First Party Theories Of Recovery

Insureds in Dallas, Fort Worth, Grand Prairie, Mansfield, Cedar Hill, De Soto, Duncanville, Red Oak, Lancaster, Arlington, Forest Hills, and other places in Texas do not really understand the different parts of insurance transactions. Let’s try to get an understanding and be more educated about insurance transactions.
To understand the different ways disputes can arise, it is helpful to consider the sequence of events that is likely to occur. At its very simplest, the insurance transaction can be divided into the initial sale of the policy, and subsequent handling of claims. These can be broken down further to include:
(1) The sale of the policy: Initially, the consumer and insurer or insurer’s agent must communicate to establish a contractual relationship. Disputes may arise over what was asked for by the applicant, what was represented by the insurer or agent, or the timeliness of the insurer or agent in providing coverage. Issues may also arise about the truthfulness of the applicant or agent in disclosing information requested by the insurer;
(2) Underwriting: At this stage the insurer considers the application and determines whether the applicant is an acceptable risk. Certain types of discrimination based on risk are legitimate and are inherent in the process of providing insurance. Other types of discrimination — such as distinctions based on gender, ethnicity, or disability — are unlawful;
(3) Policy administration: During the course of the insured / insurer relationship, disputes may arise even if there is no claim. For example, the insurer may choose to cancel or not renew the policy. The insurer may demand a premium that is higher than the insured was lead to expect; and (4) Claims: If a claim arises under the policy, the parties may fall into disagreement over the scope of coverage, the amount of payment, the insurer’s failure to pay, or the timeliness of any payment. An insurance claim may also give rise to disagreements based on the difference between the coverage promised by the insurer or its agent at the time of sale contrasted with the coverage given at the time of the claim.
There are differing theories of recovery when sueing on an insurance contract. Insurance transactions tend to resemble one another, so disputes arising from them tend to resemble one another. There are only so many ways that an insurance company and an insured can get crossways. Most cases present recurring problems that can be grouped into categories. Insurance law is driven by precedent, more so than other areas of the law. Courts try to construe similar policy language consistently. This is why many cases start to look alike.
The key in insurance law case is find case law that matches the facts of the case being looked out.
The most important starting point is the insurance contract itself. The initial inquiry almost always starts with the language of the insurance policy to determine what is covered and what is not. Other tort and statutory theories of law may depend on the existence of coverage, or may exist independent of coverage. The interplay between recovery for breach of contract and recovery under other theories of law have to be examined. Beyond suit for breach of contract, most insurance cases can be grouped into these categories:
1) misrepresentations 2) nondisclosures 3) unfair settlement practices; and
4) other misconduct.
A lot of attorneys will have some understanding of insurance law just based on their knowledge of law in general. But, insurance law is a sub-division of law unto itself and only an experienced Insurance Law Attorney is going to have read the cases and stayed up on changes in the law as they occur, enough so as to give someone having problems, good advice on how to proceed.