The State Bar of Texas, Insurance Law Section, published an article in a Journal it publishes which gives a perspective from the eyes of an insurance company lawyer defending lawsuits filed against the insurance company for denying claims.  It is good to know how they look at these matters.  Here is part of what the article tells us about what the insurance lawyer does or should do when he first receives a file.

When the insurance lawyer first gets the file his first job is to make sure you have all of the relevant documents. He should carefully review the policy to confirm he has the complete copy, including all endorsements, in effect on the date of loss.  He should also have a complete copy of the insurance carrier’s claims file, which generally consists of some sort of claims diary or journal documenting the actions taken during the claim as well as claims correspondence, estimates, evaluations, and the like.  It should be a comprehensive guide to the “who, what, when, where, and how” over the life of the claim.  He will want to determine whether the files of any independent adjusters who evaluated the claim have been incorporated into the client’s file or if he will need to get them separately.  He should also ask the client how they retain communications like emails and text messages between adjusters and insureds or vendors; he doesn’t want to see that rude or inappropriate text message for the first time at the deposition of the adjuster.

Now he needs to evaluate the case.  Insurance litigation often turns on what happened when, so a timeline can be extremely helpful in answering some important questions.  How much time transpired between the date of the claimed loss and the report to the client?  When were acknowledgements and requests for information sent to the insured?  What payments were made and when?  Since the adjuster usually has little or no independent memory of the claim, you are starting behind, while the claimant likely remembers much of the claim in great detail.  Having a clear timeline of events early on will help to figure out potential weaknesses in the case.  For instance, were there large gaps in time when the insured was waiting on a response to start repairs?  Did the insured get a timely denial letter?  Did the denial go out before the claim was even investigated?  Are there inconsistencies in dates of inspections or documents that are apparent from the claim file that would undermine the adjuster’s credibility?  Remember, it is easy for jurors to become angry at adjusters they perceive as overly bureaucratic or rude, even if they complied with the legal requirements for claims handling.  The attorney needs to be on the lookout for any behavior that will make it easier for jurors to side with the claimant if there is a question about credibility or damages.  Next, he needs to make sure that he doesn’t inadvertently produce privileged documents in the claim file.  Flag and remove those documents up front, so he is prepared when discovery starts and he can avoid drafting a privilege log at the last minute.  The same reasoning applies to documents that he might have received that are not related to the claim file.  Underwriting documents, including documents regarding reserves, may or may not be relevant in the case, but odds are they won’t be responsive to the same kind of discovery requests as claim file documents.  After the attorney is sure he has all the needed documents from the claim file, it is time to have a discussion with the client about the case.  The attorney needs to diplomatically point out any legal and factual weaknesses or potential issues before they arise during litigation.  The attorney may also be requested or required to prepare a litigation budget at this point.  Many carriers have templates the attorney is required to use, but it is often difficult to foresee the various litigation tasks and expenses that may arrive in even the most garden-variety case.  The best advice on this task—and throughout the handling of the case—is to maintain good client communication throughout the process.  Insurance carriers, like any other client, don’t like surprises.

This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.

Among other causes of action, Jackson has sued Farmers under an insurance policy for violation of the “Prompt Payment of Claims Act.” Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled a violation of the Prompt Payment of Claims Act against Farmers.  The Court reviewed the papers filed with the Court and discussed and ruled as follows.

Crystal Jackson purchased a life insurance policy from Farmers.  Wharlest Jackson was the sole beneficiary of the policy.  Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.

This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.

Among other causes of action, Jackson has sued Farmers under an insurance policy for violation of the “duty of good faith and fair dealing.” Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled a violation of the duty of good faith and fair dealing against Farmers.  The Court reviewed the papers filed with the Court and discussed and ruled as follows.

Crystal Jackson purchased a life insurance policy from Farmers.  Wharlest Jackson was the sole beneficiary of the policy.  Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.

This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.

Among other causes of action, Jackson has sued Farmers under an insurance policy for violations of the Texas Insurance Code. Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled violation of Texas Insurance Code, Section 541.060 against Farmers.  The Court reviewed the papers filed with the Court and discussed and ruled as follows.

Crystal Jackson purchased a life insurance policy from Farmers.  Wharlest Jackson was the sole beneficiary of the policy.  Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.

This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.

Among other causes of action, Jackson has sued Farmers under an insurance policy for violations of the Texas Insurance Code. Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled violations of Texas Insurance Code, Sections 541.051 and 541.061 claim against Farmers.  The Court reviewed the papers filed with the Court and discussed and ruled as follows.

Crystal Jackson purchased a life insurance policy from Farmers.  Wharlest Jackson was the sole beneficiary of the policy.  Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.

This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.

Among other causes of action, Jackson has sued Farmers under an insurance policy for violations of the Texas Deceptive Trade Practices Act (DTPA). Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled a DTPA claim against Farmers.  The Court reviewed the papers filed with the Court and discussed and ruled as follows.

Crystal Jackson purchased a life insurance policy from Farmers.  Wharlest Jackson was the sole beneficiary of the policy.  Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.

Interpreting an insurance policy is sometimes difficult at best.  Different people will read the same words in an insurance policy and believe the words say different things.  What is important to an insurance lawyer is how the Courts read and interpret insurance policies.  The Northern District of Texas, San Angelo Division, issued an opinion in May of 2020 that deals with this topic.  The case is styled, National Liability & Fire Insurance Company v. John Young d/b/a Rio Restaurant Group, et al.

This case is a declaratory judgement action filed by National.  National filed a motion for summary judgment which was denied.

In this case, National is being asked by Young to defend a lawsuit.  National asserts it does not have a duty to defend or indemnify.  Under Texas law, the “eight corners rule” governs whether an insurer has a duty to defend or indemnify in an underlying lawsuit.

Insurance Lawyers who who handle claims made through Renters Insurance policies should know there is a new kind of renters insurance coming into the marker.  Traditional Renters Insurance covers break-ins, thefts, floods, and various other types of claims to the personal property of a renter.  The new kind of renters policy is coverage for the rent.

The National Law Review published an article in May 2020, that is titled, “Rent Guarantee Insurance — A Solution For Landlors?”.  The article tells how the Chinese virus pandemic is having a profound impact on both insurance companies and their insureds with a multitude of claims having already been made and denied.  Parties that have been especially hard hit financially by the pandemic are the owners of retail shopping complexes that have multiple tenants, many of which have had to close because they are “non-essential” businesses under government emergency orders.  This has resulted in a loss of rental income to these owners as landlords.  While these landlords may have business interruption insurance as part of the commercial property, the pandemic is proving that whether business interruption insurance provides coverage is uncertain.  This uncertainty may ultimately only be resolved by court rulings made in connection with litigation proceedings.  Accordingly, given the fact that events such as the Chinese virus pandemic may occur again, commercial landlords may wish to consider rent guarantee insurance for protection.

Leases often provide that if the leased premises are damaged by a fire or other casualty event, the tenant’s obligation to pay rent will abate during the period that the leased premises are repaired and restored.  In this situation, a landlord desires to have a source of funds to replace the rent payments that it does not receive from a tenant during the period the rent abates.  Rent loss insurance can be a means to cover the risk associated with the lost rent.  As with business interruption insurance, however, there typically must be physical damage, e.g., fire to the landlord’s property.  Further, rent loss insurance may exclude coverage for loss of rent due to certain types of damages.  For example, some rent loss insurance policies do not cover water damage that creates mold because of a water leak that the landlord failed to repair.  Of particular significance is the fact that that rent loss insurance pays the fair market rental value of the leased premises, which may be less than the amount of rent the tenant is obligated to pay under the lease.

For the past three months there has been a lot of information about Covid-19.  What is not clear is how insurance policies, in particular, commercial insurance policies do or do not provide coverage for losses experienced because of Covid-19 or government reaction to Covid-19.

How these cases and the resulting lawsuits are being handled is discussed in a May 2020 article written in the National Law Review.  The title of the article is, When Insurers Deny Claim, Brokers Are Next In Line For Allegations of Wrongdoing.”  Here is what the article tells us.

In the wake of government orders shutting down or seriously limiting the operations of businesses to deal with the COVID-19 outbreak, many affected businesses have turned to their insurers for coverage.  This has led to a flurry of lawsuits across the nation seeking rulings that such claims are covered and asserting that the failure to accept such claims constitutes breaches of contract, bad faith, and other common law and statutory violations.

Insurance policies are contracts.  A violation of an insurance policy is a usually going to be a breach of the contract.  A lot of insurance law, simply put, is contract law.

So what about the relationship of breach of contract to other theories of liability?

The 1996, Texas Supreme Court opinion, Liberty National Fire Insurance Co. v. Akin, says that “Insurance coverage claims and bad faith claims are by their nature independent.  But, in most circumstances, an insured may not prevail on a bad faith claim without first showing that the insurer breached the contract.”

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