Dallas Fort Worth Insurance Lawyer Blog

If you are in Grand Prairie, Arlington, Fort Worth, Roanoke, Keller, Colleyville, Saginaw, or some other place in Tarrant County or Texas and find yourself in some financial trouble, it may be that you find yourself letting your homeowners insurance lapse. If that happens the mortgage lender on your home will buy what is called a force-placed insurance policy and charge you with the premium. There are a bunch of problems when this happens. Two of these problems are real important to you.
First, is that force-placed insurance is very expensive and you are responsible for paying it.
Second, is that a force-place policy covers the mortgage holder not you. In other words, none of your personal property or the contents of the house is covered in the event of a fire loss. Further, if you are sued by someone, the insurance does not cover you. If you get burglarized, you are not covered.
The New York Times published an article on January 21, 2011. The author is Gretchen Morgenson. The title of the article is "Hazard Insurance With Its Own Perils."
Here is some of what the article tell us.
One of the richest and most secretive sources of profit in the mortgage business is coming under scrutiny.
Investigators into this industry are looking into these force-placed insurance policies.
Benjamin Lawsky, the superintendent of the New York State Department of Financial Services, is investigating institutions that underwrite and sell force-placed insurance. Last fall, his office began sending subpoenas to insurance agents and brokers. Requests for information also went out to insurance companies that write such policies.
Recently, new subpoenas went out to loan servicers that imposed force-placed insurance on borrowers, as well as to insurers affiliated with those services.
Subpoena receivers included Morgan Stanley Mortgage Capital Holdings and CitiMortgage. Affiliates that received requests for information include BancOne Insurance and Alpine Indemnity.
Force-placed insurance appears to be the dirty little secret of the mortgage industry. It is a silent killer harming both consumers and investors while enriching the banks and their affiliates.
A spokesman for Citigroup said, "CitiMortgage does not sell homeowner's insurance to consumers. If a homeowner does not provide an insurance policy, CitiMortgage secures a policy to protect the interest of the investor. Whenever the homeowner submits proof they have obtained insurance on their own, the lender placed insurance is cancelled."
Force-placed insurance has exploded during the foreclosure crisis. Whereas it use to generate $1 billion a year, it is now a $6 billion a year business. Much of this growth is on the backs of homeowners.
When homeowners run into financial trouble, they often let their hazard insurance lapse. Because lenders require homeowners to be insured against damage or total loss policies are then forced on the borrowers and added to their monthly mortgage payments.
For those selling force-placed insurance, it is a great game. The policies typically cost at least three times as much as ordinary property insurance. Some borrowers have been charged as much as ten times the prevailing rate.
And as stated in the beginning, force-placed policies do not protect homeowners from loss. Only lenders are covered.
Some borrowers have complained of being forced to buy high-priced insurance even when it is unnecessary. Back in 2007, a borrower with a mortgage serviced by Countrywide Financial described how the lender automatically signed her up for flood insurance even though she had proved that such insurance was unnecessary. Not being able to meet the extra payments, she fell behind on her mortgage. Countrywide then began foreclosure proceedings.
All in all, force-placed insurance represents a major profit center for mortgage servicers and the companies that write the policies. In many cases the mortgage service company and the insurer are affiliated. This sets up the potential for conflicts of interest among mortgage service companies that are suppose to represent investors owning mortgage loans bundled into securities.
A more consumer friendly way to deal with insurance lapses would be for service companies to advance money to the borrower's existing carrier to keep the policy current. Then, the service company could bill the borrower for coverage.
There are other gimmicks and / or games that go on with these force-placed policies. The bottom line is - know that these are not worth while for the borrower.

No one in Grand Prairie, Weatherford, Fort Worth, Dallas, or anywhere else in the North Texas area would want to be in a situation where their spouse deliberately sets the house on fire. This is something that might happen in a divorce setting or maybe it is just the result of a really bad fight. So what happens as it relates to insurance?
A San Antonio Court of Appeals opinion issued in 1996, sheds some light on this question. Here is some background. The style of the case is Sanders v. Commonwealth Lloyd's Insurance Company.
Jan and Dan Saunders' house was completely burned down by a fire. The insurance company investigated the claim and concluded that Dan was responsible for setting the fire. Dan was convicted of a felony of conspiring to burn down the house which was later reversed and he was acquitted. In the meantime, the insurance company, Commonwealth Lloyd's, denied the claim.
The innocent spouse, Jan Sanders, filed suit for breach of contract and bad faith against Commonwealth. In the trial of a breach of contract claim brought by Jan, the jury found that Dan was responsible for the arson fire that destroyed the house. Although Commonwealth treated Jan as an innocent spouse, it refused to pay any part of the claim because the house was community property. At the time of the claim denial, current law supported Commonwealth's decision not to pay Jan any proceeds under the insurance policy. Later in 1993, when case law changed, Commonwealth agreed to pay Jan one-half of the available insurance proceeds, plus interest.
In the lawsuit where Jan sued for bad faith, Commonwealth filed a Motion for Summary Judgment which the trial court granted. Jan appealed.
In this case, this appeals court upheld the decision of the trial court rendering summary judgment for Commonwealth. In its holding, this court said that an insurance company that can prove that it possessed a reasonable basis for denying or delaying a claim for payment even if that basis is eventually determined to be erroneous enjoys immunity from statutory bad faith under the Texas Deceptive Trade Practices Act and under the Texas Insurance Code. In this case, Commonwealth had a reasonable basis to deny Jan's claim as a matter of law. At the time of the claim, there was a United States Fifth Circuit case applying Texas law directly on point specifically holding that an innocent spouse could not recover insurance proceeds for her interest in the community property of the house destroyed by a fire that was intentionally set by or at the direction of the culpable spouse. Therefore, the insurance company, Commonwealth, possessed a reasonable basis for denying payment.
There are a couple of things relevant about this case.
One, is that the law changed while this case was pending. The law had been that if the fire was intentionally set by one of the insureds, then neither could recover under the policy of insurance. That law changed. The change allowed an innocent spouse to recover her portion of the proceeds. An example of how this would work is like this; if the house and contents are owned fifty / fifty by the husband and wife, then the innocent spouse would be entitled to the proceeds covering half the property.
Second, is that when the insurance company has a reasonable basis for denying or delaying payment of a claim, then they cannot be successfully sued for acting in bad faith in violation of the DTPA or the Insurance Code.
Last, is that an experienced Insurance Law Attorney needs to be consulted in these matters.

Here is an article for people living in Grand Prairie, Fort Worth, Arlington, Hurst, Euless, Bedford, and other places in Tarrant County. It is from the Washington Post Business Page and authored by Noah Buhayar. The article was published on January 11, 2012, and much of it appears below.
Allstate Insurance Company, Travelers Insurance, and State Farm Automobile Insurance Company are among insurance companies raising homeowners' rates after damage from natural disasters defied industry projections.
Allstate, the #2 United States home insurer, boosted prices for its namesake brand of home policies by 5.6 percent in the nine months through September 30, and has said more increases are coming. Travelers is raising rates after re-evaluating United States storm risk. State Farm, the largest U.S. home insurer, has charged homeowners more nationwide for three straight years.
Near record low interest rates cut insurers' investment income, and tornadoes, wildfires and Hurricane Irene increased claims costs in the U.S. last year. The industry averaged annual underwriting losses on homeowners' policies in the decade ended in 2010, according to data compiled by the National Association of Insurance Commissioners.
Homeowners' coverage "has been really underpriced," said Josh Stirling, an analyst at Sanford C. Bernstein & Co., in a phone interview recently. "If you go back 10 years, these businesses were loss leaders." Personal auto coverage has been profitable for insurers during that period, NAIC data show.
Catastrophes worldwide led to a record $105 billion in insured losses last year, according to a report this month from Munich Re, the world's largest reinsurer. About $25 billion of those losses came from U.S. storms, including the tornado that leveled parts of Joplin, Missouri, in May. Irene, the first hurricane to make landfall in the U.S. since 2008, caused $7 billion in insured losses.
Policyholder owned State Farm raised homeowners' rates 3.6 percent last year, Dick Luedke, a spokesman for the Bloomington, Illinois based insurer said in a phone interview. That follows a 7.3 percent increase in 2010 and a 9.7 percent increase in 2009.
Allstate boosted homeowners' rates in 37 states in the first three quarters of 2011, compared with 32 in all of 2010, according to regulatory filings. Chief Executive Officer Thomas Wilson, 54, has said that the company is acting as if increased weather-related losses are part of a permanent shift in climate patterns.
"Rates are not adequate" for homeowners' insurance, he said at an investor conference in New York in December. "They are not adequate for us and the rest of the industry. We are getting little pushback from regulators or customers, for that matter, on raising pricing in the marketplace. So there are more rate increases to come."
Travelers' CEO, Jay Fishman, 59, has also said he is pushing for rate increases after tornadoes last year fueled a second quarter loss and forced the company to assess whether its models understated storm risk.
"We can either make the decision that we're really smart and we've been unlucky, or we can make the decision that something different is happening," he said on an October conference call with analysts to discuss the New York based insurer's quarterly results.
U.S. state regulators approved about 1,500 requests to raise rates for policies that protect homes last year, according to data compiled by Perr & Knight, a Santa Monica, based consulting firm that tracks the records. That adds to more than 3,700 in the prior two years. Companies must seek approval from states to make most changes on policies sold to consumers.
Allstate has also moved to change terms of some policies. They started a program in Oklahoma that limits payouts for customers' with older roofs, Wilson said at an investor conference in December.
Some carriers in Georgia have refused to cover homes with roofs older than 10 years, said Victor Hamby, a partner in Hamby & Aloisio Inc., an independent insurance agency in Atlanta. His clients faced rate increases averaging about 18 percent last year and he expects them to continue rising this year and next. He attributes the increases to underwriters needing to recoup losses and a new state insurance commissioner who has sped up the process for approving rate changes.
"The underwriting standards have really tightened up," he said in a phone interview last week. "It's not like you can jump from one carrier to another and they've got the sale of the day going on down the street."
Insurers are expanding the area they consider at risk for large tornado and hail losses beyond Texas, Oklahoma and Kansas, said Howard Botts, executive vice president at CorelLogic Inc.'s spatial solutions business, who creates natural hazard databases for the industry. The U.S. Gulf Coast, Minnesota and Wisconsin are among areas now considered at higher risk, he said.
"It often takes catastrophic events, or large loss events, to get the attention of senior management," Botts said in a phone interview. Insurers are "much more sensitive to losses now that they can't offset that with their investments."

Appraisal - People in Grand Prairie, Arlington, Fort Worth, Dallas, Keller, Coppell, Farmers Branch, Hurst, Euless, Bedford, and other places in the DFW area are probably not familiar with the way appraisal works in an insurance policy.
The Texas Supreme Court issued an opinion in 2009 that deals with appraisals. The style of the case is State Farm Lloyds v. Becky Ann Johnson. Here is some background.
A hailstorm moved through Plano, Texas in 2003, damaging the roof of Becky Ann Johnson's home. She filed a claim under her homeowners insurance policy with State Farm. The inspector concluded that hail had damaged only the ridgeline of her roof, and estimated repair costs at $499.50, which was less than her deductible. Johnson's roofing contractor concluded the entire roof needed to be repaired at a cost of more than $13,000.
To settle this difference, Johnson demanded appraisal of the "amount of loss" under the following provision in her standard-form policy:
Appraisal. If you and we fail to agree on the amount of loss, either one can demand that the amount of the loss be set by appraisal. If either makes a written demand for appraisal, each shall select a competent, disinterested appraiser. Each shall notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers shall then select a competent, impartial umpire .... The appraisers shall then set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon shall be the amount of the loss. If the appraisers fail to agree within a reasonable time, they shall submit their differences to the umpire. Written agreement signed by any two of these three shall set the amount of the loss.
State Farm refused to participate, asserting that the parties' dispute concerned causation and not "amount of loss." Johnson then filed this suit seeking a declaratory judgment compelling appraisal. Johnson and State Farm filed motions for summary judgment.
In this case, the Court attempted to clarify the division between issues that are subject to appraisal and those that are not. At one end, questions on liability are not proper for appraisal and must be decided in court. At the other end, the amount of damage is subject to appraisal. In between, questions on causation may be decided by appraisers in determining the amount of loss. This Court rejected State Farms' argument that every issue of causation is beyond the scope of appraisal.
The court reasoned that "any appraisal necessarily includes some causation element, because setting the 'amount of loss' requires appraisers to decide between damages for which coverage is claimed from damages caused by everything else." The following causation questions would be within the scope of appraisal:
- Appraisers may properly allocate damages between covered and excluded perils;
- Appraisers may determine whether a loss is due to a covered event, as distinguished from the property's preexisting condition.
By contrast, causation issues are improper for appraisal, "when different causes are alleged for a single injury to the property." In those instances, causation issues are to be decided by the courts.
In sum, whether the appraisal goes "beyond the damage questions" and impermissibly answers liability questions "will depend on the nature of the damage, the possible causes, the parties' dispute, and the structure of the appraisal award."

If someone in Weatherford, Mineral Wells, Aledo, Azle, Springtown, Hudson Oaks, Willow Park, Millsap, Brock, Cool, or some other place in Parker County suffers a loss that should be covered by their homeowners insurance, one of the first things they should do is to consult with an experienced Insurance Law Attorney.
The Texas Department of Insurance (TDI) use to require that all homeowners policies written in Texas require a certain format and contain certain required coverages in that homeowners policy. In recent years TDI has allowed insurance companies to write their own policies without as much over sight. However, most policies are still following the rules as outlined by TDI.
These current homeowners policies follow two basic forms. One is called the Homeowners -- Form A (HOA) and then other is referred to as Homeowners -- Form B (HOB).
A loss involving personal property is calculated differently under the HOB policy than is a loss to a dwelling. A loss to the dwelling is calculated based on the following policy language:
Our limit of liability for covered losses to the dwelling and other structures under Coverage A (Dwelling) except wall to wall carpeting, cloth awnings and fences, will be at replacement cost settlement subject to the following:
(1) If, at the time of loss, the Coverage A (Dwelling) limit of liability is 80% or more of the full replacement cost of the dwelling, we will pay the repair or replacement cost of the damaged building structures, without deduction for depreciation.
(2) If, at the time of loss, the Coverage A (Dwelling) limit of liability is less than 80% of the full replacement cost of the dwelling, we will pay only a proportional share of the full replacement cost of the damaged building structures. Our share is equal to:
Replacement Cost of the Loss
X
Coverage A (Dwelling) Limit of Liability
80% of Replacement Cost of the Dwelling
(3) If, at the time of the loss, the actual cash value of the damaged building structures is greater than the replacement cost determined under (1) or (2) above, we will pay the actual cash value up to the applicable limit of liability.
We will pay only the actual cash value of the damaged building structures until repair or replacement is completed. Repair or replacement must be completed within 365 days after loss unless you request in writing that this time limit be extended for an additional 180 days. Upon completion of repairs or replacement, we will pay the additional amount claimed under replacement cost coverage, but our payment will not exceed the smallest of the following:
(1) the limit of liability under this policy applicable to the damaged or destroyed building structures;
(2) the cost of repair or replace that part of the building structures damaged, with material of like kind and quality and for the same use and occupancy on the same premises; or
(3) the amount actually and necessarily spent to repair or replace the damaged building structures.
Based on the writing in the second paragraph above, it is important that each person experiencing a loss, read their policy closely and get with an attorney to make sure they are getting compensated fully under the policy they have paid for and for the loss they have incurred.
While this writing deals with the structure, it is also important to be aware of coverages for the contents of the property and to read the policy carefully to make sure there is full compensation, under the policy, for the damages that may be incurred for the contents.

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.

Anybody in Weatherford, Mineral Wells, Aledo, Azle, Hudson Parks, Willow Park, Brock, Millsap, Cool, Springtown, or anywhere else in Parker County, who owns a home, will find this interesting.
The Houston Chronicle published a story on October 13, 2011, titled, Home Insurance Rates Rise As Coverage Falls. The author is Purva Patel who has written several article on insurance in Texas.
The article tells us that the insurance companies in Texas are dropping or decreasing certain coverages to allow them to control costs and, in turn, keep a handle on the rates they charge. Consumer groups say its a reflection of lax oversight by the Texas Department of Insurance (TDI) and regulations coming out of Austin.
Since about eight years ago, many insurance companies in Texas have limited coverage for mold damage, limited wind damage coverage to named storms and in some cases eliminated windstorm coverage altogether in coastal areas.
The state's largest insurer, State Farm, recently said it plans to move new and renewing customers to a minimum 1 percent deductible starting December 2011. This means deductibles will be calculated as a percentage of a home's insured value rather than a flat dollar amount, increasing how much homeowners would pay out of pocket before collecting on insurance claims.
Reports from TDI reported earlier this year that a survey of insurance companies making up 90 percent of the Texas market found that many dropped or reduced coverage compared to the standard homeowners policies they sold before laws changed in 2003.
Eighty-seven percent of the insurance companies had less coverage for leakage from plumbing, air conditioning or heating; 72 percent had less coverage for sewer backups and 67 percent had less coverage for foundation and slab damage. An example would be that now some insurance companies cover water damage from sudden pipe breaks, but not from slow or repeated leaks. Aren't most of these damages the result of slow leaks over time?
The consumer group, Texas Watch, says the numbers are pretty clear, "Consumers are not getting the same level of protection they were getting under the standard form. And we are paying more now than we were then. So we are paying more and getting less."
Texas Watch blames the changes in the law that occurred in 2003 for creating a climate that allows companies to raise prices and lower coverage with less oversight than is needed. These changes were passed by the Legislature when mold claims were creating a financial crisis.
Current rules regarding policies allow the insurance companies to file new policies with TDI and to immediately start using them. It is only later that if the changes in the new policies are disapproved that refunds can be ordered based on the offending part of the policy.
What is important to realize is that this is a political battle wherein the politicians are allowing the insurance companies to operate without meaningful oversight.
Texas Coalition for Affordable Insurance Solutions, an insurance company lobby group, says letting the TDI preview changes before officially filing notice, leads to haggling that can delay the process.
According to figures released by the National Association of Insurance Commissioners, Texas has the most expensive homeowners insurance premiums in the nation. According to the report, the average annual premium in Texas is $1,460 for the most common type of homeowners policy sold across the country.
Insurance company representatives say the report is misleading because it does not reflect the range of policies sold in the state, some of which are cheaper than one used for the comparison.
What they do not dispute is that rates in Texas have grown.
Since the laws changed in 2003, rates have increased 5.1 percent.
Both, State Farm and Farmers have recently filed notices to hike rates.
The insurance industry argues that the increases are justified due to higher costs such as the rising price of building materials.
The bottom line appears to be that you are paying more for less and if you have a claim that is being denied, contact an Insurance Law Attorney.

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.

Whether you live in Weatherford, Mineral Wells, Aledo, Willow Park, Hudson Oaks, Peaster, Millsap, Brock, Springtown, Azle, Cool, or anywhere else in Parker County, there are odds that you may be subject to suffering a loss from flood damage. A natural question would be, "How does flood insurance work?"
Because most property insurance policies covering property at fixed locations exclude flooding, flood insurance must be purchased separately. In 1969, Congress created the National Flood Insurance Program to administer the sale of flood insurance. National flood insurance is available directly from the Federal Insurance Administration or through hundreds of private insurers who participate in federal flood insurance programs. The Federal Emergency Management Agency (FEMA) reinsures private companies against flood losses.
Flood insurance premiums are calculated based upon geographic maps setting forth the boundaries for various flood zones.
Contract claims must be filed in federal court, and are subject to the strict requirements of the policy and federal law. Insureds still have the right in the Fifth Circuit to bring suit on extracontractual claims under state law against a flood insurer. This per a 1993 case, Spence v. Omaha Indemnity Insurance Co., but it should be noted that there is disagreement in this area as to whether the National Flood Insurance Act of 1968, preempts state law in this area.
The standard flood policy is designed to insure against loss caused by an overflow of inland or tidal waters, unusual and rapid runoff of surface waters, and mud slides caused by flooding. All losses caused by perils other than flood are excluded. For example, the Standard Flood Policy excludes coverage for consequential damages resulting from the interruption of business activities following a flood. Also, case law tells us that water damage caused by heavy rains, does not constitute "flood damage." This is from a 1950, Fort Worth Court of Appeals case styled, "Sun Underwriters Insurance Company v. Bunkley."
An insured may not recover under a standard flood insurance policy unless the insured sends a proof of loss form to FEMA within sixty days of the loss. Failure to sign and swear to the completed proof of loss form enables the insurer to reject the claim.
The standard flood insurance policy contains a contractual one year limitations period. Extracontractual causes of action against flood insurers are subject to standard limitations periods under Texas law.
Flood claims need to be paid attention to immediately. Consulting with an experienced Insurance Law Attorney, early in the process is the best way to ensure you are going to maximize the coverage due because of the loss.

What if someone in Weatherford, Mineral Wells, Aledo, Willow Park, Azle, Hudson Oaks, Millsap, Brock, Springtown, Cool, or anywhere else in Parker County has insurance on a house and the house burns down - do they automatically get paid the insurance on the house? The answer is - It depends.
To be able to recover on an insurance policy, the person suffering the loss must have an insurable interest in the property that is insured. The Dallas Court of Appeals issued an opinion in 1993, that is still good law. The style of the case is, William T. & Elaine Jones v. Texas Pacific Indemnity Company.
It is a summary judgment case. The Jones sued Texas Pacific on an insurance policy. The summary judgment was granted in favor of Texas Pacific because the court said the Joneses could not recover insurance proceeds on property which they did not have an insurable interest to.
As background, the Joneses owned their home subject to Henry and Diana Martin's mortgage interest. They insured their home with Texas Pacific. The policy listed the Joneses as the "Named Insureds" and the Martins as "Mortgagee[s]." When the Joneses defaulted on their mortgage payments, the mortgagees foreclosed. The Joneses remained in the home as tenants at sufferance. Eleven days after foreclosure, the home burned.
Texas Pacific paid the Joneses for content loss and additional living expenses. It reimbursed the Martins for the dwelling damage. The Joneses sued on the policy to collect on the dwelling damage.
Texas Pacific claimed the Joneses were not owners, thus could not collect.
The Joneses contended that although they no longer owned the property, they still had an insurable interest and were entitled to the insurance proceeds. Because the foreclosure divested the Joneses of right, title, and interest in the property, the Joneses could not show any loss.
In discussing this case, the court stated the law as it relates to this situation:
A party must have an insurable interest in the insured property to recover under an insurance policy. It is not necessary that the party own the property to have an insurable interest. An insurable interest exists when the insured derives pecuniary benefit or advantage by the preservation and continued existence of the property or would sustain pecuniary loss from its destruction. If a claimant cannot suffer any pecuniary loss or derive any benefit from the property, he has no insurable interest.
The claimant has the burden of proving an insurable interest.
Applying the law to the facts of the case, the court stated that, under the Jones-Martin deed of trust, the Joneses became tenants at sufferance after the foreclosure. As tenants at sufferance, the Joneses were subject to immediate eviction. They had no future legal interest in the dwelling, and diminished motive and opportunity to protect the property. The Joneses did not suffer any pecuniary loss in the dwelling from the fire or receive any benefit from the dwelling. They had no insurable interest in the dwelling.
This case is pretty clear cut. But that is not always the case. Whenever there is any doubt about the right to insurance proceeds, an experienced Insurance Law Attorney should be consulted.

Insurance Law Attorneys in Grand Prairie, Irving, Duncanville, De Soto, Lancaster, Mesquite, Garland, Richardson, Farmers Branch, or anywhere else in the state of Texas will usually want to sue the adjuster who handled the claim in addition to suing the insurance company when a claim is denied. There are reasons for this. But the insurance company will fight the issue.
The United States District Court, Southern District, Galveston Division, issued an opinion in a case on August 10, 2011, wherein the court allowed the adjuster to be sued over the objections of the insurance company. The style of the case is, Juan Jose Cruz, Lidia Cruz and Griselda Cruz v. Allstate Lloyds and Pilot Catastrophe Services, Inc. It is property damage claim following Hurricane Ike.
In this Federal Court case, the Cruz's filed a "Motion for Leave to File Amended Complaint" for the purpose of adding to the lawsuit the individual adjuster who handled the investigation of the claim. Of relevance to the court was that by adding the adjuster the case still remained in Federal Court whereas often times the addition of the adjuster causes the case to be remanded to State Court.
The insurance company position was that the adjuster should not be added to the lawsuit because the Cruz's amended complaint fails to state a claim under applicable state law. The insurance company stakes its position on a 2007, United States Supreme Court case, Bell Atlantic Corp. v. Twombly, wherein the Court set a very high standard for reviewing the pleading of plaintiffs, making sure that the pleading clearly stated a claim under applicable law.
In the Twombly case, the Supreme Court sought to ensure that in complex litigation the substantial burden of discovery would not be placed on a defendant based on implausible allegations. On controverting argument however is that the height of the pleading requirement should be relative to the circumstances of the case at hand. The court then said that this case, and the multitude of others like it are noncomplex, straight-forward property damage claims involving allegations of substandard adjustment practices; the cases are unique only because the properties differ. In such cases, all that need be alleged are "facts that, if proven, could make it reasonably possible for a Texas court to find" that a defendant violated certain provisions of the Texas Insurance Code. Allegations against an adjuster like failing to perform a thorough investigation; failing to include all damages pointed out by Plaintiffs; disregarding damages; undervaluing damages; underpricing the costs of repairs; misrepresenting to Plaintiffs that the damage to the property was not covered under the policy, even though the damage was caused by a covered occurrence; failing to make an attempt to settle Plaintiffs' claims in a fair manner, although aware of liability under the policy; failing to explain to Plaintiffs' the reason for the offer of an inadequate settlement; failing to affirm or deny coverage within a reasonable time; and performing an outcome oriented investigation of Plaintiffs' claim are sufficient.
Then this Court said that surely, the Defendants in this and similar cases can, without much intellectual effort, divine from Plaintiffs' allegations that the adjuster is being accused of intentionally or negligently cheating Plaintiffs out of legitimately owed insurance proceeds. If, through discovery, these "factual allegations" prove to be true, there is a reasonable possibility that the Plaintiffs could establish some violations of the Texas Insurance Code committed by the adjuster, if not, summary judgment would be the appropriate way to resolve the issue on the merits.
This case is a victory for people needing to sue an insurance company and its adjusters.

Even in Grand Prairie, Arlington, Fort Worth, Dallas, Euless, Bedford, Hurst, Saginaw, Roanoke, Keller, Grapevine, and other locations in the Metroplex area, arson fires occur. One of the first things an insurance company is always going to do when there is a fire claim is investigate for the possibility of arson. If the insurance company determines a fire is arson, the next thing they will do is see if the insureds' under the insurance policy are responsible or have a motive to set the fire. Of course by this time, the insured needs to be consulting with an experienced Insurance Law Attorney.
A 1987, case from the Dallas Court of Appeals styled, Texas General Indemnity Company v. Jerry L. Speakman and Donald E. Coffman, is interesting based on the facts in the case. There are a lot of legal procedures in the case, which will not be discussed because they are unusual and hard to follow without a lot of legal knowledge. But briefly on the legal aspects, the trial was to the Judge instead of a jury and the Judge ruled in favor of the insurance company. Coffman and Speakman filed a "motion to correct judgment or for new trial" and a "first amended motion to correct judgment or for a new trial." Surprisingly the Judge reversed his earlier decision and ruled against the Texas General Indemnity Company. He awarded close to $200,000 to the insureds. This appeals court upheld the trial court decision with some modification to the money.
Here are some of the facts in this case.
Speakman and Coffman jointly owned a house in Tool, Texas, which was destroyed by fire on December 31, 1983. They had left the house about three months earlier to live at a townhouse in Dallas which they purchased together. On the morning of December 31, 1983, they returned to the house and visited Coffman's mother who lived across the street from the house. They also visited two neighbors before returning to the house about 4:30 - 5:00 p.m. While visiting the neighbors, they made a decision to stay the night in the house and the neighbors gave them two five gallon jugs of water because the pipes were frozen and none of the homes in the area had running water. Speakman borrowed the neighbors van and left for Dallas at about 5:30 or 5:45, in order to get his dog that was in the Dallas townhouse. Coffman took his mother out to eat and to buy groceries and got back to her house about 9:15 or 9:30 p.m. He helped his mother unload groceries then went across the street at approximately 9:30 p.m. He testified that he was going to get one of the five gallon jugs of water for his mother because he and Speakman would not use two five-gallon jugs in just one night. He testified that he opened his front door and "smoke just boiled out of the entry hall of the house." He did not recall if the door was locked but that he normally kept it locked. He returned to his mother's and called the fire department who arrived about ten to twelve minutes later. The firemen entered the house with masks and equipment and put out the fire in about 30 to 35 minutes. The firemen determined the fire had originated in a back bedroom which is where the fire was confined. But there was smoke damage throughout the house. The firemen had opened all 32 windows in the house and chopped up a portion of the bedroom floor to ascertain whether the fire had spread below the floor. The firemen told Coffman to check the house every hour to see if the fire rekindled during the night.
Speakman arrived about twenty minutes later and they and the dog returned to Coffman's mother's house. As they were discussing the nights events, the mother noticed the house was on fire again. The fire department arrived at about 11:15 and finally extinguished the second fire. The entire house and contents were destroyed except for a painting that hung near the doorway.
Coffman and Speakman testified that they did not keep anything unusually dangerous or inflammatory in their home. They also testified they had lit four or five candles earlier to remove the dank smell from the house being "tied up." Plus, the house contained a wet bar that was well stocked. The garage was used for storage and was full enough that a car would not fit into it, unless things were removed.
The house was worth about $90,000 more than it was insured for and the content loss exceeded the insurance value by about $7,000.
Neither Coffman nor Speakman appeared to have any financial problems.
The chief of the Tool Volunteer Fire Department was Bill Forrester who was also a Dallas Fire Department employee of twenty-seven years. Forrester had assisted with both fires and after the first fire had sent someone to the attic to make certain the fire had not spread to the attic but could not recall who he sent. He was not able to determine how the first fire originated. He did recall seeing flames shooting out of the roof upon arrival to the second fire. During the course of the fire, he went to the rear of the house where the garage door was down and locked. When it was opened, he recalled seeing a "pretty blue flame" that would not extinguish. He opined that the second fire was incendiary. He said the blue flame he saw was caused by petro-chemicals. On cross examination he admitted the second fire could have been a rekindle of the first fire and that the garage was not filled with smoke in an amount disproportionate to the flame involved as is common with petrochemical induced flame.
Travis Roberts, Fire Marshall for the City of Athens, testified that Forester called him to assist in an investigation regarding the Tool fire. Roberts testified that he had been involved in fire fighting for seventeen years and that he had considerable training and experience in arson investigations. He took three samples from different areas in the house that appeared to have strange "burn patterns" but lab results reported no traces of any flammable liquid . Roberts stilled testified that evidence regarding "burn patterns" suggested the presence of an accelerant. He also testified that "rekindles" sometimes occur despite the best efforts of firefighters.
Donald Owen testified that he was a member of the Tool Volunteer Fire Department and that he helped fight both fires in question. Owen testified that he never observed anyone check the attic after the first fire. Owen testified that he was the firefighter who chopped out the panels in the garage door during the second fire and that he did not notice a blue flame on the garage floor. Owen testified that if there had been a blue flame he would have noticed. Owen testified that he wasn't particularly looking for types of flames but was instead concentrating on fire fighting and that if, in fact, Forrester was near the garage and observed a blue flame, he, Owen, would have no reason to doubt Forester. Owen testified that it was his experience that rekindles sometimes do occur.
Also testifying was an expert in origins of fires, Kal Britt McManus, who was the president of Loss Research and Analysis, Inc. (LRA), and that LRA was employed by Texas General Indemnity Insurance Company. He testified that both fires were arsons.
McManus testified on cross examination that he did not know of the well stocked bar at the time of his investigations. Nor did he know of the candles burning in the house prior to the first fire. He also testified about "spalling marks" being common in arson fires but there were no "spalling marks" in this fire. He did not indicate in his report anything about wind conditions but did know that thirty two windows had been left open after the first fire. McManus did not investigate who set the fires.
Coffman's mother testified and backed-up Coffman's version of events. She also testified that she never noticed the smell of any accelerant.
All the above gives one a small insight into what testimony can be in a suspected arson fire. The insurance company will hire fire origin experts. Residue of the fire will be sent to the lab for analysis. Fire fighters will be interviewed. Neighbors will be interviewed. The financial position of the insured will be investigated.
None of this is a pleasant experience.

People in Grand Prairie, Dallas, Fort Worth, Arlington, Richardson, Garland, Duncanville, De Soto, Irving, Mesquite, and other places in Texas, who have a homeowners insurance policy, probably know they are suppose to pay their premiums. Beyond paying those premiums, most people do not understand what other obligations they have as part of the policy.
One of the obligations most insureds have under a homeowners policy is to submit to an examination under oath (EUO) if requested by the insurance company. A 2005, case out of the Beaumont Court of Appeals discusses this obligation. The style of the case is, In re Foremost County Mutual Insurance Company and Jim Doland. Here is some information on the case.
It is a mandamus proceeding arising out of Foremost's denial of a fire loss claim. The claim was denied after the insured, Kenneth Whitney, refused to submit to an EUO. Foremost sought an abatement of the lawsuit filed by Whitney until he had complied with the policy requirement of submitting to an EUO. The trial court refused Foremost's request and the mandamus proceeding resulted.
After Whitney suffered the fire loss and he made a claim to Foremost, Foremost began an investigation of the claim. It's investigator, Doland, suspected arson and asked much information from Whitney. Every time Whitney provided information, Doland would ask for more information. Eventually, lawyers for Foremost became involved and reaffirmed the request for Whitney to submit to an EUO. Whitney hired a lawyer and claimed that Foremost had waived its right to obtain the EUO.
The policy included the following paragraphs:
"PART IV - CONDITIONS
All obligations of the Company under this policy are subject to the performance by the insured of the following conditions:
A. General Conditions Applicable to Both Parts of the Policy
...
4. Assistance and Cooperation
The insured and any person interested in or claiming any benefit under this policy shall cooperate with the Company and, upon the Company's request, assist in making settlements, in the conduct of suits, and in enforcing any right of contribution, indemnity or recovery against any person or organization who may be liable for any injury, damage or loss with respect to which insurance is afforded under this poilcy.
5. Proof of Loss
The Insured or someone in his behalf shall file proof of loss with the Company within 91 days after the occurrence of the loss, unless such time is extended in writing by the Company, and submit to and subscribe examinations under oath conducted by anyone designated by the Company, produce for the Company's examination all pertinent papers, documents and records (or certified copies thereof, if originals be lost), permitting copies thereof to be made by or on behalf of the Company all at such reasonable times and places as the Company from time to time may designate ....
8. Action Against the Company
No payment shall be due by the Company under this policy and no action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully complied with all of the terms of this policy, nor until 30 days after proof of loss is filed and that amount of loss is determined as provided in this policy ...."
In discussing this case the court stated as follows:
"If policy language is worded so that it can be given a definite or certain legal meaning, it is not ambiguous and we construe it as a matter of law .... For an event to constitute a 'condition precedent' under a contract, the contract must provide that the event shall happen or be performed before a right can accrue to enforce an obligation."
The court then pointed out that Paragraph IV A. 5. of Whitney's policy provided that a claimant, upon the company's request, shall "submit to and subscribe examinations under oath conducted by anyone designated by the Company ..." Paragraph IV A. 8. provides that "no action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully complied with all of the terms of this policy ..." These policy provisions clearly required Whitney to provide an EUO upon Foremost's request before filing suit.
Whitney's argument that Foremost waived it right to obtain his EUO relied on Whitney's assertion that Foremost was required, pursuant to the Texas Insurance Code Prompt Payment of Claims Act, to request the EUO within 15 days of Foremost receiving notice of the claim.
The court here pointed out the misreading of the statute by Whitney. The statute requires Foremost to begin its investigation and request documents and information it needs within 15 days, but also states that additional requests may be made during the investigation of the claim if such additional requests are necessary.
In conclusion, this court ordered that the case by abated until such time as the condition precedent, the EUO, had been completed.

Lots of people in Weatherford, Mineral Wells, Aledo, Springtown, Millsap, Brock, Hudson Oaks, Willow Park, Cool, Peaster, Poolville, and other towns in Parker County own rental property. There will be times when that property is vacant. What if a fire occurs when the property is vacant?
The Fort Worth Court of Appeals issued an opinion in 2002, that dealt with the above scenario. The style of the case is, Charles J. Walch v. United Services Automobile Association Property and Casualty Insurance Co. The trial court had granted a summary judgement in favor of United and Walch appealed. There were several issues in this case but the relevant part to this writing, is where the appeals court overruled the trial court as it relates to the question as to whether the property was "vacant" at the time the fire loss occurred.
Here are relevant facts to know. Walch owed a small rental house that was insured by United under a policy of insurance. The tenants of the house moved out on May 15, 1999, and left it in a damaged condition. About ten days later, Walch began renovations. On September 2, 1999, Walch discovered the house had been damaged by fire and in October filed a claim for the fire losses.
The policy with United contained a vacancy clause which read:
17. Vacancy. During the policy term, if an insured building is vacant for more than 60 consecutive days immediately before a loss, we will not be liable for a loss by the perils of fire and lightning or vandalism or malicious mischief. Coverage may be provided by endorsement to this policy.
United contended that as a matter of law, there was no coverage due to the house being vacant more than 60 days before the fire loss.
Walch contended that the interpretation of the vacancy clause was that it should be read to mean entire abandonment, deprived of contents, empty, that is, deprived of contents of substantial utility. United on the other hand urged that vacant meant whether the character of the building's contents, if any, is such that a person could find it being used as a residence or dwelling.
The insurance policy did not define the term "vacant."
In examining the law in Texas as it relates to the definition of the term "vacant" in case law, this court looked at other cases and prior holding by the Texas Supreme Court. A 1940, case held the definition of "vacant" in a fire insurance policy to mean "entire abandonment, deprived of contents, empty." A 1992, Houston Court of Appeals [1st Dist.] case, stated, "The term 'vacant' means an entire abandonment, deprived of contents, empty, that is, without contents of substantial utility." The same Houston court in citing other courts also has said, "The term vacant means 'entire abandonment, deprived of contents, empty ...' that is, without contents of substantial value."
United's argument went more to whether or not the property was unoccupied.
The court in making it ruling in favor of Walch, said that the argument did not turn on whether the contents of the dwelling demonstrated that a person either resided or intended to return and reside in the dwelling, rather, whether the term vacant was satisfied when the term is interpreted by Texas courts to mean, entire abandonment, deprived of contents, empty, that is, without contents of substantial utility.
Fire claims that are denied by the insurance company based on the reason that vacant property is excluded under the policy are exactly the type of cases in which an experienced Insurance Law Attorney needs to be involved. Early involvement is needed to lend greater assurance to a favorable outcome.

It will happen to someone in Grand Prairie, Weatherford, Fort Worth, Arlington, Lake Worth, Benbrook, Crowley, North Richland Hills, or somewhere else in Tarrant County or a surrounding area. A spouse will be upset or depressed or temporarily out of control and while in one of these mindsets, burn the house down on purpose.
The San Antonio Court of Appeals issued an opinion in 1996, in a case where it appears a spouse burned down the house. Of course the insurance company denied the claim based on the policy defense of arson. The style of the case is, Jan Saunders v. Commonwealth Lloyd's Insurance Company.
This was an appeal from a summary judgment in an insurance bad faith case. Here is some background.
Jan and Dan Saunders' house was completely burned down by a fire. Commonwealth's investigation concluded that Dan Saunders was responsible for setting the fire and he was later convicted of arson, but this conviction was overturned and he was later acquitted of the crime.
Commonwealth continued with its denial of the claim.
Although Commonwealth treated Jan as an innocent spouse, it refused to pay any part of the claim because the house was community property. Later the company agreed to pay her half of the claim, plus interest, based on Texas common law. This put an end to her contract claim but she continued with the bad faith claim.
Under Texas law, an insurer who can prove that it possessed a reasonable basis for denying or delaying payment of a claim, even if that basis is eventually determined by the fact finder to be erroneous, enjoys immunity from statutory bad faith claims under the Texas Deceptive Trade Practices Act and the Texas Insurance Code.
So the issue here was whether Commonwealth proved it had a reasonable basis to deny the claim. Commonwealth argued that its reasonable basis for denying the claim of Jan was that Texas law did not allow the innocent spouse to recover insurance proceeds when community property was destroyed by the arson acts of the culpable spouse.
An examination of past Texas law on this issue showed that historically, Texas law did not allow either an innocent spouse or an innocent co-insured to recover insurance proceeds when community property was destroyed by the arson acts of her culpable spouse. At the time of this case, the Texas Supreme Court had not decided whether an innocent spouse could recover under the same circumstances if the property destroyed was community property.
This court examined how this issue regarding arson and community property was being handled by the Texas courts and by the Federal courts. Based on the analysis and the state of the law at that time, the insurance company was not acting in bad faith in denying the claim. Thus there was no claim left for Jan to pursue since her contractual claim had already been paid. Thus, this court upheld the summary judgment ruling of the trial court.
When someone loses property in an arson fire and the claim for the loss is denied, it is important to seek the counsel of an experienced Insurance Law Attorney. The facts of the case and the relationships of the parties involved all calculate into determining whether there is any coverage for the innocent party.