Can You Sue An Insurance Adjuster?

Insurance lawyers know that suing an adjuster when it can be done, is preferable to not suing the adjuster.  There are reasons for this that have been discussed in previous blogs.  The Southern District of Texas, Brownsville Division, had a case dealing with this issue in February 2020.  The style of the case is, Faith Pleases God Church Corporation v. Philadelphia Indemnity Insurance Company, et al.

Church sued Philadelphia and VeriClaim, Inc. and adjuster John Adame stemming from underpayment of the Church’s claim for property damage resulting form a storm.  Church filed a claim with Philadelphia who assigned VeriClaim to the claim and Adame is their employee who investigated the claim.

Church alleges VeriClaim and Adame prepared an undervalued damages report allowing Philadelphia to underpay the claim.

On January 30, 2019, Church properly notified Philadelphia, VeriClaim and Adame of its intent to sue them.  Philadelphia responded by electing under Section 542A.006 of the Texas Insurance Code to assume any liability for its agents, which include VeriClaim and Adame.

Church filed suit in Texas State Court and Philadelphia removed the case to Federal Court where VeriClaim filed its Motion for Summary Judgment.

The Church’s causes of action against VeriClaim are under Texas Insurance Code Sections 541.051 and 541.061.

Under the Texas Insurance Code, “an insurer . . . may elect to accept whatever liability an agent might have to the claimant for the agent’s acts or omissions related to the claim by providing written notice to the claimant,” pursuant to Section 542A.006(a). An “agent” for purposes of this statute includes an “adjuster who performs any act on behalf of an insurer,” pursuant to Section 542A.001(2).  When an insurer makes such an election before the claimant files suit, “no cause of action exists against the agent related to the claimant’s claim,” pursuant to 542A.006(b).  If, despite notice of the insurer’s election under Section 542A, the claimant files an action against the agent, the court shall dismiss that action with prejudice.

In this case, Philadelphia elected to accept liability under Chapter 542A of the Texas Insurance Code for its agents on February 21, 2019, more than four months before Church filed its lawsuit.  No party contests that VeriClaim is an agent of Philadelphia with respect to Church’s insurance claim at issue in this lawsuit.  Even when viewing the evidence in the light most favorable to Church, Section 542A precludes all causes of action against VeriClaim for alleged violations of Chapter 541 of the Texas Insurance Code.  As a result, VeriClaim is entitled to judgment as a matter of law

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