A Recent Case Interpreting A Texas Insurance Policy

The Court of Appeals of Texas, Houston (1st Dist), recently handed down a decision that dealth with interpreting an insurance policy here in Texas. The case was, National Fire Insurance Company of Hartford, as Assignee of Kelvin Ray Gatlin v. State and County Mutual Fire Insurance Company. This case should have had the same result whether it was decided in Dallas, Fort Worth, or anywhere else in Texas.

This case arose out of an auto accident on December 23, 2000. A 1994 Ford Ranger driven by Gatlin ran a red light and damaged a truck owned by Rainbow Play Systems and insured by National Fire Insurance.

State and County denied coverage on the accident and National Fire filed a subrogation suit against Gatlin to recover the monies paid to Rainbow for damage to their truck. National took in excess of a $42,000 judgment against Gatlin. National then got Gatlin to assign to National the claim Gatlin had against State and County for State and County denying the claim. This assignment included claims for breach of contract, a Stowers action, and violations of the Insurance Code.

The main fight here was whether or not State and County was acting properly when it denied coverage to Gatlin. State and County alleged that Gatlin had purchased the policy on December 19, 2000 and at the time of purchase had not informed State and County that he owned the 1994 Ford Ranger. State and County pointed out that the policy did not cover the vehicle unless it was listed on the policy at the time the policy was purchased and that Gatlin did own the vehicle at the time the policy was purchased but he failed to list it. State and County alleged the vehicle was purchased on October 29, 1999 by Gatlin.

Without getting too technical here, the case got into argueing about evidence and hearsay and the proper form of affidavits. What is important is that State and County was argueing that coverage denial was proper because of a listed exclusion in the policy it had issued. To prove the applicability of an exclusion to insurance the burden of proof is on the insurance company according to Texas Insurance Code, Section 554.002.

In this case, the court ruled that State and County had not properly met the burden placed on them by Section 554.002. When a claim is denied by an insurance company, most people are not in a position to realize or understand whether or not the actions of the insurance company are legal or proper. Anytime an insurance company denies a claim you should seek the advise of an experienced Insurance Law Attorney to insure that you are not being cheated.