Many people think of insurance for covering something you own when it is damaged, such as your home or auto.  Or, people thing if health insurance and life insurance.  But there is another type of insurance that is important to all of us.  That is liability insurance.  This is the insurance that is suppose to protect you when someone sues you for something they allege you did wrong.

Here is some information from the State Bar of Texas, Insurance Section, Journal.

Under Texas law, the duty to defend depends on the language of the policy setting out the contractual agreement between insurer and insured.  Whether an insurer has a duty to defend its insured is a question of law.  An insurer must defend its insured if a plaintiff ’s factual allegations potentially support a covered claim, while the facts actually established in the underlying suit determine whether the insurer must indemnify its insured.  Thus, an insurer may have a duty to defend but, eventually, no obligation to indemnify.  The initial burden is placed on the insured to demonstrate that coverage exists considering only the policies and the underlying lawsuit papers.  The burden then shifts to the carrier to establish that one or more of the policy exclusions apply to negate any otherwise-applicable duty to defend.  Courts consider the factual allegations without regard to their truth or falsity, and resolve all doubts regarding the duty to defend in favor of the insured.  Further, in making the determination, courts  look to the factual allegations showing the origin of the damages claimed, not the legal theories or conclusions alleged.  If the petition asserts one claim that could potentially be covered by the insurance policy, the insurer must defend the entire suit.  The duty to defend is a sprawling topic on which Texas law and the Restatement of Insurance agree on many issues.  For example, it is well settled that an insurer’s right to conduct the defense includes the authority to select the attorney who will defend the claim and to make other decisions that would normally be vested in the insured as the named party in the case.  Likewise, the Restatement outlines the scope of an insurer’s right to control the defense as follows:

Here is another Texas Insurance Code, Section 542A.006 case.  The opinion is from the Texas Southern District, Laredo Division.  It is styled, Yarco Trading Company, Inc., et al. v. United Fire & Casualty Company, et al.

This case was filed in State Court and United removed the case to Federal Court.  United argued the adjuster was improperly joined and after citing Texas Insurance Code, Section 542A.006, accepted responsibility for the adjuster, thus, arguing that the adjuster had to be dismissed, resulting in diversity jurisdiction pursuant to 28 U.S.C., Section 1441(a).  Yarco sought to have the case remanded to the State Court.

First, the court addressed the improper joinder argument and ruled in favor of Yarco.

Here is an opinion from the Fort Worth Division, Northern District of Texas, that discusses insurance policy interpretation.  The opinion is styled, Suzann Ross v. Hartford Lloyd Insurance Company.

Ross had homeowners insurance coverage with Hartford and suffered a windstorm loss.  Ross made a claim for benefits and Hartford adjusted the claim and paid the amounts it believed it owed under the policy.  The main dispute was whether the roof damage needed to be totally replaced or just a portion replaced.  Ross sued Hartford and Hartford filed this Motion For Summary Judgment on her claims.

The relevant policy language reads in pertinent part:

Claiming an insurance company has committed fraud, as in all fraud claims, it must be stated who communicated the fraud, what was said, when it was said, where it was said, and how the statement was fraud.  All of this is particularly true when the lawsuit is in Federal Court where the pleading requirements are much more stringent.

This is illustrated in the case discussed in an earlier blog styled, Nancy Roberson v. Allstate Vehicle and Property Insurance Company.  The case is from the Southern District of Texas, Houston Division.

This case arises from a tree falling on the home of Roberson, who was insured by Allstate.  Roberson made a claim and the adjuster assigned by Allstate came back with a repair estimate that was far below what Roberson believed was needed to compensate her for her loss.  Roberson filed a lawsuit alleging many causes of action against Allstate but the one discussed here is her allegation of common-law fraud.

There are deadlines for filing lawsuits and if those time limits are not honored, then there is no case.  This is illustrated in a Southern District, Houston Division, opinion released on July 2, 2019.  The case is styled, Nancy Roberson v. Allstate Vehicle and Property Insurance Company.

Roberson sued Allstate in state court asserting causes of action for breach of contract, violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act, (DTPA) and common law fraud.  Allstate timely removed the case to federal court.  Allstate then filed a Rule 12(b)(6) Motion to Dismiss.

The background in this case is that Roberson had Allstate coverage for her home when in February 2016, she filed a claim for hail damage.  An adjuster determined that her roof was in great condition and that her loss was below her deductible.

The title of this blog topic should be “Insurance Company Gone Wacko”.

The case at issue here is from the Fifth Circuit Court of Appeals.  It is styled, Frederking v. Cincinnati Insurance Company.

This case involves Frederking being injured by an insured of Cincinnati who was intoxicated at the time of the automobile wreck.  The insured caused a wreck between the vehicle he was driving and the vehicle being driven by Frederking, causing injury to Frederking.  A jury found in favor of Frederking and Cincinnati refused to pay based on their assertion that the wreck was not the result of an accident as that term is used in the policy.

The Western District of Texas, San Antonio Division, issued an opinion on July 1, 2019, discussing the handling of under-insured motorist (UIM) claims and how they are handled by the courts.  The case is styled, Laura Lee Green v. Allstate Fire And Casualty Insurance Company.

Green sued Allstate for UIM benefits under breach of contract theories of law among other causes of action and Allstate filed a motion to dismiss.

Green was involved in an accident with Shana Dorsey who was alleged to be under-insured and Green then made a claim against Allstate for UIM benefits.  It is alleged that Allstate failed to make an offer of settlement, failed to provide a reasonable explanation of the basis for denying Green’s claim, refused to affirm or deny coverage within a reasonable time, refused to pay Green’s claim without conducting a proper investigation, and refusing to pay the claim after liability had become reasonably clear.

The Texas Insurance Code requires that life insurance policies contain incontestability clauses.  These are a provision that a policy will be incontestable after it has been in force during the lifetime of the insured for two years from its date, except for nonpayment of premiums.  This is found in Section 1131.104 for individual life insurance policies and Sections 705.101 – 705.105 for group life policies.  The effect of these clauses is to limit defenses so they can apply only during the first and second policy years.

The Texas Supreme Court, in 1972, stated the purpose of an incontestability clause is to protect the insured from a contest as to the validity of the policy after the set period has expired.  The opinion is styled, Minnesota Mutual Life Insurance Company v. Morse.

A problem has arisen from the statutes in that they do not specify whether the policy date or the effective date is considered its date; this creates an ambiguity that must be construed against the insurer.  And an insurer may not place a more onerous incontestability clause in the policy than the one prescribed by statute, although it may provide a shorter period than that prescribed.  This was made clear in the 1982, Houston 14th Court of Appeals opinion styled, Parchman v. United Liberty Life Insurance Co.

Life insurance lawyers need to be know this 1990, opinion from the Texas Supreme Court.  It is styled, Koral Industries v. Security-Connecticut Life Insurance Co.

It is not uncommon for a beneficiary of a life insurance policy to concede that misrepresentations regarding health were made on an application for life insurance.  What they will contest is that the insurance company should have known of the misrepresentations.

In the Koral case, Koral sought insurance on one of its key employees, Lewis Lindsey.  Lindsey did not disclose on the insurance application his medical history regarding treatment over the previous five years a history which included hospitalization in 1981, 1982, and 1983, and counseling and treatment for depression and excessive use of alcohol.  Further, he had been treated for mental or nervous disorders from 1976-78, and his physician had treated him for anxiety.

The Texas Supreme Court has rendered an opinion which concerns the Texas Prompt Payment of Claims Act (TPPCA).  The opinion issued on June 8, 2019, and is styled, Barbara Technologies Corporation v. State Farm Lloyds.

In this case, the Texas Supreme Court reversed the appeals court judgment, which had granted summary judgment in favor of State Farm, and remanded the case to the trial court for further proceedings.

This case arose out of a wind and hail storm that damaged Barbara Tech’s property on March 31, 2013.  Tech filed a claim with State Farm on October 17, 2013, pursuant to the insurance policy, requesting coverage of the cost of repairs.  State Farm promptly inspected the costs of repair and denied Tech’s claim based on the assertion that the damage totaled $3,153.75, which was less than Tech’s $5,000 deductible.  Tech requested a second inspection and State Farm conducted another inspection finding no additional damage.