What all insurance lawyers know: Insurance policies are contracts, and as such are subject to rules applicable to contracts generally. This was stated in the 1994, Texas Supreme Court case, Hernandez v. Gulf Group Lloyds, and is still good law.
A party seeking to recover on an insurance contract must prove that the contract was in force at the time of the loss. Also, a party who claims under a policy is required to produce the insurance contract upon which he sues or to prove its terms. This was stated in the 1975, Tyler Court of Appeals opinion, Hartford Accident & Indemnity Co. v. Spain. This also, is still good law. To prove a breach off contract, the insured has to establish:
- the existence of the contract sued upon;
- compliance with the terms of the contract; and
- the insurer’s breach of the contract
In Rakkar, the first and second elements were satisfied by uncontroverted testimony that the house was insured at the time of the fire, that the insured had paid his premiums, that the insurer had refused to pay, and that the amount that would have been paid was the policy limits. The insurer denied the claim, contending that the insured intentionally caused the fire. When the jury rejected this defense, that established the third element; the insurer’s breach of the contract.
Something to be aware of is that State common law and statutory claims made by an insured when he or she is insured under an employee benefit plan are preempted by ERISA. This is made clear at 29 U.S.C., Section 1144(a) and in the 1989, 5th Circuit opinion, Ramirez v. Inter-Continental Hotels. In addition the 5th Circuit has specifically held that breach of contracts are preempted in the 1988, opinion, Hermann Hospital v. MEBA & Benefits Plan. Under ERISA benefits are limited to recovery of the claim, clarification with respect to future claims, attorney fees and costs and, on rare occasion, limited equitable relief under 29 U.S.C., Section 1132(a).