What Does An Insurance Policy Cover?

The above is a good question by anyone in Mansfield, Arlington, Grand Prairie, Dallas, Seagoville, Newark, Keller, Colleyville, or anywhere else in Texas. What does an insurance policy cover? Well the question may be good but the answer could be very long. So lets get more specific. Does an auto insurance policy cover exemplary damages?
The last question was answered in a 1972 case styled, Dairyland County Mutual Insurance Company v. Glen F. Wallgren, Indiv. and as Next Friend For Nancy. This was a Fort Worth Court of Appeals case.
The only question answered in this case was: Are indemnity benefits for exemplary damages afforded in Texas under a policy of automobile liability insurance written pursuant to the provisions of the Texas Insurance Code and under the delegation of legislative authority granted in the Insurance Code?
This court said yes. That the insurance contract at issue was written under provisions of law by the Department of Insurance and the insurance afforded did not contravene public policy.
Generally the expressions upon public policy speak with reference to the law of any particular state as embodied in its constitution, statutes, and decisions of its courts. However, expressions thereupon are often times enlarged to include the administrative practices of the state’s officers as part of its public policy.
As early as 1930, the Dallas Court of Appeals, in Francis v. International Travelers’ Association, pointed out that power given by the legislature to the Department of Insurance was to prescribe terms, conditions, and the very language of insurance policies.
In 1950, the Austin Court of Appeals, in Board of Insurance Commissioners v. Carter, the court spoke regarding the article or articles expressive of the law in the Insurance Code. It was held by the court that the Board of Insurance Commissioners’ promulgation of uniform policies of insurance was not an improper exercise of delegated legislative authority.
In this casethe court concluded that the terms and conditions set out in the insurance contract at issue, pursuant to the Texas Department of Insurance, did not contravene public policy.
The pertinent portion of the policy here had the insurance company agreeing to:
“to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of: … bodily injury, sickness or desease, including death resulting therefrom, hereinafter called ‘bodily injury’, sustained by any person; … arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile …”
In the courts’ decision they pointed out that the Honorable Royal Brin of Dallas, Texas, prepared an article discussing the question of whether an award of punitive damages is covered by provisions which are substantially identical to those of the policy at issue here.
In the article Mr. Brin quotes, “The policy in the present case (General Casualty Co. v. Woodby) obligated the insurance company to pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability … sustained … by any person …” “We are of the opinion that the punitive damages awarded in these cases are liabilities imposed by law for damages within the meaning of the policy.” Mr. Brin then proceeds to make his own statement, as follows: “Certainly it is difficult to quarrel with this conclusion as an interpretation of the language of the policy, and those courts and commentators which espouse non-coverage usually do so on the basis of public policy rather than of construction of the policy language.”
The relevance her of this case is that it cites numerous other cases for its holding that exemplary damages are payable by the insurance company in the standard Texas auto insurance policy. An experienced Insurance Law Attorney will tell you exceptions to this law. The changes are the result of the Texas Department of Insurance allowing insurance companies to write their own policies to a certain extent in recent years,