Articles Posted in Bad Faith Insurance

A claim against an insurance company generally speaking, will involve at least two distinct claims.  One for a breach of the insurance contract and a second claim for the insurance company acting in “bad faith” in their handling of the claim.  This issue was discussed in a 2022 opinion from the Northern District of Texas, Dallas Division.  The case is styled, Claire Garcia v. Allstate Vehicle and Property Insurance Company.

Allstate had filed a Motion to Sever and Abate the contract claim from the bad faith claims alleged to be violations of the Texas Insurance Code, Sections 541.060 and 542.060, plus violations of the Texas Deceptive Trade Practices Act and fraud.

Garcia experienced hail damage to her home and filed a claim for coverage through her home insurer, Allstate.  Allstate sent an adjuster to Garcia’s home who calculated an estimate of $843.68.  Later, another agent calculated an estimate of $1,166.84.  After applying deductibles, Garcia was not receiving any monies for the claim.

Bad Faith insurance lawyers are always questioning themselves on where the line is drawn regarding bad faith claims.  This issue is discussed in this 2022, opinion from the Western District of Texas, San Antonio Division.  It is styled, Dr. John Winston, III v. State Farm Lloyds.

State Farm filed a motion for summary judgment regarding Winston’s bad faith allegations.

Winston sued State Farm regarding a claim for damage to Dr. Winston’s residence caused by a hail storm.

Bad Faith Insurance Lawyers need to read this 2022 opinion from the Northern District of Texas, Dallas Division.  The style of the case is, Vernon Humphries and Rebecca Humphries v. State Farm Lloyds.

The Humphries sued State Farm alleging State Farm failed to pay the full amount of their claim.  After litigating some of the case, State Farm filed a motion for summary judgment regarding Humphries’ bad faith claims.

We will not state the detailed facts of this case.  To get the facts of this particular case, a reading of the opinion is necessary.

Insurance companies and insurance agents have no general duty to obtain coverage nor to make sure the coverage is adequate.  On the other hand, courts have found insurance companies liable for affirmative misrepresentations, and an insurance agent who undertakes to procure insurance for another owes a duty to a client to use reasonable diligence in attempting to place the requested insurance and to inform the client promptly if unable to do so.  This is discussed in numerous cases, including, the 1992, Texas Supreme Court opinion, May v. United Services Ass’n of America.  Also, the 1999, 1st Court of Appeals opinion, Frazier v. Texas Farm Bureau Mutual Ins. Co.

An agent has a duty to keep the customer informed about the insurance policy’s expiration date when the agent receives information pertaining to expiration date that is intended for the customer.  This was discussed in the 1985, Texas Supreme Court opinion, Horn v. Hedgecoke Ins. Agency.

Additionally, the court in May suggested an agent could be found negligent if an explicit agreement or course of conduct showed the agent undertook to determine the customer’s insurance needs and counseled the customer as to how they could be met.

Bad Faith insurance claims are common complaints when dealing with claims being denied.  When fighting these cases a common tactic is to sue the adjuster for the wrongs the adjuster did in causing the claim to be denied.  When suing an adjuster the insurance company is going to always claim that the adjuster is not a proper party to be sued in the case.  The relevance of whether the adjuster is sued or not often determines whether the case will be litigated in a State Court or in Federal Court.

Properly suing an adjuster was discussed in this 2022 opinion from the Northern District of Texas, Dallas Division.  The case is styled, Art Dallas, Inc. v. Federal Insurance Company and Derek Franks.

In this case, ADI made a claim for wind and hail damage.  The insurance company, Federal, sent it’s adjuster, Franks, to inspect the claim.  Franks determined the damage from wind and hail was minimum and that the roof damage was due to “wear and tear.”

Insurance claims lawyers are well aware that insurance companies prefer to litigate in Federal Court.  Proper pleading can often times prevent a case from being litigated in Federal Court.  Usually suing the adjuster who handled the claim will prevent removal to Federal Court.  The key is properly pleading claims against an adjuster.

This is discussed in a 2022, opinion from the Northern District of Texas, Dallas Division.  The style of the case is, Jackie Preston v. Nationwide Property & Casualty Insurance Company; Stevie Bruesewitz; and Matthew Vaughters.

Preston sustained damage to her property in 2019.  Nationwide was her property insurer and thus, Preston made a timely claim to Nationwide.  Preston became frustrated with Nationwide’s handling of her claim and sued Nationwide and the two adjusters, Stevie and Matthew.

Lawyers handling insurance claims that have been denied frequently have a conversations with clients about “bad faith” insurance.  Bad faith, generally speaking, often times centers around whether or not an insurance company has committed a fraud.

If allegations of fraud are going to be alleged, insurance lawyers need to understand that those claims that end up in a Federal Court are subjected to a higher pleading standard than those claims that are litigated in State or County Courts.  This is illustrated in a 2021, opinion from the Southern District of Texas, Galveston Division.  The opinion is styled, Smiley Team II, Inc. v. General Star Insurance Company.

Smiley made a claim against General Star after a vehicle was alleged to have crashed into Smiley’s building.  A lawsuit was eventually filed containing allegations that General Star failed to properly adjust the claim which resulted in an alleged underpayment of the claim.

Insurance agents misrepresenting the terms and conditions of an insurance policy is a common complaint.  Here is a 1994, Texas Supreme Court opinion styled, Celtic Life Insurance Company v. John D. Coats, Jr.

This case presents three issues relating to an insurance company’s liability for its agent’s representations: first, whether the company’s liability depends on its authorization of misrepresentations; second, whether reliance on the representations is an element of recovery; and third, whether the insured’s damages should be trebled when the misrepresentations were not committed “knowingly.”

This blog will focus on the first issue regarding the agents misrepresentations and the liability of insurance company.

Filing a lawsuit is not as simple as saying the words.  One common reason for suing an insurance company is based on allegations of fraud.  A 2021, opinion from the Southern District of Texas, Galveston Division, shows that pleading fraud an insurance company has to meet certain criteria or the case will be dismissed.  The style of the case is, Smiley Team II, Inc. v. General Star Insurance Company.

Smiley carried commercial property insurance with General Star.  A vehicle crashed into Smiley’s covered property and a claim was made.  Smiley complains that General Star failed to properly adjust the claim, issuing a payment that substantially undervalued the damages.

Smiley’s First Amended Complaint asserted causes of action for breach of contract and various violations of the Texas Insurance Code and the Texas DTPA.

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