Articles Posted in General

All insurance lawyers need to know what happens to a claim when an insurance company becomes insolvent.  Insolvency to an insurance company is the same as bankruptcy to other companies and individuals.  So what effect is this to policy holders?

Companies that write insurance policies in the State of Texas are heavily regulated, and the Legislature has provided numerous safeguards to protect the public against insurance company insolvency.  This can be seen by looking at the Texas Insurance Code, Chapter 462 and in the Texas Transportation Code, Section 643.105.  In connection with these statutory safeguards, Texas Insurance Code, Section 1952.102 lists and defines the definition of “uninsured motorist” to include a vehicle for which the liability carrier is or becomes insolvent.  As an adjunct to this requirement, the Texas Property and Casualty Insurance Act provides further protection for the public against failure of licensed insurance companies as a result insolvency.

The Act creates a Guaranty Association for the purpose of paying unpaid claims, including those of third-party liability claimants that arise out of and are within the insured’s coverage, but not in excess of the insured’s applicable policy limits.  This limitation can be found in Texas Insurance Code, Section 462.201.  According to Section 462.213, covered claims are limited to $300,000.00 in value.

Insurance attorneys have to have an understanding of how warranties work.  Sometimes it is hard to tell the difference between insurance and a warranty.  An article in the Insurance Journal about Allstate purchasing a warranty company shows how the two can be connected.  The title of the article is “Allstate to Pay $1.4 Billion for SquareTrade, Seller of Warranties for Mobile Devises, Appliances.”

The Allstate Corp. agreed to acquire SquareTrade, a consumer electronics and appliance protection plan provider that distributes through many of America’s major retailers.

SquareTrade’s plans protect mobile devices, laptops and tablets, and other consumer electronics and appliances from malfunctions, accidental damage and mishaps.  It promises that its technology delivers “a zero hassle claims process.”

Palo Pinto residents may not think they will ever need flood insurance but those living around the Brazos River may think otherwise.  In any event, knowing what is going on in the hurricane and flood insurance industry is helpful for insurance law attorneys.  The Insurance Journal published an article in November 2016 dealing with this topic.  The article is titled, Q&A:  Deloitte Insurance Expert Discusses Hurricane Season And Flood Insurance.

Although Atlantic hurricane season ends in November, cleanup from any damage seen on the East Coast could last beyond the end of the season.  Some coastal areas, such as Virginia Beach, were impacted this season, particularly by flooding.

Flooding is the nation’s number one natural disaster, with roughly 25 percent of all flood insurance claims filed in low to moderate risk areas, according to data from the Insurance Information Institute.  Many standard homeowners’ policies don’t cover flood damage, making it an important consideration for insurers and their clients as Atlantic hurricane season comes to an end and the cleanup continues.

Cresson insurance lawyers as well as those insurance lawyers in the rest of the Dallas and Fort Worth area will usually be ordered to mediate a case prior to any Judge allowing the case to go to trial. The reason for this is because of the high success rate of mediation. The San Antonio Division of the Western District recently had a case where an insurer tried to expedite the mediation time line by filing an “Expedited Motion to Compel” mediation. The case is styled, Vinings Insurance Company v. Todd Hughes and Pasadera Builder, L.P.

Vining alleges the policies at issue in this case require the insured to “cooperate with Vining in the investigation or settlement of the claim or defense,” and may not “voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without Vinings consent.” The policies further state that Vinings will “pay those sums that the insured becomes legally obligated to pay as damages” to those claims to which the policy applies, and has the “right and duty to defend the insured against any suit seeking damages” covered under the policy.

Vinings argues that it will suffer irreparable and significant harm if the case proceeds to arbitration before the parties engage pre-arbitration mediation, because Pasadera will demand that Vinings satisfy any arbitration award with Mr. Hughes, and will also require Vinings to pay its private attorneys’ fees. Further, Vinings states that Mr. Hughes agreed to mediate the case with mediator Lee Shidlofsky before engaging in arbitration. Vinings does not state that Pasadera ever agreed to participate in mediation. Pasadera argues that it should not be compelled to mediation less than three weeks before the commencement of arbitration; it also argues that Vinings does not appreciate the significance of Mr. Hughes claim in the context of the Cordillera Ranch community where Pasadera has constructed many luxury homes.

Sometimes the fights put up by insurance companies seem unnecessary. It is nice when a court agrees. This was the case in a Southern District, Houston Division case. It is styled, Houston Granite & Marble Ctr., LLC v. Mesa Underwriters Specialty Ins. Co.

Houston sued Mesa in State Court and Mesa had the case removed to Federal Court over an insurance coverage dispute. Houston, soon thereafter, filed a motion for non-suit without prejudice because its president had recently undergone triple by-pass heart surgery and would be unable to respond to discovery or assist in prosecuting the case, plus, the president is a material witness in the case.

Mesa responded by stating there must be conditions placed on the non-suit. One, that Mesa be reimbursed for expenses it had incurred including attorney fees. Two, that any re-filing of the lawsuit be in the Southern District of Texas. Three, that upon re-filing, Granite fully comply with Mesa’s requests for production and answer interrogatories.

Insurance Companies Cheat. Yes,it’s true. Insurance law attorneys see this all the time. While the majority of claims are handled in a competent manner and the policy holder is at least partially satisfied with the outcome, insurance lawyers are constantly confronted with the situations where the insurance company is doing wrong. The Insurance Journal published an article on May 31, 2016, titled, Supreme Court to Hear State Farm’s Appeal of Katrina False Claims Ruling. It is worth reading.

The U.S. Supreme Court on Tuesday agreed to hear an appeal by State Farm contesting a jury finding that the insurance company defrauded the federal government when assessing damage caused by Hurricane Katrina in 2005 along the Gulf of Mexico coast.

The court will review a 2015 ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals upholding the verdict in a suit brought under the federal False Claims Act, which lets people sue over allegations that the government has been defrauded.