Third Party Beneficaries

Weatherford and Mineral Wells attorneys need to have some understanding of insurance law. In insurance contracts there are usually what is called intended or third party beneficiaries. Here is a little information about these third party beneficiaries.
Other persons who may sue for benefits under a contract of insurance besides the named insured are “intended beneficiaries,” also known as “third party beneficiaries.”
A third person for whose benefit a contract is made may enforce the contract against the promissor. Texas case law, as stated in 1985, by the Houston Court of Appeals, 14th Dist., tells us the controlling factor in determining whether a third party may enforce a contract is the intention of the contracting parties.
Federal case law in the Palma case tells us a presumption exists that parties intended to contract only for themselves, so the contract will not be construed as having been made for the benefit of another, unless it clearly appears that this was the intention of the contracting parties. Any doubts are to be construed against such an intent.
To qualify as a third party beneficiary, the plaintiff in a lawsuit against an insurance company must prove:
1) that she was not privy to the written insurance agreement;
2) that the contract was made at least in part for her benefit; and 3) that the contracting parties intended for her to benefit from their written agreement.
Here is an example:
In the Federal case mentioned above, Palma v. Verex Assur., Inc., the borrower was a third party beneficiary of private mortgage insurance, which protected the lender in case she defaulted. She was not a party to the contract, and the agreement was made in part for her benefit, because it protected her from a claim by the lender once the insurance company paid. The court also found the contracting parties intended for the borrower to benefit from their written agreement.
But here is something to be aware of in these “intended beneficiary” cases. It is called ERISA.
ERISA preempts state common law and statutory claims when an insured or beneficiary receives the insurance in question under an employee benefit plan. In such a situation, relief is limited to that set forth in ERISA: recovery of the claim amount, clarification with respect to future claims, attorneys fees and cost and, on rare occasion, limited equitable relief.
As it relates to ERISA plans, no person should deal with these situations without the hellp of an attorney who has experience in handling ERISA plans.