Named Property In An Insurance Policy

Fort Worth insurance attorneys will tell you that they need to know a few things to be able to properly discuss the legal aspects of a claim with a potential new client. One, what are the facts of the claim. Two, what does the policy say. And three, how do the courts interpret situations similar to the situation being dealt with.
Unpublished opinions historically are not given a lot of notice but they do give an attorney insight into how the courts look at specific situations. A 1996, unpublished opinion from the Dallas Court of Appeals is worth reading. It is styled American Indemnity Company v. McFarland Insurance Agency. Here is some of the relevant information from that case that is worth knowing.
The insurance carrier, American Indemnity, in this case issued a Texas commercial package through McFarland which contained four different commercial coverages: fire and extended, glass, general liability, and inland marine. The insured purchased the inland marine to insure video equipment.
A burglary occurred at the insured’s premises in which the video equipment specifically listed on the inland marine declarations page was stolen. American Indemnity paid the insured the replacement costs of the items stolen, less depreciation. The insured then sent McFarland a demand letter stating its intention to assert a claim against McFarland for misrepresentations regarding the policy’s coverages. The insured sought payment of $14,296.00, the amount of the depreciation that the carrier withheld. McFarland settled its dispute with the insured, and the insured released McFarland and assigned the claims and causes of action which the insured might have against American Indemnity.
McFarland sued American Indemnity for breach of contract, bad faith and violations of the Texas Deceptive Trade Practices Act (DTPA) and the Texas Insurance Code. American Indemnity and McFarland moved for summary judgment. The trial court granted McFarland’s partial summary judgment on the breach of contract claim. The remaining causes of action were severed. American Indemnity appealed.
The Dallas appeals court affirmed the breach of contract claim.
The declaration page on the policy indicated a Special Extended Coverage Endorsement. This endorsement did not insure against loss to any “property more specifically insured.” The “replacement cost” endorsement stated that it applied to items number 1 of the policy which included the video equipment. The replacement cost endorsement extended the coverage to the replacement cost without deduction for depreciation. The inland marine declarations page set forth the specific video equipment and insured that equipment against loss.
American Indemnity claimed that because the inland marine coverage specifically listed the video equipment that was lost, that constituted “property more specifically insured.” The Court rejected this argument stating that the phrase “property more specifically insured” was ambiguous and, therefore, had to be construed against the carrier. “Property more specifically insured” means property which is insured under a different insurance policy by a different carrier. Therefore, in this case, the insured was entitled to recover replacement costs without deduction for depreciation. McFarland as the insured’s assignee, was entitled to judgment against the carrier.
These cases can be confusing. That is why an experienced Insurance Law Attorney must be consulted.