonial was investigating whether Hector had an "insurable interest" in the car. On April 5, 1996, Colonial filed the declaratory judgment action for a determination of the insurable interest.
This court ruled that the Texas Insurance Code, Section 541.061, prohibits the making of any misrepresentations relating to an insurance policy by:
Failing to state a material fact that is necessary to make other statements not misleading, considering the circumstances under which the statements are made; or
Making any statement in such a manner as to mislead a reasonably prudent person to a false conclusion of a material fact; or
Failing to disclose the full terms of the policy.
The court held that Colonial's failure to disclose to Valdez the fact that his car would not be insured if he transferred the title to his son is actionable under these sections.
Colonial made statements in the policy itself that indicated that the vehicle was covered. Nothing in the policy indicated that the vehicle would not be covered because of the transfer. Also, while Valdez did not know for certain whether the insurance company had been advised of the transfer to his son, he instructed the bank to contact the insurance company to verify coverage on the car at the time of the transfer. He was reasonable in assuming that the bank's representative advised the insurance company of the transfer, that being the fundamental reason that the bank was verifying coverage. Under the circumstances, Colonial's actions violated the insurance code sections above.
In explaining the ruling this court said that first, Colonial failed to state the material fact that transfer of title would void the insurance coverage. Statement of that material fact was necessary to make not misleading the terms in the policy showing the coverage to be effective. Thus liability under the Insurance Code is appropriate. Colonial's failure to state, either orally or in writing, that transfer of title would void the coverage would have misled a reasonably prudent person to the false conclusion that the car was covered after the transfer. The fact that the policy itself indicated that the vehicle was still covered, and the fact that the insurance company apparently verified to the bank that the car was covered after the transfer makes this argument even more compelling. This gives rise to liability. Also, it is a violation to fail to disclose the full terms of the policy. Colonial's conduct violated the plain meaning of this provision. Thus the court held that the evidence in the case was legally sufficient to support findings of insurance code violations based on Colonial's failure to disclose information.
It appears that the wording in the insurance policy went a long way to helping Valdez prevail in this case. Plus he simply had a lot of other facts on his side. Often when the issue of insurability is contested by the insurance company the insurance company is going to have wording in the policy or facts in their favor. One thing that is certain. These types of cases necessitate the involvement of an experienced Insurance Law Attorney.

Arson cases are the same in Grand Prairie, Arlington, Irving, Fort Worth, Dallas, Mesquite, Garland, Mansfield, Duncanville, Lancaster, De Soto, or anywhere else in Texas. Fires happen by accident and by arson. When a fire occurs the insurance company is going to investigate for reasons of denying coverage for the claim or to find reasons to lower the amount of money they may have to pay on the claim.
In 1992, the San Antonio Court of Appeals, issued an opinion in a case styled, State Farm Lloyds, Inc. v. Robert Polasek and Shirley Polasek.
In this case, arson and bad faith were asserted against State Farm. The Polasek's prevailed at trial and State Farm appealed. The jury had awarded $40,000 in property damage and $500,000 as exemplary damages against State Farm. The court sustained the verdict for the property damage but overruled the finding of bad faith that allowed the award of exemplary damages. Here is some background.
In 1990, fire destroyed the Polasek's video rental business, which State Farm insured. State Farm denied the claim based on the affirmative defense of arson.
The liability issues in this case fell into two categories: (1) whether State Farm established arson and misrepresentation and (2) whether the Polasek's established that State Farm denied their insurance claim in bad faith.
In discussing the case, the court stated that to establish arson as a defense to a civil suit for insurance proceeds, State Farm had to prove by a preponderance of the evidence that the Polasek's set the fire or caused it to be set. Because arson is usually planned and committed in secrecy to avoid detection, these elements may be proved by circumstantial evidence. Ordinarily the circumstantial proof that the Polasek's committed arson here, would consist of evidence that the fire had an incendiary origin and that the Polaseks had an opportunity and a motive to set the fire.
There was considerable evidence that the fire had an incendiary origin. Burn patterns showed the presence of accelerants in two places. Laboratory tests found traces of kerosene. No accidental cause was apparent; electricity and heaters were not present in the areas where the fire started. There was no evidence of forced entry into the building; this indicated that someone with a key might have been involved.
The evidence on this issue - whether the Polasek's set the fire or caused it to be set - was conflicting, and the jury's finding was within their providence. There was evidence that the Polaseks had the opportunity to set the fire. Mrs. Polasek was the last person on the premises that night, no one else had a key, and the lights were not turned on, as they had been before. There was also evidence that the Polasek's had a motive for destroying the store for the insurance proceeds. The business had not been profitable; it owed a $6500 note, which fell due several days after the fire. The company had only $365 in the bank. The Polaseks had been paying operating expenses from their personal funds. They had borrowed money and had been late paying the rent.
All this was evidence that a jury could have used in deciding against the Polaseks but the jury refused to do so.
The Polaseks' bad faith cause of action was not satisfied by proof that they did not commit arson. It is not satisfied by proof that State Farm should have paid their claim, or that State Farm acted unreasonably in denying their claim. Instead, their bad faith claim required proof of a negative: that no reasonable basis existed for denying, or delaying payment of the claim. It is at this point that an experienced Insurance Lawyer is required for any hope in being successful on the claim because to be successful he must establish "the absence of a reasonable basis for denying or delaying payment of the benefits of the policy" and that the carrier knew or should have known that there was no reasonable basis for denying or delaying payment.
Courts have found that where there is undisputed evidence that a reasonable basis existed for denying an insurance claim, the bad faith cause of action is defeated as a matter of law. In deciding whether a reasonable basis exists for denying an insurance claim, the trier of fact does not weigh conflicting evidence; it decides whether the evidence existed and whether, standing alone, it constituted a reasonable ground for denying the claim.
In making its final decision the court stated, "State Farm did not simply deny the claim without investigating; it investigated the circumstances surrounding the fire." "We hold that as a matter of law State Farm had a reasonable basis for denying the claim even though the jury later decided that State Farm should have believed contrary evidence and paid the claim."
The case itself goes into more detail about the efforts made by State Farm to investigate. Part of this included getting into the financial records of the Polaseks. Anytime an insurance company requests financial records you can just about guarantee they are going to deny a claim.

Here is one for people in Grand Prairie, Arlington, Irving, Mansfield, Fort Worth, Dallas, Mesquite, Garland, Richardson, Farmers Branch, and other places in Texas to think about.
What if you get sued but do not tell your insurance company but the person who sued you does tell the insurance company, does the insurance company have to defend you in the lawsuit?
In 2008, the Texas Supreme Court in the case styled, National Union Fire Insurance Company of Pittsburg, PA. v. Beatrice Crocker, issued an opinion dealing with this issue. Here is some background and a discussion.
Beatrice Crocker was a resident of Redwood Springs Nursing Home, which is owned by Emeritus Corporation. She filed suit in state court against Emeritus and Richard Morris, a nursing home employee, seeking compensation for injuries suffered when she was hit by a door swung open by Morris. Crocker's claim against Emeritus were covered under a commercial general liability policy issued by National Union Fire Insurance Company of Pittsburg, PA. Because Morris was acting within the course and scope of his employment when the accident occurred, he qualified as an additional insured under the policy. National Union defended Emeritus, the named insured, but did not defend Morris even though the claims against him were covered by the policy and National Union knew he was a named defendant that had been served. Morris was not aware he was an additional insured under the policy. National Union did not inform Morris he was an insured, nor did it offer to defend him. Morris was served with the lawsuit papers but he did not forward them to National Union or Emeritus. Morris did not answer the suit nor appear at trial to defend himself. National Union did attempt to contact Morris but to no avail. Repeated phone messages were not returned.
A judgment was taken against Morris for $1,000,000.
Crocker then sued National Union asserting she was a third party beneficiary to the policy. National Union argued that Morris never triggered the duty to defend because he failed to forward the suit papers or otherwise notify National Union that he had been sued and he did not ask National Union to provide a defense. The policy provides:
"Before coverage will apply, you must notify us as soon as possible of an occurrence or offense which may result in a claim or suit against you.
Notice should include:
*How, when and where the occurrence or offense took place;
*Names and addresses of any witnesses and injured people;
*Nature and location of any injury or damage.
Before coverage will apply, you must notify us in writing of any claim or suit against you as soon as possible. You must:
*immediately record the specifics of the claim and the date you received it;
*send us copies of all demands, suit papers or other legal documents you receive, as soon as possible."
The relevant question before the court was, "Where an additional insured does not and cannot be presumed to know of coverage under an insurer's liability policy, does an insurer that has knowledge that a suit implicating policy coverage has been filed against its additional insured have a duty to inform the additional insured of the available coverage? The court answered, no.
In explaining its answer the court stated, "Insurance policies are written contracts, and, as with other contracts, we interpret and enforce them according to settled rules of construction. Most importantly, we must give the policy's words their plain meaning, without inserting additional provisions into the contract."
The case used several paragraphs of it's opinion clarifying this point. What is important to realize is that this is not a real unusual situation and an experienced Insurance Law Attorney needs to be consulted when it does happen. There are ways of handling these types of cases to make sure coverage is provided.

A natural question for someone in Grand Prairie, Arlington, Mansfield, Fort Worth, Dallas, Hurst, Euless, Bedford, North Richland Hills, and other places in Texas would be - How much does an insurance company have to pay on a claim? The answer is - It depends on many things?
A Fort Worth Court of Appeals case, decided in 2000, gives some insight into how much an insurance company may have to pay on a claim. The style of the case is, Thomas Carter, Mary Carter, and Ed Carter v. State Farm Mutual Automobile Insurance Company. Here is some background.
In April of 1997, Thomas Carter, Kari Brunson, Jeff Goodman, Michelle Keeffe, and Craig Derrick were traveling west on I-30 in an Isuzu. At the same time, Jennifer Puterbaugh was traveling the same direction at a high rate of speed weaving through traffic and struck the Isuzu from behind. The collision caused the death of Kari Brunson and injured the four other occupants of the Isuzu. State Farm insured Michelle Keeffe, the Isuzu's owner, against loss caused by bodily injury under a $50,000 per person up to $100,000 per incident uninsured/underinsured (UM/UIM) policy.
On May 15, 1997, State Farm sent a letter to Thomas Carter's attorney suggesting that the potential claimants to the Keeffe policy meet for a settlement conference. The attorney replied that a settlement conference was premature because Thomas Carter and Jeff Goodman were still receiving medical treatment for the injuries they sustained and they did not know the extent of their damages. State Farm notified Carter's attorney on June 9, 1997, that State Farm had received a demand for $50,000 from Kari Brunson's estate and that they had to decide that day whether or not to pay the demand. State Farm accepted the demand of Brunson's estate and paid out policy limits of $50,000, leaving only $50,000 available for any remaining claims. State Farm notified the potential claimants of that settlement by letter.
Carter and Goodman then demanded $50,000 each to settle their claims. State Farm replied that it stood by its decision to pay Brunson's estate $50,000 and again encouraged Carter and Goodman to participate in the settlement conference scheduled for August 29, 1997. At the conference, the attorney representing Carter refused to consider settling his claim for less than $50,000, and Goodman said he wanted no settlement on Keeffe's policy, at that time, because he had uninsured motorist coverage under his own policy. State Farm settled Keeffe's and Derrick's claims by paying $35,000 to Keeffe and $10,000 to Derrick. State Farm then unconditionally tendered a check for $4,000 to Carter and a check for $1,000 to Goodman.
In May 1999, the Carters filed suit alleging State Farm had breached the duty of good faith and fair dealing. The trial court granted summary judgment for State Farm.
In arguing its case, State Farm asserted that there was no breach of contract because State Farm's settlement of the claims presented by Keeffe, Derrick, and Brunson's estate were reasonable, even though the settlements depleted most of the uninsured motorist coverage available under Keeffe's policy. The Carters urged the court to consider only whether State Farm's actions were reasonable as to the Carter's claims, not whether State Farm reasonably settled the other claims. The court said that an insurance company does not breach its contract by settling with covered persons, even when the settlement depletes or exhausts the policy proceeds.
In this case, the Carters sued for other violations which are not relevant to this posting. What is relevant is showing what an insurance company may have to pay on a claim. The first consideration is the limits of the policy. A policy with a $30,000 limit will not have to pay more than $30,000. A policy with a $50,000 limit will not have to pay more than $50,000. And so on. Most policies actually have two limits, for example, a limit of $30,000 per person or a maximum of $60,000 per incident. This means that one person may get $30,000 and 4 other people injured may have to split the other $30,000, or one person could get $30,000 and another person could get $30,000 and the other three people get nothing.
All of this can be confusing. Of course that this is the reason that an experienced Insurance Law Attorney must be consulted early.

People who own homes in Weatherford, Aledo, Azle, Poolville, Brock, Hudson Oaks, Willow Park, Peaster, Mineral Wells, Cool, Millsap, and other areas of Parker and Palo Pinto counties might want to pay attention this story.
The Court of Appeals, Beaumont, issued an opinion on March 10, 2011, that gives some insight into how the courts will look at appraisal clauses in homeowners insurance policies. The style of the case is, In Re Southern Insurance Company.
In this case the homeowner, Michelle Neisen, suffered a loss that she alleges was the result of hurricane damage. Southern sought to have an appraisal process to determine the amount of the disputed loss. Neison claimed that Southern waived its right to appraisal because Southern claimed it was not responsible for the loss. The trial court refused to order participation in the appraisal process which Southern was requesting and Southern appealed that decision.
Under the insurance contract, if the parties "fail to agree on the actual cash value, amount of loss, or the cost of repair," either party may make a written demand for appraisal. The appraisal clause did not provide for a forfeiture of that right, and the policy states that "no provision of this policy may be waived unless the terms of this policy allow the provision to be waived."
Neisen's arguement was that Southern must agree that the loss is covered by the policy before it may "fail to agree" on the amount of the loss. As the court pointed out, nothing in the plain language of the policy requires Southern to acknowledge liability before it may demand an appraisal. In fact the policy refers to a failure to agree on the amount of the loss. Neisen contended that Texas case law provides that when an insurer completely and unconditionally denies coverage, there is no dispute over the amount of the loss and the insurer waives its right to demand an appraisal. This court pointed out that recent case law clarifies that a dispute over the extent of the loss is a dispute over the amount of the loss. The court pointed out that in one recent decision the parties disagreed over whether hail damaged only the ridgeline or the entire roof. The homeowner sought declaratory relief compelling an appraisal. The Texas Supreme Court ultimately upheld the appraisal provision.
The court then cited other cases saying, "When different causes are alleged for a single injury to property, causation is a liability question for the courts. By contrast, when different types of damage occur to items of property, appraisers may have to decide the damage caused by each before the courts can decide liability."
This court also talked about that in this case, Southern contended that the damage to Neisen's home is the result of long term repeated leakage while Neisen contends it is hurricane damage. That appraisal should be determined as an initial matter and the parties may then litigate causation questions. They said that when an indivisible injury to property may have several causes, appraisers can assess the amount of damage and leave causation to the courts. When divisible losses are involved, appraisers can decide the cost to repair each without deciding who must pay for it. That when an insurance company denies coverage, appraisers can still set the amount of loss in case the insurer turns out to be wrong. The appraisal clause "binds parties to have the extent or amount of the loss determined in a particular way, leaving the question of liability for such loss to be determined, if necessary, by the courts.
In discussing the waiver issue, the court pointed out that waiver may arise by agreement or estoppel. The insurance policy in this case allowed either party to invoke the appraisal clause. Under the policy at issue here, no provision of the policy was waived unless the terms of the policy allowed it. The policy did not require an admission of liability to invoke the appraisal clause. The record in this case did not establish that Southern induced Neisen to believe compliance with the terms of the policy was not desired and would be of no effect if performed. Even though Southern denied the claim based on its determination that the damage to the covered property was not caused by a covered peril, the appraisers "can still set the amount of loss in case the insurer turns out to be wrong."
This case serves as yet another example of why an experienced Insurance Law Attorney needs to be consulted when dealing with an insurance company.

Here is one for people in Weatherford, Grand Prairie, Fort Worth, Dallas, Aledo, Richardson, Garland, Mesquite, Irving, and anywhere else in Texas to know. It regards insurance settlements and hospital liens.
This is an opnion issued on March 17, 2011, by the Texas Court of Appeals, First District, Houston. The style of the case is, Memorial Hermann Hospital System v. Progressive County Mutual Insurance Company.
In this case, Progressive settled a claim brought against one of its insureds arising out of injuries in a car accident. Memorial filed a hospital lien for the cost of medical treatment to the injured person half an hour before Progressive issued the settlement check. Under the Texas Hospital Lien Law, a hospital "has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attibuted to the negligence of another person." Texas Property Coce, Section 55.002. To secure the lien, Section 55.005 requires the hospital file notice with the county clerk before payments to the entitled party. The statute also declares that the county clerk "shall index the record in the name of the injured individual."
A hospital lien usually attaches to settlement proceeds, and an insurance company usually names the hospital lienholder as a payee on the settlement check. But in this case, because the clerk had not yet indexed the lien, Progressive maintains that it was unaware of the lien and, therefore, it did not name Memorial as a payee.
In this case Memorial contends that the lien is secured on filing, and thus it was entitled to allocation of the settlement proceeds. The court agreed.
Progressive had issued the check at 3:23 PM on December 12, 2007. Thirty minutes before, Memorial had filed its notice of lien with the Harris County Clerk's Office. Before issuing the check, Progressive conducted a lien search on the county clerk's website. It had conducted two searches, one at 2:25 PM and the other at 3:30 PM.
According to the county clerk, the process of recording and indexing the lien usually takes two business days after filing. In this case, the lien was not indexed until December 17, 2007.
This case concerns the proper reading of the hospital lien statute. In interpreting the statute, the court, according to the Texas Government Code, Section 311.023, is to consider the legislatures intent in: the object sought to be obtained; the circumstances of the statute's enactment; the legislative history; the common law or former statutory provisions, including laws on the same or similar subjects; the consequences of a particular construction; administrative construction of the statute; and the title, preamble, and emergency provision. Per Section 311.021, the court also presumes that the legislature intended a just and reasonable result; a result feasible of execution; the entire statute to be effective; and the public interest to be favored over any private interest.
The court stated, "We read the plain language of Section 55.005 as providing that a lien is secured when the lienholder properly files with the county clerk a written notice of lien that complies with the statutory requirements." The court then further discusses what the language of Section 55.005 means.
They tell us that, "Subsection (c) requires the county clerk to index the lien, but does not set any deadline." Progressive argued that Section 13.002 of the Property Code, which declares that a properly recorded instrument is "notice to all persons of its existence" and "subject to inspection by the public," is evidence that the legislature intended that proper recordation be necessary to provide the public notice. According to Progressive, the provision's emphasis on recording, rather than filing, supports the conclusion that the lien is not effective until it is properly recorded.
This court says, "The Propery Code, however, specifies that the duty of proper recordation belongs to the county clerk. Section 11004(a)." This section gives the clerk "within a reasonable time after delivery" as leeway in getting the document filed.
In this writer's opinion, the court got this case completely wrong. The purpose of having a lien filed is to put the world on notice of the lien. All the world had to do is search the county records. Yet if the clerk has not filed the lien, how does the world know of it's existence.
There are remedies to this situation, but to work it out, an experienced Insurance Law Attorney is needed.

When someone in Weatherford, Aledo, Hudson Oaks, Peaster, Springtown, Azle, Millsap, Cool, Poolville, Whitt, or out in Mineral Wells, finds themselves in a situation where they have to hire a lawyer and file a lawsuit against an insurance company, they want to win the case. The best chance of doing that is making sure the lawsuit is in a State Court rather than a Federal Court. There are many reasons why a State Court is preferable to Federal Court. All someone really needs to know is that every time an insurance company lawyer can get a case removed from State Court into a Federal Court, they are going to do so. The other thing they need to know is to seek the advice of an experienced Insurance Law Attorney. He will know the best strategies for keeping a case in a State Court.
On January 24, 2011, the United States District Court, Southern District of Texas, Houston Division, issued an opinion in a case where the issue was discussing, in which court the lawsuit should be litigated. The style of the case is, Scott Browning v. Sentinel Insurance Company and Cavalry Construction Co.
Browning had filed the lawsuit in the 11th Judicial District Court of Harris County, Texas, alleging that Calvary, violated provisions of the Texas Insurance Code.
The lawsuit arose in the following way. Sentinel issued an insurance policy to Browning, who is a Texas resident. After his home was damaged during Hurricane Ike, Browning submitted a claim for the property damage. Browning alleges in the lawsuit that Sentinel assigned Calvary to adjust the claim. Legally, Calvary is a Texas resident and Sentinel is not a Texas resident. Uncontroverted evidence submitted establishes that Calvary is not an adjuster and merely provided an estimate for repair work for Browning's home, thus was not a proper party to this insurance dispute.
The issue in these types of cases is called "jurisdictional." In this case, if Calvary is out of the case then the only defendant is Sentinel, who is an out of state defendant and when the only defendant is an out of state defendant and certain other qualifications are met, the defendant can have the case removed to Federal Court.
Here is some of the language the court used in allowing the case to be removed from State Court to Federal Court: Sentinel asserts that Calvary was improperly joined. A non-diverse defendant may be found to be improperly joined if either there is "actual fraud in the plaintiff's pleading of jurisdictional facts" or the removing defendant demonstrates that plaintiff cannot establish a cause of action against the non-diverse defendant. There is no allegation of actual fraud in Browning's pleading of the jurisdictional facts in this case.
The test under the second prong "is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against the in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." The party asserting improper joinder bears a heavy burden of persuation. Any doubt about the propriety of removal must be resolved in favor of remand. If necessary, the district court may "pierce the pleadings" and consider other evidence to determine whether, under controlling state law, the non-removing party has a basis in fact for a valid claim against the non-diverse defendant. This is particularly appropriate where the plaintiff has "misstated or omitted discrete facts" that are relevant to or dispositive of the improper joinder analysis.
The Texas Insurance Code, Section 541.002 prohibits certain practices by persons "engaged in the business of insurance." In this case, the uncontroverted evidence establishes that Calvary is a construction company that was hired by Sentinel to provide an estimate or appraisal of repair costs for the damage to Plaintiff's home. It is well established that Texas law does not recognize a claim under the Texas Insurance Code against independent firms who are hired to provide engineering or similar services to the insurance company. Walker has not cited any exception in which an independent construction firm hired by the insurance company to provide an estimate or appraisal of repair costs is held to be a person engaged in the business of insurance for purposes of the Texas Insurance Code.
The Court then pointed out, in this case, there is no evidence that Calvary participated in any way in the sale or servicing of Browning's insurance policy, made representations to Browning regarding the coverage under the policy, or adjusted the claim. Instead, the uncontested evidence establishes that Calvary provided an estimate. As a result, there is no reasonable basis to predict that Browning could recover against Calvary on his Texas Insurance Code claim.
The Court then ruled: "For the foregoing reasons, the Court concludes that Calvary was improperly joined and its citizenship cannot be considered in determining whether this Court has subject matter jurisdiction based on diversity of citizenship. Because there is complete diversity between Browning and Sentinel, and because the amount in controversy exceeds the jurisdictional amount, the Court has subject matter jurisdiction in this case. It is hereb ordered that Plaintiff's Motion to Remand is Denied."

Here is good information for someone sued in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, Lake Worth, Roanoke, Newark, Saginaw, and all other places in Texas.
What happens when you are sued? Does the insurance company automatically protect you?
Here is a partial answer to the above.
In 2008, the Texas Supreme Court decided a case styled, National Union Fire Insurance Company of Pittsburg, PA v. Beatrice Crocker. This was an insurance coverage case that went to the Texas Supreme Court from the Federal District Court asking guidance from the Texas Supreme Court on how Texas law handled the situation. This is called a certified question.
The principle issue was whether an insurance company has a duty to notify an additional insured of available liability coverage.
Here are some facts of the case:
Beatrice Crocker was a resident of Redwood Springs Nursing Home, which is owned by Emeritus Corporation. She filed suit against Emeritus and Richard Norris, a nursing home employee, seeking compensation for injuries suffered when she was hit by a door swung open by Morris. Crocker's claims against Emeritus were covered by a commercial general liability policy issued by National Union Fire. Because Morris was acting within the course and scope of his employment when the accident occurred, he qualified as an additional insured under the policy. National Union Fire defended Emeritus, the named insured, but did not defend Morris even though the claims against him were covered by the policy and Natinal Union Fire knew he was a named defendant that had been served with legal papers. Morris was not aware of the terms and conditions of the policy and did not realize he was an additional insured under the policy. National Union Fire did not inform Morris he was an insured and did not offer to defend him. Morris did not forward the lawsuit papers to National Union Fire and did not ask them to defend him.
In this case, a judgment against Morris resulted when he did not appear for trial and National Union Fire did not defend him. Crocker then sued National Union Fire asserting she was a third party beneficiary of the policy. National Union Fire is claiming that Morris never triggered the duty to defend because he failed to forward the suit papers or otherwise notify them that he had been sued and he did not ask National Union Fire to provide a defense.
The insurance policy at issue here says:
"Before coverage will apply, you must notify us as soon as possible of an occurrence or offense which may result in a claim or suit against you.
Notice should include:
How, when and where the occurrence or offense took place;
Names and addresses of any witnesses and injured people;
Nature and location of any injury or damage.
Before coverage will apply, you must notify us in writing of any claim or suit against you as soon as possible. You must:
Immediately record the specifics of the claim and the date you received it;
send us copies of all demands, suit papers or other legal documents you receive, as soon as possible."
National Union Fire contended that, because Morris failed to comply with the notice provisions, he did not invoke coverage or the right to a defense under the policy, meaning that Crocker, who now purports to stand in Morris's shoes, cannot collect under the policy either.
The court went on discussing the law and citing other cases for support of their decision in this case.
The ultimate decision by this court was: "Insurers owe no duty to provide an unsought, unrequested, unsolicited defense. ... Accordingly, because insurers need not provide coverage to additional insureds who never seek it, National Union had no duty either to inform Morris of available coverage or to voluntarily undertake a defense for him, and its actual knowledge did not establish lack of prejudice as a matter of law."
An experienced Insurance Law Attorney knows ways to get an insurance company to provide a defense in cases such as the one above. That is a big reason why their advise should be sought early on in any potential claim a person has.

It happens in Grand Prairie, Weatherford, Arlington, Dallas, Fort Worth, Roanoke, Keller, Colleyville, North Richland Hills, Grapevine, and all over the state. Someone has some property damage. They call their insurance company. The insurance company suggests they call XYZ company. The insured calls XYZ company. XYZ company does something wrong in their dealings with the insured. The question becomes: Is the insurance company responsible for any wrong committed by XYZ company?
The most common situations where the above happens is car wrecks. After a car wreck the insurance company often suggests a repair shop to take the car to for repairs. The second most common situation is home repairs. A home owner has hail damage, flood, or fire and the insurance company suggests a company to make the repairs.
The Texas Court of Appeals in Dallas recently had a case that involved a theft. The opinion was issued on February 8, 2011, and the case is styled, J. Howard Jaster, Individually and as Assignee of the Edinberg Trust v. Shelter Mutual Insurance Company. In this case Jaster alleged that Shelter Mutual Insurance Company (Shelter) was an agent of Michael Hanna d/b/a Cornerstone Replacement Services (Cornerstone).
Here is some background. In 2004, Jaster moved from Tennessee to Texas. Shorty after he arrived, the U-Haul truck containing his personal property was stolen. The stolen propery included valuable antique furniture, paintings, and other items of high value. Jaster filed a claim with his insurance company, Shelter. Shelter contacted Cornerstone to do an appraisal and told Jaster that Cornerstone would be contacting him. Because Jaster decided to go with Cornerstone to replace the stolen property, he asked Shelter to pay the settlement funds directly to Cornerstone. A check for $189,875.03 was issued to Jaster with Jasters' name and Cornerstone. Jaster endorsed the check over to Cornerstone.
Soon thereafter, Jaster canceled his order with Cornerstone and requested a refund. Cornerstone issued a refund but the check bounced. Ultimately, Cornerstone returned $140,000, but never repaid the remaining amount. After talking with Shelter for a period of time, Jaster eventually sued Shelter and Cornerstone alleging that Cornerstone was an agent of Shelter.
This case evolves into a case where the issue became an arguement about the questions that were submitted to the jury. In these questions, Jaster was trying to get the jury to answer in such a way as to agree that the evidence established that Cornerstone was an agent of Shelter. The appeal point in this case was whether or not these questions proved the point that Jaster was trying to establish.
The lesson to be taken from this case for insureds who are making an insurance claim where the insurance company refers the insured to other vendors is to be aware how courts look at the facts in these cases. For the insured, the first thing to keep in mind is that they should be working with an experienced Insurance Law Attorney to make sure their rights are protected. Beyond that, is to keep good records of what happens. The insured would want to keep copies of all letters, memos, e-mails, and text messages related to the claim. While the claim is going on, the insured should keep a small notebook or computer message detailing all oral conversations with the adjuster and the vendor. Hopefully the claim goes smooth and the case is resolved and the insured can get on with their life. But, too many times problems arise. When they do, it is often times difficult to go back and try to remember all that was said, when it was said, and the context in which it was said. It is important to keep in mind that this is a business transaction taking place between the insurance company and the insured and in that setting it is important to keep a record of what has transpired in the event there is a conflict at some point.
Whether or not there is an agency relationship between the insurance company and the vendor is not always clear. Where it is not clear, then the evidence of what happened including all the communications mentioned above become relevant in determining whether or not the agency relationship is able to be established. It is often times important to prove this relationship because many times the vendor is insolvent or not insured or does not have sufficient monies to pay for the wrongs they may commit thus being able to look back at the insurance company for compensation becomes vital.