Articles Posted in Claims Handling Process

Like all property insurance policies, the Business Personal Property (BPP) policy imposes a number of duties on the insured.  Insurance attorneys will tell these duties constitute conditions precedent to coverage; that is, the insured must comply with these requirements before the insurance company is obligated to pay any loss.  This requirement was made clear in the 1999, 5th Circuit opinion styled, Griggs v. State Farm Lloyds.  These duties generally include:

  1.  the insured must provide notice to the insurer of the loss
  2.  the insured must preserve the property as much as possible

Insurance lawyers will tell you that a person must have an insurable interest in the insured property to recover under an insurance policy.  This is also stated in the 1993, Dallas Court of Appeals opinion, Jones v. Texas Pacific Indemnity Co.

The purpose of the requirement of an insurable interest is to discourage the use of insurance for illegitimate purposes as discussed in the 1999, Austin Court of Appeals opinion, Valdez v. Colonial County Mutual Insurance Co.

The 1998, Fort Worth Court of Appeals opinion, Foust v. Old American County Mutual Fire Insurance Co., tells us an insurable interest exists when the insured derives a pecuniary benefit or advantage by the preservation and continued existence of the property or would sustain pecuniary loss from its destruction.

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.

Here is some general property insurance information and personal property insurance information.

Property insurance involves the indemnification of the insured by the insurer for the oss of, or damage to, identifiable property described either specifically or by general language in the policy.  That is what was stated in the 1973, Dallas Court of Appeals opinion, Cumis Insurance Society v. Republic National Bank of Dallas.

As stated in the 1989, Corpus Christi Court of Appeals opinion, Warrilow v. Norrell, coverage evaluations in the context of property insurance examine the relationship between perils covered under the policy and perils excluded under the policy.

Insurance attorneys know about the statutory requirements of making a claim.  These rules can be looked up in the Texas Insurance Code.  The problem arises when the insurance companies do not comply with these rules.  So, what are some of these rules.

Start with Texas Insurance Code, Section 542.056(a).  This statute requires an insurance company to give written notice it is accepting or rejecting a claim.  A telephone call from the insurance company adjuster notifying the insured of the amount of the loss will not constitute “notice of payment of claim, because the statute requires that the acceptance or rejection be in writing.  This writing requirement is discussed in the Houston Court of Appeals [14th Dist.] opinion styled Daugherty v. American Motorists Insurance Company.

However, an insurance company’s written response acknowledging only that a claim has been received does not constitute an acceptance or rejection under the statute according to a Corpus Christi Court of Appeals opinion styled, Northern County Mutual Insurance Company v. Davalos.

Cooperation with the insurance company investigation of a claim is required under the insurance policy.  Failure to cooperate can result in the policy being rescinded and the claim denied.

The 1994, Amarillo Court of Appeals opinion, Andy Costely and Cathy Costley v. State Farm Fire And Casualty Company, illustrates the necessity of cooperation with the insurance company investigation of a claim.

In this case, State Farm was allowed to rescind a policy based on the insured failure to cooperate.  Cathy had her truck, tractor, and other personal property destroyed by a fire while it was parked on Andy’s father’s (Robert) property.  Andy and Cathy sued Andy’s father.  Later Robert sued Andy alleging the damage was due to the negligence of Andy.

The United States 5th Circuit Court issued an opinion in October 2017, that is basic to insurance law.  The opinion is styled, Nautilus Insurance Company v. Irma Miranda-Mondragon.

This is a declaratory judgment action filed by Nautilus against its insured Houston Star Security Patrol and Mondragon.  Nautilus argued it had no duty to indemnify Houston Star regarding a claim brought by Mondragon.  Summary Judgement was granted in favor of Nautilus.

Mondragon worked as a waitress at a nightclub when armed gunmen entered and began shooting customers and employees.  Mondragon was shot and required significant treatment.

Probably all homeowner policies require a “Proof Of Loss” (POL) be filed before a lawsuit be filed against the insurance company.  This issue is addressed in the Northern District, Dallas Division opinion, Gwendolyn Pamphile v. Allstate Texas Lloyds.

Before the Court was a motion to dismiss filed by Allstate.  This arose out of an insurance dispute wherein Pamphile suffered hail damage during a storm and made a claim to Allstate for benefits.  Allstate assigned an adjuster who evaluated the claim and Allstate made payment based on the adjusters evaluation.  Unsatisfied with the payment Pamphile submitted a POL form with her own repair estimate and one day later, filed suit against Allstate.  Allstate removed the case to federal court and filed their motion to dismiss.

Federal courts can adjudicate claims only when subject matter jurisdiction is expressly conferred and must otherwise dismiss for lack of subject matter jurisdiction.

Insurance lawyers learn real fast to know who are the persons who can recover / benefit under an insurance policy.

Other persons who may sue for benefits under the insurance contract are “intended beneficiaries,” also known as “third party beneficiaries.”

A third person for whose benefit a contract is made may enforce the contract against the promissor.  The controlling factor in determining whether a third party may enforce a contract is the intention of the contracting parties.  This is illustrated in the 1985, 14th Court of Appeals opinion, Hermann Hospital v. Liberty Life Assurance Co.

What all insurance lawyers know:  Insurance policies are contracts, and as such are subject to rules applicable to contracts generally.  This was stated in the 1994, Texas Supreme Court case, Hernandez v. Gulf Group Lloyds, and is still good law.

A party seeking to recover on an insurance contract must prove that the contract was in force at the time of the loss.  Also, a party who claims under a policy is required to produce the insurance contract upon which he sues or to prove its terms.  This was stated in the 1975, Tyler Court of Appeals opinion, Hartford Accident & Indemnity Co. v. Spain.  This also, is still good law.  To prove a breach off contract, the insured has to establish:

  1.  the existence of the contract sued upon;