Duties Of Insured Under A Policy

One of the primary duties of an insured under his insurance policy is to cooperate with the insurer’s investigation of a claim.  As an example –

The Texas Auto Policy  provides:

A person seeking coverage must (1) cooperate with us in the investigation, settlement, or defense of any claim or suit; and (2) properly send us copies of any notices or legal papers received in connection with the accident or loss.

The Texas Supreme Court in the 1978 opinion, Weaver v. Hartford Accident & Indemnity Co., made clear the insured’s cooperation regarding a claim is a condition precedent to coverage.  In the weaver case, the insured failed to forward lawsuit papers to Hartford and thus, Hartford successfully denied coverage.

Many policies contain a contractual time limit on claims.  A policy must be read carefully to determine whether it contains a provision that otherwise alters the statute of limitations applicable to contract claims.  As an example, the Texas Homeowners Policy — Form B (HOB) contains a contractual two year and one day limitations period.  This contractual limitations period supersedes the standard four year contractual statute of limitations period.  In the 1996, Texarkana Court of Appeals opinion, Stevens v. State Farm Fire & Casualty Co., the court upheld a breach of contract action involving the HOB policy, stating the action had to be brought no later than two years and one day after the homeowner’s claim was denied by State Farm.

To avoid ambiguity, most insurance policies define key terms used in the policy.

Endorsements are important to pay attention to.  They usually alter or vary terms or conditions of the policy.

Endorsements are usually attached to insurance policies, but failure to attach them does not invalidate them.  A separate contract can be incorporated into an insurance policy by an explicit reference clearly stating the parties’ intent to include that contract as part of their agreement.  This was made clear in the 1999, Texas Supreme Court opinion, Urrutia v. Decker.