Read The Insurance Policy?

A Weatherford insurance lawyer will always tell you “read the policy” or risk losing on a case where you otherwise thought you had coverage.  A recent case may change that advice, depending on the facts.

When a plaintiff fails to read an insurance policy, they usually don’t have much of a case against an insurer if they’re denied coverage.

But one insurance lawyer recently convinced Houston’s Fourteenth Court of Appeals that his client could sue an insurance company over a policy he’d never laid eyes on before filing a claim.

The background to his Oct. 18 victory in Wyly v. Integrity Insurance Solutions is as follows, according to the decision.

Benson Scott Wyly bought a Glasair III airplane in Bristol, Tennessee, and arranged to have it shipped to League City, Texas.  Before it was transported, he contacted Integrity Insurance Solutions agent Garner Geisler and purchased a policy to cover the plane while it was in transit.

After the plane arrived in League City, Wyly discovered that it had been damaged after tie-down straps on the trailer collided with the plane’s fuselage.

But Integrity Insurance later denied Wyly’s claim for the damage, pointing to exclusion in his policy for “improper packing, preparation for shipment of loading by you or the shipper.”

Although Wyly did not read the policy until after his plane was delivered, he alleged he relied on Geisler’s statement to him that his plane was covered “A to Z” while in transit, from loading to unloading.  Wyly later learned that Geisler did not read the policy before making recommendations to him regarding coverage.

Wyly later sued Integrity Insurance for negligent misrepresentation, breach of fiduciary duty, negligent training and supervision of an employee, and deceptive trade practices claims among others.  A state court judge later granted summary judgment for Integrity Insurance, dismissing all of Wyly’s claims.

Wyly appealed the decision to the Fourteenth Court, but only as to his Deceptive Trade Practices Act claim under the Texas Insurance Code.

On appeal, Integrity Insurance raised a common law claim defense that Wyly’s failure to read the policy precluded his claim. But the Fourteenth court concluded that Integrity Insurance’s common law defense was precluded by the DTPA, a statute enacted decades ago to provide consumers a cause of action for deceptive trade practices without the burden of a defendant’s numerous common law defenses.

“Appellant’s failure to read the policy does not preclude his claims under the DTPA or the Insurance Code,” wrote Justice John Donovan.  “Because appellant’s claims are for alleged violations of the DTPA and the Insurance Code based upon an affirmative misrepresentation of coverage, the trial court could not have properly granted summary judgment on the basis that appellant was deemed to know the contents of the policy.”

The outcome of this decision proves that the DTPA can be a powerful weapon for plaintiffs in insurance litigation.

“What has been clarified in insurance law is that the DTPA as it relates to the prosecution of false or misleading representation claim is far more stronger cause of action than a common law cause of action,” Stated on insurance lawyer.

“The DTPA is a powerful statute and the only affirmative defenses under the DTPA are statutory, not common law,”  “And his failure to read the policy is not an affirmative defense when the insurance agent made a false representation.”