Bad Faith Insurance

Historical Development Of Texas Bad Faith Law

May 10, 2010 | Mark S. Humphreys

Someone who has insurance in Grand Prairie, Arlington, Keller, Colleyville, or any other town in Texas would be curious to know what can be done when they are treated wrong by their insurance company. This article is largely taken from a legal book for insurance law attorneys and gives some insight into the legal history of the development of the duty of good faith and fair dealing law, in Texas.

Reviewing the theory’s history aids in understanding the current law which will be discussed in a follow-up article.

The development of the common-law duty of good faith and fair dealing in Texas began in the Texas Supreme Court case, English v. Fisher, decided in 1983. There, the insureds asked the court to recognize an implied covenant of good faith and fair dealing that would require insurance policy proceeds to be paid contrary to the terms of the contract. The court said no. In its divided opinion the court pointed out that in other circumstances a duty of good faith and fair dealing arises from a special relationship between the parties. Insurance was one area where such a duty had been recognized.

Bad Faith Insurance In Texas

May 8, 2010 | Mark S. Humphreys

The guy in Grand Prairie, Arlington, Weatherford, Fort Worth, Dallas, or any other place in Texas, wonders what he can do when his insurance company does him wrong. Usually when an insurance company does something that is wrong with one of their insured policyholders, that is called “bad faith” insurance.

Changes in insurance laws in recent years have made it more difficult to make bad faith claims against insurance companies. But this concept of bad faith is definitly not dead. The Texas Department of Insurance has a complaint department that does investigate improper conduct by insurance companies. That is the good news. The bad news is that they seldom do anything except in the most extreme cases where the wrongs are big and affecting thousands of people. What they often times end up telling individuals is that they should consult an experienced Insurance Law Attorney to further pursue complaints. It is not that they don’t care, it’s that they do not have the staff to be pursuing all the wrongs being committed.

A person should never give up when being wronged by one of these companies. The Texas Insurance Code has contained within it, statutes with a lot teeth for attorneys to use in making an insurance company pay for the wrongs it commits. Section 541.060, is titled “Unfair Settlement Practices” and lists several acts, or examples of inaction, that will subject an insurance company to civil liability to the person being wronged.

What Is A Stowers Claim In Texas?

April 27, 2010 | Mark S. Humphreys

What does “Stowers” mean to someone in Grand Prairie, Arlington, Fort Worth, Dallas, Weatherford, or anywhere else in Texas? This is something very important to understand.

A Stowers claim is a claim that an insurance company has handled in an improper manner. Most incorrect claims handling by an insurance company can be called “bad faith”, and the Stowers claim is just a different and unique version of bad faith. This Stowers doctrine was first articulated in the case, Stowers Furniture Co. v. American Indemnity Co. This is an old case, decided in 1929, but is still good law. This case was decided by what is today, the Texas Supreme Court. In 1929, it was called the Texas Commission of Appeals. When an insurance company violates their duty under the Stowers doctrine, the insurance company can become liable for much more money than the insurance policy provides for in the insurance contract.

A Stowers action arises when the liability carrier fails to make a reasonable settlement within the policy limits, and subsequently, exposes their insured policyholder to a judgment in excess of the policy limits. This Stowers claim belongs to the insured policyholder, not the person sueing the policyholder. What usually happens when the Stowers duty is violated, is that the policyholder assigns the Stowers claim to whoever is sueing the policyholder.

Filing A Lawsuit Against An Insurance Company

April 12, 2010 | Mark S. Humphreys

When a couple in Grand Prairie, Arlington, Fort Worth, Dallas, or Weatherford, has to sue an insurance company, is there anything that they have to do first? The Texas legislature has enacted laws and the Supreme Court of Texas enforces these laws telling us what to do. The quick answer is; see an experienced Insurance Law Attorney. The longer answer follows.

Texas Insurance Code, Section 541.154(a) and (b), tells us that as a prerequisite to filing a suit seeking damages, the plaintiff must give written notice to the other person at least sixty days before filing suit. The notice must tell the other person the specific complaint, and the amount of actual damages and expenses, including attorney’s fees, incurred in asserting the claim. The best way for this to work is that once a person realizes that there is, or is going to be a problem, to write down everything that is happening. Try to remember back to all that has happened and write it down and gather any documents, such as letters, e-mails, faxes, the policy, etc., and get it organized to present to an attorney. Doing this while it is freshest in your memory is better than putting it off.

Texas Insurance Code, Section 541.154(c), tells us that notice is not required if the lawsuit must be filed sooner than the sixty day notice to avoid limitations, or if the claim is asserted as a counterclaim.

In Texas – Who Do You Sue?

April 6, 2010 | Mark S. Humphreys

You live in Grand Prairie, Fort Worth, Arlington, Dallas, Weatherford, or anywhere else in Texas and you get treated wrong with your insurance policy – Who do you sue? The answer is not very hard.

First of all …. seek the advice of an experienced Insurance Law Attorney. Then …

The Texas Insurance Code, Section 541.151, provides that a person who has sustained damages caused by another’s engaging in unfair or deceptive insurance practices may sue the person engaging in those acts or practices. Texas Insurance Code Statute, 541.002(2) defines “person” to mean “an individual, corporation, association, partnership, reciprocal or interinsurance exchange, Lloyd’s plan, fraternal benefit society, or any other legal entity engaged in the business of insurance, including an agent, broker, adjuster or life insurance counselor.”

Excess Insurance Case Law In Texas

April 3, 2010 | Mark S. Humphreys

If a resident of Grand Prairie or Arlington or other cities such as Dallas, Fort Worth, Weatherford, and others in Texas has a policy of insurance with a limit and another policy that covers claims that go over the limit of the first insurance policy, what happens if the primary policy does not cooperate in settling the case? The Texas Supreme Court answered this question in a 1992 case.

The style of this case is long, American Centennial Insurance Company and First State Insurance v. Canal Insurance Company, Talbert, Biessel, Stone & Lyman, Giessel, Stone, Barker & Lyman, Henry P. Giessel and Richard S. Joseph. Canal Insurance Company (Canal) was the primary insurance company with coverage of $100,000. American Centennial Insurance Company (American) had coverage from $1 million to $4 million and First State Insurance (First State) had insurance from $100,000 for $1 million and were the excess insurance companies. In this case, the insured company was General Rent-A-Car International, Inc., who was sued for injuries and death allegedly resulting from a blowout of a defective tire on one its rental cars.

In the lawsuit against General, there was a $3.7 million settlement based on the claim itself and the alleged mishandling by trial counsel in the litigation. Trial counsel are the other parties named in the style of the lawsuit.

“Standing”? In Texas Insurance Law

March 30, 2010 | Mark S. Humphreys

A Grand Prairie life insurance policy holder passes away. His beneficiaries live in Dallas, Fort Worth, Arlington, Weatherford, and Mansfield. Who has “standing”, or the right to enforce the policy of insurance?

Uslegal.com defines “standing” as follows: Standing is the ability of a party to bring a lawsuit in court based upon their stake in the outcome. A party seeking to demonstrate standing must be able to show the court sufficient connection to and harm from the law or action challenged. Otherwise, the court will rule that you “lack standing” to bring the suit and dismiss your case.

As further general information, there are three constitutional requirements to prove standing:

Deceptive Trade Practices And Insurance Code

March 29, 2010 | Mark S. Humphreys

A few things for people in Dallas, Fort Worth, Grand Prairie, and Arlington to know. First, and most important would be to seek the help and advice of an experienced Insurance Law Attorney when having arguements with an insurance company. The second, is to use the Texas Department of Insurance web-site as a source of some information.

The Texas Insurance Code and the Deceptive Trade Practices Act (DTPA), which is found in the Texas Business & Commerce Code, were adopted together in 1973 by the Texas legislature as part of a package of reform legislation, are interrelated, and incorporate each other. Thus, as is stated by the Texas Supreme Court in the case, State Farm Life Insurance Company v. Beaston, in 1995, and in, Vail v. Texas Farm Bureau Mutual Insurance Company, in 1988; Courts construe the two statutes together.

Texas Insurance Code, Section 541.008, clearly states that the provisions of the code are to be liberally construed and applied to promote the underlying purposes which are to define and prohibit unfair and deceptive insurance practices.

Texas Insurance And The Deceptive Trade Practices Act

March 28, 2010 | Mark S. Humphreys

Grand Prairie residents and residents of Arlington, Fort Worth, Dallas, Weatherford, and every other town in Texas should know a few things about holding insurance companies accountable. One is, they should always report wrongs to the Texas Department of Insurance. The other thing they should do is contact an experienced Insurance Law Attorney.

An attorney will discuss the fact that remedies for the wrongs committed by insurance companies are addressed in at least two areas of law in Texas; The Texas Insurance Code and the Texas Business & Comerce Code which contains the laws dealing with violations of the Deceptive Trade Practices Act (DTPA).

The Texas Insurance Code, Section 541.151(2) cross-references and prohibits conduct defined in The Business & Commerce Code, Section 17.46(b) of the DTPA. The latter statute applies to all types of consumer transactions, not just insurance, thus not all of the provisions are relevant to insurance issues. The sections that matter most in insurance cases are:

Unfair Settlement Practices In Texas

March 27, 2010 | Mark S. Humphreys

Grand Prairie residents, residents of Arlington, Mansfield, Fort Worth, Dallas, Weatherford or anywhere else in Texas have the same insurance laws apply to each other. They all need to know there is a law that prohibits unfair settlement practices in the State of Texas.

Texas Insurance Code, Section 541.060, is titled “Unfair Settlement Practices”. It is the law that prohibits these types of actions. The statute prohibits engaging in any of the following settlement practices with respect to a claim by an insured person or his beneficiary:

(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;