Do Texas Laws Govern All Texas Policies

An important issue for any resident of Grand Prairie, Arlington, Dallas, Fort Worth, or even a resident of a smaller community such as Weatherford is: What happens if I get into an insurance dispute with my insurance company? What laws apply in fighting with the insurance company?
This question is atleast partially answered by a section of the Texas Insurance Code. Article 21.42 of the Texas Insurance Code is titled, Texas Laws Govern Policies. It says, “Any contract of insurance payable to any citizen or inhabitant of this State by any insurance company or corporation doing business within this State shall be held to be a contract made and entered into under and by virtue of the laws of this State relating to insurance, and governed therby, notwithstanding such policy or contract of insurance may provide that the contract was executed and the premiums and policy (in case it becomes a demand) should be payable without this State, or at the home office of the company or corporation issuing the same”.
Wow, no wonder attorneys are needed to decipher the law!
What this insurance law says is that policies of insurance issued by insurance companies doing business in Texas, to Texas citizens, are governed by Texas laws. This is important because different states will have different laws governing insurance policies.
There are exceptions to the law. One exception is a federal case decided in 1979. The style of the case is Butler v. Mutual Life Assurance Company of Canada. Another exception is found in an old case decided in 1896. This is also a federal case styled, Manhatten Life Insurance Company v. Fields. These cases with exceptions to the above law have to be scrutinized carefully to make sure they are still good law today. Most of the cases finding exception to the Texas law are older cases.
It is important to realize that insurance companies fight over which laws apply because they are trying to get the laws of the state most favorable to them to be the laws that are applied to a lawsuit. Any person sueing an insurance company has to seek the advice of an experienced Insurance Law Attorney to make sure their rights are properly protected. Sometimes the laws the laws of another state may actually be more favorable to the insured.