State Bar of Texas
Texas Trial Lawyers Association
College of the State Bar of Texas

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Most of the time, Personal Injury Protection (PIP) benefits are paid when a proper claim for them is made and then if a claim for Uninsured Motorist (UIM) benefits is made, the insurance company takes/gets an offset for the PIP benefits in any settlement that occurs.  But what if the case is tried to a jury?

A case involving PIP and UIM benefits was tried to a jury in Jasper County and a Judgement was entered in favor of the insured.  No offset was given for the PIP benefits that had been paid by the insurance company.  How did this happen?

An appeal was taken to the Beaumont Court of Appeals and the case is styled, Allstate Fire And Casualty Insurance Company v. Andy Alfred.

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Claims for violations of the Texas Insurance Code must be stated properly against an insurance company adjuster.  One way of doing this is talked about in this Western District of Texas, San Antonio Division, opinion styled, Jeanette Kotzur, David Kotzur v. Metropolitan Lloyds Insurance Company of Texas, Bryant Tullous, Michael Esmay.

This case involves a claim for damages arising out of a wind and hailstorm that is alleged to have caused damages to property owned by the Kotzur’s.  Metropolitan is the insurance company and the adjusters were Tullous and Esmay.

The Kotzur’s sued Metropolitan and the adjusters in State Court.  Metropolitan removed the case to Federal Court asserting the amount in controversy exceeds $75,000, that the Kotzur’s are citizens of Texas and Metropolitan is a citizen of states other than Texas.  Metropolitan also asserts that the adjusters should be disregarded for citizenship purposes because the adjusters were improperly joined in the lawsuit in an effort to defeat diversity of citizenship.  Metropolitan asserts that the Kotzur’s have not properly asserted claims against the adjusters.  The Kotzur’s assert that they have properly asserted claims against the adjusters.

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As is acknowledged in the following case, the federal courts are mixed as to their rulings on the timing of when an insurance company adjuster is sued and how that affects diversity cases.

This case is from the Western District of Texas, San Antonio Division.  It is styled, Bexar Diversified MF-1, LLC v. General Star Indemnity Company, Paul R. White And Company Inc.

Bexar had an insurance policy with General Star.  Bexar suffered a weather related loss and reported it to General Star.  General Star assigned White, a company, to adjust the claim.  Bexar was dissatisfied with the way the claim was handled and sued General Star and White in state court for violations of the Texas Insurance Code, Sections 541 and 542.

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Spring is coming soon and exclusions in homeowner policies for “surface and ground water damage” will be an issue an insurance lawyer must be able to discuss with client.

Here is a November 2019, opinion from the Southern District of Texas, Houston Division, that “kinda” addresses this issue.  The opinion is styled, Robert Salcetti v. AIG Property Casualty Company.

Salcetti suffered damage to his home after the U.S. Army Corps of Engineers decided to release water from reservoirs and Salcetti alleges that water entered his home causing significant damage.

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What is “bad faith” in the context of insurance?  There is a lot of material on this subject.  Here is a little to know about.

In the 1997, Texas Supreme Court opinion styled, Universe Life Ins. Co. v. Giles, adopted the standard that an insurer breaches its duty of good faith and fair dealing by “failing to attempt in good faith to effect a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear.”  The current statutory version of this is Texas Insurance Code, Section 541.060(a)(2)(A).

The statutory standard adopted in Giles takes the place of the common-law standard for unreasonably denying a claim or unreasonably delaying payment.  The court’s analysis in Giles also supports adopting the statutory standard for failing to conduct a reasonable investigation.  That standard is found at Texas Insurance Code, Section 541.060(a)(7), which prohibits “refusing to pay a claim without conducting a reasonable investigation with respect to the claim.”

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As discussed before, litigating cases in Federal Court is what an insurance company prefers to do.  Ans as discussed before, there are ways to keep this from happening in the right circumstances.  The United States 5th Circuit issued an opinion issued an opinion in 1998, that is worth knowing about as it relates to calculating damages and how that calculation effects whether or not a case will be litigated in Federal Court.  The opinion is styled, St. Paul Reinsurance Co., LTD. v. Greenberg.

This declaratory judgment action is a case wherein the insurance company won their fight to have the case litigated in Federal Court because the amount in controversy requirement for diversity jurisdiction under 28 U.S.C., section 1332, was not satisfied.

Greenberg had a homeowners policy with St. Paul.  Greenberg’s home was destroyed by arson.  Greenberg filed a sworn proof of loss for $35,000, which was the policy limits.  St. Paul denied the claim for three reasons.

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All insurance lawyers understand that there are time limits within which an insurance company must accept and pay the claim or else deny the claim.  And it is also understood that the insured making the claim has an absolute duty to cooperate with the claims investigation.  But what about a situation where the insurance company needs to be able to get information from a third party, such as medical providers?

What is clear is that if the insurance company reasonably requests information from the claimant, deadlines for payment of the claim are postponed until the insurance company receives that information.

In contrast, the Prompt Pay Statute does not expressly extend any deadlines while the insurance company awaits information from third parties.  However, if the insurance company cannot accept or reject a claim because it is still waiting for such information, Texas Insurance Code, Section 542.056(d) allows the insurance company a one-time 45 day extension.

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Understanding how insurance policies are interpreted by the courts is one of the more important aims of an insurance law attorney.

Here is some more information to be kept in mind.

An insurance policy is a contract, generally governed by the same rules of construction as all other contracts. This is told to us by the Texas Supreme Court in the 2010, opinion styled, Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London. When construing a contract, our primary concern is to ascertain the intentions of the parties as expressed in the document according to the Texas Supreme Court 2014, opinion styled, Amedisys, Inc. v. Kingwood Home Health Care, LLC.  In the Gilbert opinion the court stated that, we begin our analysis with the language of the contract because it is the best representation of what the parties mutually intended.  Unless the policy dictates otherwise, we give words and phrases their ordinary and generally accepted meaning, reading them in context and in light of the rules of grammar and common usage.  We strive to give effect to all of the words and provisions so that none is rendered meaningless.  In quoting from a 1938, opinion, the court said, “No one phrase, sentence, or section [of a contract] should be isolated from its setting and considered apart from the other provisions.”

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Knowing how to interpret an insurance policy is vital for insurance attorneys attempting to help clients with insurance disputes.  Knowing how to do this, is to know how courts interpret insurance policies.

One issue frequently faced by courts is the source of meaning to be given to words.  At least two different rules have evolved in order to identify the definitions to be given to words as used in insurance contracts.

The first rule is the “definition” rule.  Where the policy, by its own terms, defines a term, those definitions control.  This was made clear in the 2003, Texas Supreme Court opinion styled, Provident Life & Accident Ins. Co. v. Knott, and the 1997, opinion styled, Trinity Universal Ins. Co. v. Cowan.

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Allegations of fraud against an insurance company must be specific when a case is in Federal Court.  This is illustrated in a recent case from the Western District of Texas, San Antonio Division.  The case is styled, Maria Quintero v. Allstate Vehicle And Property Insurance Company.

The claim against Allstate arises from a hail and windstorm that is alleged to have caused property damage to Maria.  The assertion is that Allstate breached the insurance contract, misrepresentation, and fraud arising under the Texas Insurance Code.

Allstate filed a motion to dismiss based on Maria’s failure to satisfy the heightened pleadings standards under Rule 9(b) and the general pleading standards under Rule 8.

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