An article ran in February 2017, that explains why people need experienced insurance lawyers to help with their insurance claims.  The article is titled, State Can’t Help With Most Unpaid Insurance Claims.

The Texas Department of Insurance claims it can help resolve complaints against insurance companies and boasts of helping Texas consumers get millions of dollars in unpaid claims every year.  However, a KXAN Investigation finds that only happens in certain situations and most of the time the state has no power to do anything at all, leaving you—the consumer—without much recourse.

In the spring of 2013, a storm swept through pummeling hail down on Carol Fredenburg’s house.  A roofing contractor told her the roof needed replacing but when she filed a claim with State Farm, they told her the damage only affected part of her roof and they would not pay for the entire roof to be replaced.  They estimated her repairs at $7,600, with a $2,841 deductible.

The above question comes up more often than it should.  The short answer is no.  A 2000, San Antonio Court of Appeals case styled, Nwaigwe v. Prudential Property & Casualty Insurance Company, discusses the agent’s responsibility.

Moses Nwaigwe sued Prudentail and its agent, William Eckert for failing to disclose a policy exclusion that the company used to deny a claim.  Prudential’s argument is that Eckert did not misrepresent the terms of the policy and that it had no duty to tell Moses about the exclusionary clause.  The court granted summary judgment in favor of Prudential and Eckert.

Moses purchased a fire insurance policy from Prudential to insure an occupied rental property.  The policy was renewed two times, but Moses never received a copy of the policy.

All insurance lawyers need to know what happens to a claim when an insurance company becomes insolvent.  Insolvency to an insurance company is the same as bankruptcy to other companies and individuals.  So what effect is this to policy holders?

Companies that write insurance policies in the State of Texas are heavily regulated, and the Legislature has provided numerous safeguards to protect the public against insurance company insolvency.  This can be seen by looking at the Texas Insurance Code, Chapter 462 and in the Texas Transportation Code, Section 643.105.  In connection with these statutory safeguards, Texas Insurance Code, Section 1952.102 lists and defines the definition of “uninsured motorist” to include a vehicle for which the liability carrier is or becomes insolvent.  As an adjunct to this requirement, the Texas Property and Casualty Insurance Act provides further protection for the public against failure of licensed insurance companies as a result insolvency.

The Act creates a Guaranty Association for the purpose of paying unpaid claims, including those of third-party liability claimants that arise out of and are within the insured’s coverage, but not in excess of the insured’s applicable policy limits.  This limitation can be found in Texas Insurance Code, Section 462.201.  According to Section 462.213, covered claims are limited to $300,000.00 in value.

The Insurance Journal published an article on an opinion issued by the Texas Supreme Court that will have an impact on all property owners in the State of Texas.  The title of the article is, Texas High Court Sides With Policyholder In Ike Damaged Property Case.

When is a fence a “dwelling” structure for insurance coverage purposes and when is it an “other structure?”

The Texas Supreme Court, relying on disputed language in a Liberty Mutual homeowners policy, found that a fence is a covered dwelling structure when it is attached to the home.

To sue an insurance company, a person must have “standing.”

Texas is not a direct action state.  In other words, when Fred and Ted collide in their cars, the resulting lawsuit is styled Fred vs Ted, and their respective liability insurers are not named parties.  Fred can’t sue Ted’s insurer; he has to sue Ted.  Because of the lack of privity between a liability insurer and a third-party claimant, an insurer had no duty to a third party to settle a claim brought against its insured until the insured’s liability has been established.  This was made clear by the Texas Supreme Court in 1997, in a case styled, Farmers Texas County Mutual Insurance Co. v. Griffin.  Indeed, until the liability of the insured is judicially established, a third-party plaintiff does not have standing to bring a direct action against the insurer to recover for the liability of the insured.  For further guidance there is more case law.

This rule of law is so well ingrained in the jurisprudence of the State that it is embodied within the Texas Rules of Civil Procedure.  Rule 51(b) regarding the Joinder of Claims and Remedies provides:

The Fort Worth Court of Appeals delivered an opinion in 2006, that is relevant to all insurance lawyers in Texas.  The case has to do with who can assert a claim under the Texas Prompt Payment of Claims Act.  The opinion is styled, American National Fire Insurance Company  v. Hammer Trucking, Inc.

In November 2006, the Fort Worth Court of Appeals held that the Prompt Payment of Claims Act doe not apply to an indemnity claim against an excess carrier for payments made to settle a liability claim.  In so holding, the Court stated that this Act only applies to first party claims between the insurance company and their customer.  However, the Texas Supreme Court recently held, in response to a certified question from the Fifth Federal Circuit on a CGL case, that the Prompt Payment of Claims Act applied to the insurance company’s obligation to pay third party claims.

The prompt-payment statute provides that an insurer, who is “liable for a claim under an insurance policy” and who does  not promptly respond to, or pay, the claim as the statute required, is liable to the policyholder or beneficiary not only for the amount of the claim, but also for interest on the amount of the claim at the rate of eighteen percent a year as damages, together with reasonable attorney’s fees pursuant to Texas Insurance Code, Section 542.060(a).  “Claim” is defined as “a first party claim made by an insured or policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract that must be paid by the insurer directly to the insured or beneficiary.”  This is found in Texas Insurance Code, Section 542.051(2).  The statute does not separately define “a first party claim,” and Texas cases are divided as to its meaning.

Llano life insurance agents need to know about this case from the United States 5th Circuit.  It is a 2011 opinion styled, Araceli Medina Garcia v. American United Life Insurance Company.

Araceli’s husband, Salvador, died in a car accident.  He had a policy with American through his employer.  The policy was an ERISA plan.  American’s plan administrator denied Araceli’s claim for benefits because Salvador was living illegally in the U.S.  Araceli filed a lawsuit seeking benefits.  On Salvador’s policy enrollment form he indicated his date of birth and social security number.

When Araceli made a claim for benefits, she submitted a proof of death form, her Mexican identification card, and Salvador’s death certificate, identifying his date of birth as above and his place of birth as Mexico City and the above social security number.  No documents reflected Salvador being a U.S. citizen.  American was then sent Araceli’s alien registration card and a copy of Salvador’s I-9 form, which was expired.

Dallas Texas life insurance lawyers will know this case and use it where necessary.  The case is from 1938, and was issued by the El Paso Court of Appeals.  It’s style is, National Life & Accident Co. v. Dickinson.

This is a judgment case wherein National Life sued Vera Dickinson, to cancel a life insurance policy issued on Vera’s husband, Fred.  National Life alleged that Fred made misrepresentations in his application for life insurance.  Fred later died.

The particular matters about which it was alleged Fred gave untrue and false answers were: (a) If he had ever had syphilis, and he answered “No,” whereas he did have; (b) he was asked about consulting a physician, and he answered “No,” whereas he had consulted a physician for various ailments; (c) whether he had been an inmate of a hospital, and answered “No,” when he had been an inmate of a hospital; (d) he was asked to give the names of physicians consulted, and he gave the name of only one, when he had consulted several; (e) he was asked if any physician ever gave unfavorable opinion of his health with reference to military or naval service, to which he answered “No,” when he had appeared before a medical board in 1933, and on examination was disqualified for active duty in the navy on account of his health, and he was then so advised; (f) it was alleged that the policy and application provided that the policy should not become effective unless it was delivered to Fred while he was in good health, and that Fred was not in good health when the policy was delivered to him.  National Life alleged that by reason of the matters stated the insurance contract never took effect, and rescission was sought on that ground.

The Houston Chronicle published an article in February on a topic that lawyers who handle hail damage claims need to know about.  The title of the article is, Insurers, Plaintiffs Lawyers Square Off In Austin Over Hail Storm Bill.

Lobbyists representing insurance companies are pushing legislation they say will prevent premium increases by weeding out “abusive” lawsuits over damages caused by hail and other storms in what is shaping up as a battle royal with consumers and plaintiffs’ lawyers.

Gov. Greg Abbott raised the stakes when he used his State of the State address earlier this week to proclaim that “hailstorm litigation is the newest form of lawsuit abuse.”  He urged the Republican-controlled legislature to send him a bill that he can sign into law to limit those types of lawsuits.

Palo Pinto insurance lawyers know the above question can be difficult to answer.  Each situation is different.  The Stowers doctrine in the law is an example to look toward for some understanding.

The heart of a Stowers claims is the 1929 decision in G. A. Stowers Furniture Co. v. American Indemnity.

In Stowers, the insurance company refused to accept a third party’s offer to settle the asserted claim within policy limits and a judgment in excess of the policy limits resulted.  The court imposed a duty for an insurance company to handle settlement demands reasonably.