Texas Insurance Policy Interpretation

The Fort Worth Court of Appeals recently decided a case wherein the Court had to apply Texas Insurance Laws and Texas Labor Code Laws in interpreting an insurance policy. The case was, Paul Robertson v. Home State County Mutual Insurance Company.

In this case, Robertson was an employee of a company called Redi-Mix. Robertson was injured while on the job for Redi-Mix. Redi-Mix had a policy of insurance with Home State. The policy in relevant part said that it provided coverage for “all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies”. The policy contained the following relevant exclusion to which coverage did not apply:

3. WORKERS COMPENSATION Any obligation for which the insured or the insured’s insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.

Robertson sued Redi-Mix and Home State and obtained a judgment against Redi-Mix for $967,631.52. The claim against Home State was separated by the Court. Home State made legal arguements based on the above portions of the policy that Home State did not have any liability under the policy and that the case against them should be dismissed. It was dismissed and this appeal followed.

Redi-Mix did not carry workers compensation insurance. Based on this, Roberstson said the above Workers Compensation exclusion did not apply. Home State argued that the workers compensation exclusion did apply because this claim arose under the Texas Workers Compensation Act. This law is found in the Texas Labor Code, Sections 406.031 thru 406.035.

The arguement about whether or not the Workers Compensation exclusion applied eventually came down in favor of Home State and was upheld by the Fort Worth Appeals Court. Thus, Redi-Mix became fully liable for the injures suffered by its employee rather than Home State having to pay the claim. What is most relevant here is that reading of the policy dealt not only with insurance laws but also how those insurance laws applied to Texas labor laws. This serves as another example why an experienced Insurance Law Attorney is needed to offer legal advise on interpretation of Texas Insurance Policies.