Who Has Standing To Sue An Insurance Company

Arlington insurance lawyers need to be able to answer the above question when someone comes into their office with a complaint. Simply put, standing means the legal right to be in court on a case.
Texas Insurance Code, Section 541.151 grants a cause of action to a person who sustains actual damages caused by another person engaging in any unfair insurance practice or deceptive trade practices.
The Texas Supreme Court in a 2000, case stated the law that to assert a cause of action a plaintiff must be: (1) a “person” as defined by the statute; or (2) injured by another’s unfair or deceptive acts.
The statute, Texas Insurance Code, Section 541.002(2), defines “person” to mean “an individual, corporation, association, partnership, reciprocal or inter-insurance exchange, Lloyd’s plan, fraternal benefit society, or any other legal entity engaged in the business of insurance, including an agent, broker, adjuster or life insurance counselor.” In a 1978, Texas Supreme Court case, the Court held that the language requiring that the person be “engaged in the business of insurance” did not apply to plaintiffs.
Categories of plaintiffs who have standing to sue under the statute include:
a. insureds b. named beneficiaries c. intended third party beneficiaries d. agents e. claimants who relied on representations by the insurer Third party claimants may not sue the negligent party’s insurer, when recognizing a duty to the claimant would conflict with the duties the insurance company owes to the insured. Also, even those who have standing to sue as “persons” are not able to rely on the prohibitions that limit recovery to “consumers,” unless they fit within that classification.
The statutes and case law are clear that insureds and beneficiaries are able to sue for wrongs committed.
Sometimes there is argument over who are “persons” for purposes of the law. Put simply would mean anybody who has sustained actual damage. But putting it simply does not always settle the matter because of complicated facts scenarios that happen in the everyday world.
The Federal 5th Circuit Court of Appeals held in a 1990, case that standing requires privity of contract or some sort of reliance by the person bringing the claim on the words or deeds of the insurance company. The court found that under Texas law there must be “a direct and close relationship between the wrong-doer and the claimant” to allow recovery under the statute.
The attorney giving advice on this issue has to be aware of the facts in a case and be able to apply those facts, to holding of courts in order to properly advise a client.