Dallas Fort Worth Insurance Lawyer Blog

Persons who are insured in Grand Prairie, Arlington, Mansfield, Fort Worth, Dallas, De Soto, Duncanville, Cedar Hill, and other places in Texas are probably unsure what the phrase "like kind and quality" means in an insurance contract. Here is a case that may help to understand.
This is a Texas Supreme Court case that was decided in 2004. The style of the case is, Republic Underwriters Insurance Company v. Mex-Tex, Inc. Here are some relevant background facts in the case:
The roof atop a shopping mall was damaged by a hail storm. Before the insurance company agreed to pay for the replacement, the insured, owner of the mall, retained a roofer on a priority basis to replace the roof in order to avoid further injury to the tenants from future rains at a total cost of $179,000. Republic estimated the cost of replacing the roof with an identical make to be $145,460 and tendered that amount. The new roof was substantially similar in kind and quality to the old one, but the additional cost was due to the method of the roof's attachment to the building and the high priority of the job. Republic refused to pay the balance of the claim and the insured sued. Tex-Mex sought to recover the balance of the amount owed plus a statutory 18% penalty on the entire claim. Republic argued that the penalty, if any, should be assessed only on the disputed amount, rather than on the entire claim. The trial court entered the judgment in favor of Tex-Mex and Republic appealed. The Amarillo Court of Appeals affirmed, holding that the policy did not require the replacement roof to be identical and that an insurer's tender of the amount it believed was owed on a claim did not stop the accrual of Texas Insurance Code 542.060 penalties, or prejudgment interest, on what was later judicially determined to be the full amount of the claim. This Texas Supreme Court granted review of the case.
The Texas Supreme Court reversed and remanded, agreeing that replacement of a damaged roof with one of "like kind and quality" fell within the policy but rejecting the lower court's holding that Insurance Code, Section 542.060 calls for an 18% penalty of the amount of the claim, not just the amount outstanding after partial tender.
The court observed that interpreting "claim" as the amount ultimately determined to be owed net of any partial payments made prior to such determination was consistent with the statutory goal of encouraging prompt payment by insurers of undisputed amounts. The court also found a lack of support for the trial court's conclusion that the insurer's payment was in full satisfaction of the claim. Therefore, the statutory penalty could be imposed on $33,540, the difference between the trial court's determination of the claim amount and the partial payment tendered by the insurance company, from the date of payment until the date of the judgment.
This case helps explain the "like kind and quality" issue but it points out something else in the process. What else it does is point out one of the ways for determining how late payment penalties work.

A natural question for someone in Weatherford, Mineral Wells, Aledo, Hudson Oaks, Willow Park, Millsap, Brock, or anywhere else in Parker County to ask is; What is the value of my claim?
When the claim is a personal injury claim, there is no easy answer. One general principle in this regard is that there are laws against making a "double recovery." A double recovery would be where you collect money from more than one source for an injury. The most likely place for this to be seen is where a person is injured in an auto accident caused by another. The injured person goes to the hospital and pays for the hospital bills with their personal health insurance. Then later on, the injured person makes a claim against the person who caused the accident and injuries and the insurance company for that person pays the injured person again, for the same hospital bills. Technically, this is illegal.
Another example is where the injured person makes a claim against two other people who may be responsible for the injuries and both pay all the bills.
In the second example above the Texas Civil Practices & Remedies Code, Section 33.012(b) says, "If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by the sum of the dollar amounts of all settlements."
What Section 33.012(b) means is that if a person has a claim that is worth $1,000, then he cannot collect $1,000 from both people he is making the claim against. So, if one pays $100, then he still has a claim against the other for $900.
In the first example above, where the injured person has had the hospital bills paid by his insurance company, then the hospital has a subrogation interest in any amounts the injured person receives from the person who caused the injuries. The amount of the subrogation amount would be an amount up to what his health insurance has paid. So, if the injured person has a claim worth $1,000 but only $500 is paid by the health insurance company and if the injured person collects $1,000 from the person who caused the injury, then $500 has to be paid back to the health insurance company and the injured person can do as they wish with the other $500.
An experienced Insurance Law Attorney knows how to use other laws and legal principles to increase the total amount of the recovery and or lessen the amount of money that has to be paid back as a subrogation interest. - One thing to know, is it can be very confusing.
One place where a double recovery is allowed and fully legal is in auto injury claims where the injured person has Personal Injury Protection (PIP) benefits. The Texas Insurance Code, Section 1952.155(a) and (b).
Section 1952.155(a) says, "The benefits under coverage required by this subchapter are payable without regard to: (2) any collateral source of medical, hospital, or wage continuation benefits." This means that the injured person can collect his PIP benefits and then still make a claim against some other personal insurance he has for the same losses such as medical bills or lost wages. The caveat here is that there are exceptions to this and is again, a situation where an experienced Insurance Law Attorney needs to be involved to stay out of trouble.
Section 1952.155(b) says, "Except as provided by Subsection (c), an insurer paying benefits under coverage required by this subchapter does not have a right of subrogation or claim against any other person or insurer to recover any benefits by reason of the alleged fault of the other person in causing or contributing to the accident." This means that the PIP insurance company cannot subrogate against the insurance company of the person who caused the injuries. There is only one exception to this statute which is in Subsection (c), and this writer does not know where it has ever come into play.
The lesson to be taken from this posting is that the value of a claim has to take into account the rules discussed above.

Grand Prairie, Fort Worth, Arlington, Mansfield, Crowley, Benbrook, Burleson, Cresson, and other Tarrant County residents would naturally wonder what the value of their claim is when their insurance company violates the law in the way they treat one of their customers. In other words, what will it cost the insurance company.
The most common actual damages when an insurance company treats somebody wrong are the actual policy benefits themselves. In certain cases under the Insurance code, the amount of policy benefits wrongfully withheld is an element of damages caused by the insurance company's conduct. This is often held to be the case as a matter of law. This was stated in the Texas Supreme Court case, Vail v. Texas Farm Bureau Mutual Insurance Company, decided in 1988. The Supreme Court in the Vail case rejected the insurance company arguement that damages for an unfair settlement practice had to be something more than the amounts due under the policy. The court held that damages for a wrongful refusal to pay are at least equal to the policy benefits, as a matter of law. The reasoning of the court was:
The fact that the Vails have a breach of contract action against Texas Farm does not preclude a cause of action under the Texas Deceptive Trade Practices Act and what is now Section 541 of the Texas Insurance Code. Both the DTPA and the Insurance Code provide that the statutory remedies are cumulative of other remedies. They said it was well settled that persons without insurance are allowed to recover based on false representations of coverage, and that an insurance company may be liable for damages to the insured for its refusal or failure to settle third-party claims. It would not be right to bar an insured person who has paid premiums and is entitled to protection under the policy of insurance from recovering damages when the insurance company wrongfully refuses to pay a valid claim. The court stated that "Such a result would be in contravention of the remedial purposes of the DTPA and the Insurance Code."
One thing for any person, including an experienced Insurance Law Attorney to be aware of here is that sometimes the courts construe this language in the Vail case to not always include that policy benefits are damages as a matter of law. This was the result in the 1995 case, Twin City Fire Insurance Company v. Davis. The court held that policy benefits culd not serve as independent tort damages resulting from the insurance company's breach of its duty of good faith and fair dealing, which were necessary to support exemplary damages. Other cases have also concluded that policy benefits are not necessarily damages as a matter of law. One of these cases is Seneca Resources Corporation v. Marsh & McLennan, Inc., a 1995, Texas Court of Appeals, Houston 1st District case. Another is, Beaston v. State Farm Life Insurance Company, a 1993, Austin Court of Appeals case.
The issue boils down to - making sure you have good legal representation when pursueing a claim against an insurance company for wrongfully denying a claim.

Solutions - that is what someone in Grand Prairie, Arlington, Fort Worth, Bedford, Hurst, Euless, North Richland Hills, Keller, Colleyville, Grapevine, and other Tarrant County cities want when they are having problems with their insurance company.
One thing that can be recovered in an insurance claim situation is "actual damages." Actual damages are the real damages someone suffers. Actual damages are also called compensatory damages. Compensation paid for harm, loss or injury suffered by an aggrieved party due to an act or a failure to act by another party/parties. Actual damages can be measured. For example, 'A' suffers a loss of income and or wages due to injuries that resulted in A's unemployment. They also include medical expenses and specific losses due to breach of contract, like in insurance cases where a house burns down or a car suffers hail damage. It is usually amounts that can be easily proven. Examples that are not so easy to prove are, pain and suffering, impairment, disfigurement, mental anguish, loss of comfort.
The Texas Supreme Court, in 1997, set out the following principles that govern recovery of "actual damages" under the similar language that existed under the Texas Deceptive Trade Practices Act - that is that the same analysis should apply to the Texas Insurance Code, Section 541.152(a)(1). The relevant case was, Arthur Andersen & Company v. Perry Equipment Corporation.
Here is the language the court used:
The amount of actual damages recoverable is "the total loss sustained as a result of the deceptive trade practice."
Actual damages are those damages recoverable under common law. At common law, actual damages are either "direct" or "consequential." Direct damages are the necessary and usual result of the defendant's wrongful act; they flow naturally and necessarily from the wrong. Direct damages compensate the plaintiff for the loss that is conclusively presumed to have been foreseen by the defendant from his wrongful act.
Consequential damages, on the other hand, result naturally, but not necessarily, from the defendant's wrongful acts. Under the common law, consequential damages need not be the usual result of the wrong, but must be foreseeable, and must be directly traceable to the wrongful act and result from it. Of course, foreseeability is not an element of producing cause under the DTPA. Still, if damages are too remote, too uncertain, or purely conjectural, they cannot be recovered.
Under Texas common law, direct damages for misrepresentation are measured in two ways. Out-of-pocket damages measure the difference between the value the buyer has paid and the value of what he has received; benefit-of-the-bargain damages measure the difference between the value as represented and the value received. Under the DTPA, a plaintiff may recover under the damage theory that provides the greater recovery. Both measures of damages are determined at the time of sale.
Here is an example of an "actual damage" you may not normally consider. The Texas Court of Appeals, Houston 14th District, in 1989, in the case styled, Paramount National Life Insurance Company v. Williams, allowed an insured to recover actual damages for loss of credit or injury to credit reputation based on receiving notice letters from bill collectors arising from medical expenses the insurer misrepresented would be paid.
There are other damages that can be recovered besides "actual damages" when you are dealing with violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act. What this means is that an experienced Insurance Law Attorney needs to be consulted to make sure that all allowable theories of recovery are considered.

Claimants in Grand Prairie, Weatherford, Arlington, Fort Worth, Dallas, Mansfield, Irving, Hurst, Euless, Bedford, Keller, Azle, Aledo, and any other place in Texas would naturally wonder about the value of any claim they may have against an insurance company. Sometimes the valuation is very simple. An example would be where your car is a total loss and it is insured for $10,000 and you and the insurance company agree it is worth $10,000. You look at your policy and determine that you have a $500 deductible and thus you are entitled to a payout of $9,500.
If only they were all so simple.
Here is an actual case example that is less logical. On February 4, 2011, the Court of Appeals for the Seventh District of Texas at Amarillo issued an opinion styled, Progressive County Mutual Insurance Company v. Natividad Delgado.
Here is some background. In December 2007, Delgado filed a negligence action against George Brent Bailey, Jr. Bailey had been towing an auto which became disconnected and struck Delgado's pickup. Delgado also sued Progressive for recovery of underinsured benefits alleging that Bailey was underinsured. Delgado settled with Bailey's insurance company for the policy limits of $25,000. At trial against Progressive, Delgado was awarded $52,968.39 for his medical expenses, $13,258.00 for his past physical pain, $5,000.00 for past physical impairment, and $1,200.00 for past lost earning capacity.
In this case Progressive was entitled to an offset for the $25,000 paid by Bailey's insurance plus an offset of $2,500 already paid by Progressive as part of Delgado's PIP coverage.
Here is where the case gets tricky / confusing:
Delgado had health insurance that had allready paid the medicals. Pursuant to the contract between Delgado, the health insurance, and the medical providers, $4,763.77 had been paid to the medical providers as full and final payment on Delgado's bills with no more money due from Delgado.
At this point a relatively new law that was enacted, Texas Civil Practices & Remedies Code, Section 41.0105, purports to limit Delgado's claim on his medical bills to what was actually "paid," the $4,763.77, rather than the amount "incurred", which was $59,968.39. This is called the "paid" versus "incurred" issue in cases involving medical bills.
So now, instead of a claim for $52,968.39 in medical bills, Delgado was left with a claim for $4,763.77 in medical bills. When this amount is added to the amounts for past physical pain, past physical impairment, and past lost wages, the total is less than the $25,000 already received by Delgado from Bailey's insurance company. Thus, the court said that Delgado did not have an underinsured motorist claim.
The result in this case is being disputed all over the state of Texas. There have been other appeals level courts that have made ruling on this "paid" versus "incurred" issue. This issue arises out of the Section 41.0105 referred to above. Ultimately this issue will be decided by the Texas Supreme Court.
The arguement on this issue can be very confusing when the following is considered.
1) the law in Texas has long been that courts are not suppose to take into evidence any "collateral" sources of payments for medical expenses. This is called the "collateral source rule." This means that a Judge or jury is not to consider whether or not there is other insurance available.
2) many times the money recovered for medical expenses has to be used to pay those bills or if the bills have already been paid, to be used to reimburse whoever has made those payments.
3) why should the person who caused the injury get the benefit of a contract the injured person has with someone else - in this case the injured person's health insurance.
4) this ruling does not take into account the monies that have been spent by the person with insurance to maintain that insurance.
5) this ruling does not take into account the possibility that the person who has the insurance may now get his insurance rates raised or his policy cancelled due to the claim.
These are just five of the many arguements against the fairness of this ruling. There are also many other arguements related to the legislative intent of the law when it was passed and the wording of the statute.
As stated above, this is not the end of this issue. This is a case that will ultimately be decided by the Texas Supreme Court. Also, the Texas Legislature is looking at rewriting this law to make the intent of the law more clear.
There are ways to diminish the harm that results from this law. An experienced Insurance Law Attorney can be useful in navigating this law and optimizing a recovery for his client.

A fair question for someone in Grand Prairie, Arlington, Mansfield, Alvarado, Keene, Joshua, Cleburne, Granbury, Aledo, Hudson Oaks, or anywhere else in Texas might be; What is the potential recovery against an insurance company that breaks their agreement with me?
Of course, the answer would depend on many things. The harm caused by breaking the agreement, the intent of the insurance company in breaking the agreement, was a lawsuit filed or was there just some phone calls and correspondence back and forth, did the insured have to hire an experienced Insurance Law Attorney to protect their rights, etc. Many factors come into play but as it relates to just the breaking of the contract here is some food for thought.
Policy benefits are the basic recovery allowed for the insurance company's breaking of its contractual obligations. An insurance company's refusal to pay the insured's claim causes damages in at least the amount of the policy benefits wrongfully withheld. This was stated by the Texas Supreme Court in the case, Vail v. Texas Farm Bureau Mutual Insurance Company, a case decided in 1988. Another Texas Supreme Court case, which was decided in 1994, styled Transportation Insurance Company v. Moriel, said breaking of the insurance contract allows recovery of benefit of the bargain damages.
In addition to the above an insured person should be able to recover consequential damages that are the foreseeable result of the insurance company's breach of the contract of insurance. Numerous cases hold that insurance policies are subject to the same rules as other contracts. This was stated in another 1994, Texas Supreme Court case styled, Hernandez v. Gulf Group Lloyds. One of the best established rules is that:
"Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally; i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach."
This was stated as far back as 1854, in Hadley v. Baxendale, and quoted by the Texas Supreme Court in 1981, in the case, Mead v. Johnson Group, Inc. The court in Mead stated, "In an action for breach of contract, actual damages may be recovered when loss is the natural, probable, and foreseeable consequence of the defendant's conduct."
The Texas Civil Practices & Remedies Code, Section 38.001, tells us that a successful claimant may recover attorney's fees for the insurance company's breach of contract. There are also a number of cases standing behind that statute.
One thing that is not recoverable under a breach of contract claim is punative damages. This was made clear by the Texas Supreme Court in the 1995 case, Twin City Fire Insurance Company v. Davis.
When an insurance company breaks an insurance contract with one of its insured's there are many other theories of recovery beyond the breach of contract claim discussed above. Only an experienced Insurance Law Attorney is going to understand and properly advise on these other powerful theories of recovery.

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

It will probably happen to most people at one time or another. Including residents of Dallas, Arlington, Grand Prairie, Mansfield, Burleson, Crowley, De Soto, Mesquite, Weatherford, and lots of other towns and cities in North Texas. An insurance company will refuse a reasonable offer from you or your attorney to settle a claim you have against the insured of an insurance company. If it happens - what can be done?
This article will focus on one aspect of the above. That aspect is when a third party claimant has his demand for a settlement refused by the other person's insurance company. This happens in lots of scenarios but the most common is a car wreck. The most common situation is where the third party causes a wreck wherein the claimant has damages that exceed the insurance policy limits of the third party who caused the damages. Example - The third party has insurance coverage for the state's required minimum as of this date, $25,000. The person injured has medical bills exceeding $40,000 plus another $10,000 in lost wages, plus he is entitled to compensation for his impairment, and pain and suffering.
Next, the injured person through his attorney demands that the insurance company for the person who caused the wreck to pay $120,000 to settle the claim or policy limits, which ever is less. The insurance company refuses to pay. The injured person sues the person who caused the wreck and gets a judgment for $120,000. The insurance pays only the $25,000 that they insured and now the injured person has a judgment against the responsible person for the balance. Of course, most of the time the only money this person has is the money he is insured for.
Next, the injured person gets an assignment from the person who caused the damages for the claim he has against his own insurance company for not settling the case for the policy limits of $25,000 and thus exposing him to a judgment for the balance. This is called a "Stowers" claim.
The injured person then takes this assignment and sues the third parties insurance company for the entire amount of the judgment plus other damages that are available by way of the Texas Insurance Code.
The issue was the focus of a case decided on June 25, 2008, by the Tyler Court of Appeals. This case is styled, Home State County Mutual Insurance Company v. George Horn, Jr., as Assignee of Burrell Rowe, as Administrator or the Estate of Eric A. Hulett. In this case Home State County Mutual Insurance Company (Home State) prevailed because the other side failed to properly make a demand on Home State to settle the case. It is vital here that an experienced Insurance Law Attorney be involved in the claim.
In this case, Horn was severely injured and Hulett, the at-fault driver was killed. Horn's attorney sent a letter dated June 10, 1999 to Home State, the at-fault driver's insurance company, in which he offered to settle Horn's claim for policy limits and promised to fully release Home State's insured from all liability and satisfy the hospital lien, provided the settlement check was received by 5 P.M. on June 25, 1999. Even thought the check was mailed it was not received by the deadline and was refused. Horn sued Hulett's estate and got a judgment for $10,231,844.06.
Horn eventually got an assignment from Hulett's estate and sued Home State for failure to settle a Stowers claim as well as other Insurance Code violations.
Home State got the case thrown out of court and what follows is some reasoning used by the Court in reaching its decision and is good guidance for these types of cases.
-- Per the Stowers case / doctrine, to prevail on a Stowers cause of action, a plaintiff must establish that the insurer was negligent in failing to accept a settlement offer. As stated by the Texas Supreme Court, the law is well settled that an insurer has no affirmative duty to make or solicit settlement offers under Stowers. Rather, the insurer is held to that degree of care and diligence which an ordinary prudent person would exercise in the management of his own business in determining whether to accept an offer made to it. As a threshold matter, "a settlement demand must propose to release the insured fully in exchange for a stated sum of money." Furthermore, for a settlement demand to activate the insurer's Stowers duty, (1) the claim against the insured must be within the scope of coverage, (2) the demand must be within policy limits, and (3) the terms of the demand must be such that an ordinarily prudent insurer would accept it, considering the likelihood and degree of the insured's potential exposure to an excess judgment. In determining whether the claimant's demand was reasonable under the circumstances, along with other factors, evidence concerning claims investigation, trial defense, and conduct during settlement negotiations is considered. Nevertheless, the ultimate issue remains whether the claimant's demand was reasonable under the circumstances such that an ordinarily prudent insurer would have accepted.
This court concluded that Horn failed to demonstrate he was entitled to judgment because no Stowers duty was created as to Hulett's estate. Here, Horn relied on the June 10 letter to support the existence of a Stowers duty. In the reference line of the letter, Horn defined Berry as Home State's "insured" and Hulett as Home State's "driver." The settlement offer then proposed to "fully release your insured from all liability" in exchange for policy limits. Thus, by its express language, the June 10 letter proposed to release Berry only, and did not offer to release Hulett's estate.
Horn's Stowers claim is not his own, but instead is a claim assigned to him by the administrator of Hulett's estate. In order for Horn, as assignee of Hulett's estate, to have a potential Stowers claim, he was required to present evidence of a proposed settlement offer to fully release Hulett's estate. Because Horn's underlying judgment was taken only against the administrator of Hulett's estate, an offer to fully release Berry fails to demonstrate the existence of a Stowers duty owed to Horn and Home State. Since there is no evidence of an offer to release Hulett or his estate in the record, the court held that Horn failed to demonstrate that Home State owed Hulett's estate a Stowers duty and, therefore, was not entitled to judgment.
This case is not hard to follow if you are familar with how the Stowers doctrine works. If you don't know it, then you probably did not really understand what was happening in this case.

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

What does "Stowers" mean to someone in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas? This is something very important to understand.
A Stowers claim is a claim that an insurance company has handled in an improper manner. Most incorrect claims handling by an insurance company can be called "bad faith", and the Stowers claim is just a different and unique version of bad faith. This Stowers doctrine was first articulated in the case, Stowers Furniture Co. v. American Indemnity Co. This is an old case, decided in 1929, but is still good law. This case was decided by what is today, the Texas Supreme Court. In 1929, it was called the Texas Commission of Appeals. When an insurance company violates their duty under the Stowers doctrine, the insurance company can become liable for much more money than the insurance policy provides for in the insurance contract.
A Stowers action arises when the liability carrier fails to make a reasonable settlement within the policy limits, and subsequently, exposes their insured policyholder to a judgment in excess of the policy limits. This Stowers claim belongs to the insured policyholder, not the person sueing the policyholder. What usually happens when the Stowers duty is violated, is that the policyholder assigns the Stowers claim to whoever is sueing the policyholder.
The Stowers duty to an insured policyholder is triggered when the claimant makes a claim against the insurance company that is within the policy limits. There is no responsibility on the insurance company to make the offer of settlement.
The Texas Supreme Court case, Texas Farmers Insurance Co. v. Soriano, states that the Stowers doctrine creates liability only if the insurance carrier negligently rejects a demand from a claimant that is within the policy limits, or the settlement entered into is unreasonable.This Texas Farmers Insurance Co. case, involved multiple claimants with severe damages. The policyholder however, had only a minimum policy to be divided between the seriously injured and multiple claimants.
A person wanting to make a Stowers claim would need the assistance of an experienced Insurance Law Attorney. The reason is, there are legal requirements necessary to be satisfied in order to properly invoke the Stowers liability against the insurance company. One of these requirements is that the settlement offer must offer a full release of all claims in exchange for the payment of the policy limits. This is a requirement per the case, Trinity Universal Insurance Co. v. Bleeker. This is another Texas Supreme Court case, decided in 1998. Here, a release had been offered to Trinity Universal Insurance Co. but a hospital lien had attached to the claim, per Texas Property Code, Section 55.007, thus making the release insufficient to satisfy Stowers.
Another requirement is that the Stowers doctrine only applies to covered claims. An example where this requirement was not satisfied was the case, St. Paul Fire & Marine Insurance Co. v. Convalescent Services, Inc., decided in 1999, by the 5th Federal Circuit Court of Appeals. Here, the Stowers demand made against St. Paul Fire & Marine included a claim for punitive damages. Punitive damages were not covered by the insurance policy, thus Stowers was not properly invoked.
Yet another requirement is that the release being offered in the Stowers demand, be a release of the proper parties. In Home State County Mutual Insurance Co. v. Horn, decided in 2008, the release properly named the insured but not the actual driver of the insured vehicle.
These are just a few examples of where a proper Stowers demand was not made. There are other requirements that must be satisfied. When these requirements are properly satisfied, the claim can be very much larger than what it originally was, due to the insurance company's violation of the Stowers doctrine.

For the Grand Prairie resident or the resident in Arlington, Weatherford, Fort Worth, or Dallas, the concern is - What do I get paid if the insurance company does me wrong.
There are several types of damages to be recovered, depending on the wrong committed by the insurance company. This article will deal with "actual damages" and the recovery of policy benefits.
It makes sense that the most common actual damages are the policy benefits themselves. As a matter of law, at least in certain cases, the amount of policy benefits wrongfully withheld is an element of damages caused by the insurance companies wrongful conduct in the matter. This was stated in the Texas Supreme Court case, Vail v. Texas Farm Bureau Mutual Insurance Co. This was a 1988 court decision where the Court rejected Texas Farm Bureau's arguement that damages for an unfair settlement practice had to be something more than the amounts due under the policy. The Supreme Court said that damages for a wrongful refusal to pay are at least equal to the policy benefits, as a matter of law. The Court in its reasoning stated:
The fact that the Vails have a breach of contract action against Texas Farm does not preclude a cause of action under the DTPA and Article 21.21 of the Insurance Code. Both the DTPA and the Insurance Code provide that the statutory remedies are cumulative of other remedies ... It is well settled that persons without insurance are allowed to recover based on false representations of coverage, ... and that an insurer may be liable for damages to the insured for its refusal or failure to settle third-party claims ... It would be incongruous to bar an insured who has paid premiums and is entitled to protection under the policy from recovering damages when the insurer wrongfully refuses to pay a valid claim. Such a result would be in contravention of the remedial purposes of the DTPA and the Insurance Code.
One thing to be aware of here is that Courts construing this language from Vail have concluded that policy benefits are not always damages as a matter of law. This highlights a point that anyone finding themselves in the position of having policy benefits or coverages denied should seek the advice of an experienced Insurance Law Attorney.
In another Texas Supreme Court case, decided in 1995, Twin City Fire Insurance Company, v. Davis, the court held that policy benefits could not serve as independent tort damages resulting from the insurance company's breach of its duty of good faith and fair dealing, which were necessary to support exemplary or punitive damages. Other cases have concluded that policy benefits are not necessary damages as a matter of law. This can be seen in several cases. One example is Seneca Resources Corp. v. Marsh & McLennan, Inc., a 1995, Houston 1st District Court of Appeals case. Another case is a 1993, Austin Court of Appeals case, Beaston v. State Farm Life Insurance Company. For an attorney, the advise is, when in doubt, the best approach is to plead, prove, and get a jury finding on policy benefits as damages.

If you get treated wrongly by your insurance company and you live in Grand Prairie, Arlington, Mansfield, Weatherford, Fort Worth, or Dallas, the first thing you should do is find an Insurance Law Attorney. He will tell you some of the following:
A plaintiff who prevails against an insurance company may obtain:
a) actual damages
b) additional damages if the insurance company acted knowingly
c) court costs
d) attorney's fees
e) other monies depending on the wrongful act
This article will deal just with one potential recovery, that being, the actual damages.
In a 1997, Supreme Court case, the court set out the following principles that govern recovery of "actual damages" under the similar language that existed under the Deceptive Trade Practices Act before 1995. This case was, Arthur Andersen & Company v. Perry Equipment Corporation. The same analysis in that case should apply to the Insurance Code, Section 541.152(a)(1).
The amount of actual damages recoverable is "the total loss sustained as a result of the deceptive trade practice."
Actual damages are those damages recoverable under common law. At common law, actual damages are either "direct" or "consequential." Direct damages are the necessary and usual result of the defendant's wrongful act; they flow naturally and necessarily from the wrong. Direct damages compensate the plaintiff for the loss that is conclusively presumed to have been forseeable by the defendant from his wrongful act.
Consequential damages, on the other hand, result naturally, but not necessarily, from the defendant's wrongful acts. Under the common law, consequential damages need not be the usual result of the wrong, but must be foreseeable, and must be directly traceable to the wrongful act and result from it. Of course, foreseeability is not an element of producing cause under the DTPA. Still, if damages are too remote, too uncertain, or purely conjectural, they cannot be recovered.
Under Texas common law, direct damages for misrepresentation are measured in two ways. Out-of-pocket damages measure the difference between the value the buyer has paid and the value of what he has received; benefit-of-the-bargain damages measure the difference between the value represented and the value received. Under the DTPA, a plaintiff may recover under the damage theory that provides the greater recovery. Both measure of damages are determined at the time of sale.
Here is just one example from the 1989 case, Paramount National Life Insurance Company v. Williams. This is a Houston, 14th District, Court of Appeals case.
An insured recovered actual damages for loss of credit or injury to credit reputation based on receiving notice letters from bill collectors arising from medical expenses the insurer misrepresented would be paid.
Each situation has to be looked at on an individual basis.

A lot of homeowners insurance policies in Texas have "appraisal" clauses written into them. So whether you live in Weatherford, Texas, or in Grand Prairie, Arlington, Fort Worth or Dallas, if you have homeowners insurance you need to be aware of these appraisal paragraphs.
An appraisal paragraph is of benefit to the insurance company. That is why they put it into the insurance policy. When the homeowner and the insurance company cannot reach an agreement on the amount of money that should be paid on a claim, the insurance company will try to invoke the appraisal clause in the insurance contract. Appraisal happens when the insurance company knows they owe the homeowner money, but there is a dispute as to how much money is owed.
The United States District Court, Southern Division, recently handled a case where the issue was whether the homeowner properly defeated the insurance company trying to invoke the appraisal process. The style of the case is, Hector Sanchez v. Property and Casualty Insurance Company of Hartford and Irene Bernardo. The courts' opinion was handed down on January 27, 2010.
In this case Sanchez made a claim for benefits on October 26, 2008. This was after Hurricane Ike struck Harris County, Texas, on September 12, 2008. The next day Property and Casualty Insurance Company of Hartford (Hartford) sent adjuster Irene Barnardo out to inspect the Sanchez home. Bernardo concluded that Sanchez had suffered a loss, but that the loss was only $150, an amount below Sanchez's deductible of $5,850.
In a letter dated October 29, 2008, Hartford refused to make a payment on his claim. Sanchez called to complain the next day. Six months later, Sanchez called Hartford complaining about their handling of the claim and then filed a lawsuit on April 29, 2009, which Hartford received on May 12, 2009.
When making a claim for insurance benefits the Texas Insurance Code, Section 541.154 provides that a person must give a 60 day written notice to the insurance company before filing a lawsuit.
Hartford, successfully had the case removed to Federal Court on June 5, 2009 and filed an answer to the lawsuit on June 29, 2009. Two months later, on August 3, 2009, Hartford filed a motion with the Court having the case abated for 60 days so that the time required for notice could be observed. The case was unsuccessfully mediated in September. Then on October 15, 2009, Hartford sent Sanchez correspondence seeking to invoke the appraisal clause in the insurance policy.
The bad thing for policy holders is that most appraisal clauses have requirements in them similar the Sanchez appraisal clause. It required Sanchez to: 1) pay for his own appraiser and, 2) bear the other expenses of the appraisal and umpire equally with the insurance company.
Without getting into more details of this case and the law associated with it, Sanchez prevailed, and did not have to submit to the appraisal process. The bottom line to his victory were the arguements his lawsuit attorney was able to make regarding the time frame that had past without Hartford invoking its right to the appraisal process.
An experienced Insurance Law Attorney would understand how this process works. It is important for a policy holder to get an attorney involved early in this process to more assure the policy holder will not get cheated by having to submit to the appraisal process.

The Texas Windstorm Insurance Association, has found itself in an unfortunate position. The position is a creation of their own actions. Those actions were actions whereby they refused to pay proper claims to policyholders who suffered damages because of the hurricanes, Ike, Dolly, and Rita.

TWIA is crying "help" because they are afraid they are going to be punished for not properly paying claims to their policyholders. They are asking that they be immune from paying penalties, policyholder attorneys' fees, and other expenses coming out of litigation that resulted from their conduct.

The windstorm association is a state-created insurer and is claiming that because they are an instrument of government that they should have immunity. Lawyers for the policyholders say that TWIA is effectively a private company, and that immunity would effect the over 900 lawsuits pending against TWIA.

The Texas Department of Insurance has administrative control of TWIA. Even though TWIA was created by the government, it is privately run.

The full story can be found in the Houston Chronicle. The Houston Chronicle reports that the Texas Attorney General has ruled the association is subject to the Public Information Act because it was created by lawmakers and is accountable to the State Insurance Commissioner.

The importance of this case lies in whether or not the TWIA can get away with just paying what they should have paid in the beginning to policyholders for their claims, or are they subject also having to pay penalties, interest, and attorneys' fees. To only have to pay the original amount of the claim effectively "cheats" the policyholders since the actions of TWIA forced the policyholders to have to live with the loss and occur court costs and attorneys' fees.

Can it be a surprise? Insurance companies appear to be getting caught in under paying on claims. The Texas Windstorm Insurance Association (TWIA) seems to be caught in some controversy regarding its claims handling along the Texas Gulf Coast. Keep in mind the problems being experienced could just as easily be happening in Fort Worth, Dallas, Grand Prairie, Arlington, or even a small town like Weatherford out in Parker County.

This problem is written about in an article in the Houston Chronicle titled "Lawsuit Says Windstorm Insurer Rigged Process". The article discusses TWIA using prices lower than market rates to estimate materials and repair costs. TWIA is said to also be unfairly limiting costs on roof repairs and discouraging the reopening of closed claims.

In a lawsuit resulting from some of the abuses by TWIA, documents and software is said to have been discovered that supports the claims that the abuses are being committed. One example of the abuse was discovered when one adjusting firm reported the market rate for roof repairs to be $230 to $255 per 100 square feet, but TWIA's price was $182. In another situation it is said that they suggested using shingles off one house that were not in too bad shape, to put on another house. This does not sound right to most people but may actually be allowed depending on the language in the insurance policy.

On the issue of reopening closed claims, it is claimed that adjusters were getting bonus pay for denying a claim. Furthermore, if it was determined the adjuster did something wrong on a visit they risked not getting paid anything. The result of this being that the adjuster would not reopen a claim to see if anything actually was done wrong.

When any of the above happens to a home owner and the home owner is forced to file a lawsuit Texas Insurance Law has a statute to help. Section 542.003 Texas Insurance Code, says it is illegal to compel a policyholder to file a lawsuit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit brought by the policyholder.

Insurance companies make money when they get away with denying claims or paying less than the full value of the claim. The making money part is okay, as long as they are not breaking the Insurance Laws and cheating policyholders by their actions.

Whenever you have an insurance claim, you need to make sure you are getting what you bargained for when you purchased the insurance policy. Don't be afraid to talk with an experienced Insurance Law Attorney to make sure you are not being underpaid on your claim.