Insurance Policy Contents

All parts of an insurance policy are important.  An insured needs to understand what is contained in any policy he has.  Texas laws assumes a person has read and understands the contents of his insurance policy.

The insuring clause of a policy in the insurance company’s agreement to provide coverage to the insured.  A policy may include several insuring clauses.

The 1997, Houston Court of Appeals [1st Dist.] stated in State Farm Lloyds v. Marchetti, that the insuring clause is the foundation of the agreement and forms the basis for all obligations owed to the insured.  Unless this clause provides coverage for a claim, it is unlikely that any other term of the policy will do so.

The insuring clause usually sets forth the following qualifications for the coverage provided by the policy:

  1.  Who is covered
  2.   What type of loss or damage is covered by the policy.
  3.   What type of activity or peril is covered by the policy.

Policy forms typically contain numerous exclusions that restrict or eliminate coverage provided by the insuring clause.  In the 1998, Beaumont Court of Appeals opinion, E & L Chipping Co., Inc. v. Hanover Insurance Co., the court found that an absolute pollution exclusion in a commercial general liability policy barred coverage for contamination of lake and groundwater resulting from runoff of water from the insured’s effort to extinguish fire on its property.

Conditions are imposed by the policy.  In general, conditions impose certain duties on the insured that the insured must follow in order to be eligible to recover on a claim.  This is seen in the 1997, Tyler Court of Appeals opinion styled, Ohio Casualty Group v. Risinger, where the insured’s failure to send the liability insurer demand and suit papers precluded his claim for policy benefits.

All first-party property forms contain provisions regulating when a claim must be made under the policy and how the insured must document the loss.

The Texas Auto Policy requires the insured to promptly provide the how, when and where of losses.  The notice should also include the names and addresses of any insured persons and of any witnesses.  If this is not done, and the insurer believes failure to provide the information, prejudices their defenses, there will be no liability coverage under the policy.

To determine whether an insured has given notice “promptly,” all circumstances are considered including the insured’s age, experience, capacity for understanding and knowledge.  The law is clear in Texas that for an insurer to successfully deny coverage because of late notice, the insurer must show that it was prejudiced by the late notice.