Dallas Fort Worth Insurance Lawyer Blog

What if you live in Fort Worth, Arlington, Grand Prairie, Dallas, Weatherford, or any other town in Texas and you are in a wreck with a drunk driver? Can you get punative damages from your ininsured / underinsured (UM) insurance policy because the other person was drunk at the time of the accident?
This is one of the issues in the case, Suzanne Vanderlinden v. United Services Automobile Association Property and Casualty Insurance Company. This case was decided in 1994, by the Texarkana Court of Appeals.
In this case Vanderlinden was injured in a car wreck caused by a drunk driver. At the trial of this matter the trial judge would not let Vanderlindens' attorney submit a jury question to the jury asking for punative damages due to the other driver being drunk. Vanderlinden was sueing her own insurance company, United Services Automobile Association Property and Casualty Insurance Company (USAA) to recover monies by way of the underinsured motorist coverage portion of her insurance policy with USAA. The Texarkana Court cited an 1849, Texas Supreme Court case saying, "Punative damages are typically not to compensate a damaged plaintiff for his injuries; rather, they are to discourage the defendant from continuing his heinous activities and to likewise discourage others from similarly misbehaving." Thus, the issue in this case is whether an injured person may obtain punative damages from the injured persons insurance company through the underinsured motorist clause.
The policy language says the insurer will:
... pay all sums which the insured ... shall be legally entitled to recover as damages from the owner or operator of an automobile ....
The court also noted that the Texas Insurance Code, Section 1952.101, requires this UM coverage to be made available in all automobile insurance policies.
Furthermore, the Texas Insurance Code is to be liberally construed to give full effect to the policy which led to its enactment and the court is to review the statutory definition of exemplary damages as "any damages awarded as an example to others, as a penalty, or by way of punichment," See also the Texas Civil Practices & Remedies Code, Section 41.001(3).
In the courts' ruling they stated; "Most states that have expressly considered this question have held that in this context an insurance company should not be liable for punitive damages because to allow such recovery would be antithetic to the acknowledged purpose to be served by rendition of such damages."
In reaching this conclusion the court cited and took the reasoning from the following"
1) Milligan v. State Farm Mutual Ins. Co. - Houston 14th Court of Appeals - 1997,
2) State Farm Mutual Ins. Co. v. Shaffer - Houston 1st Court of Appeals - 1994
3) Government Employees Ins. Co. v. Lichte - El Paso Court of Appeals - 1991

Insurance policies have different forms of coverage depending on what it is that the policyholder purchases. In Texas, a homeowners policy purchased in Grand Praire, Arlington, Dallas, Fort Worth, or Weatherford, is going to have the same basic coverage. Parts of this coverage is for losses such as water damage, hail, fire, wind, and others. But most homeowners insurance policies also have liability coverage.
Liability coverage is coverage that protects and pays on behalf of the policyholder for injuries to others caused by the negligent acts of the policyholder. The normal homeowners policy is not going to pay or protect from acts that are voluntary or committed on purpose.
A lawsuit litigating this issue was decided by a Texas Appeals Court in Houston. The name on the case is State Farm Lloyds v. Henderson, et al. In this case, the underlying facts were that Henderson, after drinking a large amount of alcohol, punched a guy named Burnley in the face causing severe bruises and cuts and the loss of one of Burnley's teeth. Henderson was sued by Burnley. State Farm Lloyds was obligated to defend if the injuries sustained by Burnley were the result of an accident. If the injuries to Burnley were intentionally or voluntarily caused by Henderson, then State Farm did not have an obligation to defend Henderson, or to pay for any of the damages suffered by Burnley.
This case is a little complicated in the legal manuvering that occurred but the facts and issues in the above paragraph are what is relevant. The Court ultimately ruled that State Farm had no duty to defend Henderson or to pay damages to Burnley. The Court stated that Henderson acted voluntarily in becoming intoxicated and did so knowing of his propensity to loose control. The facts alleged in the lawsuit clearly established that Henderson voluntarily and intentionally caused Burnley's injuries.
An experienced Insurance Law Attorney may have made a difference in this case. The wording in a lawsuit must be very carefully drafted. This drafting must be done with an awareness of what it takes to invoke insurance coverage.

A resident of Grand Prairie recently caught his insurance agent in Dallas committing fraud. The agent was taking the cash payments for the premiums from the resident and hand writing a receipt. Sounds okay so far. Next, the agent was pocketing the money rather than forwarding the payment to the insurance company. This could have happened in Arlington, Fort Worth, Weatherford, or anywhere else in Texas.

The agent would have continued to have got away with this except that the resident had an accident and got sued and when he turned the lawsuit papers over to the insurance company and was denied coverage the resident went to an experienced Insurance Law Attorney. A subsequent investigation revealed what was happening and a lawsuit is currently going forward against the agent.

Most of the time when people think of insurance fraud, they think in terms of someone staging a theft, an accident, or committing arson to recover monies from an insurance policy. This type of insurance fraud is defined and talked about in the Texas Penal Code, Chapter 35. Section 35.02, describes some of what constitutes an offense and also describes the penalty. The range of punishment is from a Class C misdemeanor, which is a ticket offense, all the way to a Felony of the First Degree, which is punishable by up to life in prison. The monetary cost includes fines up to $10,000, court costs, and restitution.

The Texas Insurance Code, Chapter 701, is another place where issues concerning insurance fraud are discussed. Section 701.001 says "Fraudulent Insurance Act" means an act that is in violation of a penal law and is: (A) committed or attempted while engaging in the business of insurance; (B) committed or attempted as part of or in support of an insurance transaction; or (C) part of an attempt to defraud an insurer.

The problem with both of the above laws dealing with insurance fraud is that they are focused on the person who may be trying to cheat an insurance company. The fraud that companies and agents commit are not the focus. When an insurance company or an agent commits fraud on one of its' insureds or customers there are things that can be done. But these things are less criminal in nature and more punative in a financial aspect. And this is where Insurance Law Attorneys are most helpful.

Even without an attorney a person can act on their own by turning in the company or agent to the Texas Department of Insurance. Most attorneys would discourage any actions being taken until you have first spoken with an experienced Insurance Law Attorney so that any complaint forms or other types of complaints filed are done so in a proper manner and that nothing that would jeopardize the case is handled in an incorrect manner.

The Texas Supreme Court in the case Tanner vs Nationwide has ruled in a case concerning exclusions for "intentional acts" committed by an insured driver.

The case facts involved a high speed chase wherein the driver, Gibbons was fleeing the police going at speeds in excess of 80 miles an hour in urban and residential neighborhoods, topping 100 miles per hour in rural areas, swerving across the road, going into and across fields, and around police cars. The chase ultimately resulted in Gibbons entering an intersection where the Tanner family was also entering and had the right-of-way. Gibbons did slam on his brakes and skidded to try and avoid a collision with the Tanners. Injuries resulted to the Tanner family.

The Tanners sued Gibbons and took a judgment against Gibbons however Nationwide refused to defend Gibbons or pay for Tanners damages arguing the intentional-injury exclusion in the policy of insurance barred coverage for the Tanners' claims. Nationwide contended that when Gibbons fled police, he voided coverage under the policy's intentional-injury exclusion, which withholds coverage for: "Property damage or bodily injury caused intentionally by or at the direction of an insured, including willful acts the result of which the insured knows or ought to know will follow from the insured's conduct".

The court focused on the word "intentionally" as used in the exclusion saying that it speaks to the resulting damage or injury, not the actions that led to it. In other words the conduct of fleeing and speeding may have been intentional but the causing of injury was not intentional.

As the court stated, the purpose of our auto insurance liability laws is to afford protection to people injured by other drivers acts. The insurance company says that when the accident or injury is intentional there is no coverage. The distinction pointed out by the court is that drivers routinely do things intentionally that result in accidents such as speeding, running stop signs, red lights, improper lane changes or as here failing to yield to the vehicle that has the right of way such as the Tanners. To exclude coverage for these types of "intentional" acts would make insurance liability essentially a waste of time. So the focus is; did Gibbons intend to cause the injury? The evidence shows he did not, in that he slammed on his brakes and skidded in an attempt to avoid the wreck and injuries to the Tanners.

This case is a victory for innocent drivers on the road such as the Tanners who otherwise would be victims without recourse of the negligent acts of other drivers who at the time of the wreck may have been committing an intentional unlawful act such as speeding or running a light simply because they were in a hurry.