General

Diminished Value Of Your Automobile In Texas

November 7, 2009 | Mark S. Humphreys

Pretend for a minute that you are driving your car in the Dallas Fort Worth area going west. You drive through Grand Prairie and Arlington and are on your way to Weatherford to enjoy the “First Monday” market. All of a sudden a dog runs in front of you and you swerve to miss it and hit a telephone pole. You are lucky in that no one is injured, but your car has $3800 worth of property damage. You are lucky again because you have collision coverage on your automobile and they repair your car and you are only out a $500 deductible.

Sounds ok so far, right. Well think about it for a minute. Your car was only a year old because you sell your car every two to three years and buy a new one. When you sell this one you will either have to disclose to the buyer the wreck or they will easily find out. So what does that mean? It means this: Your car is worth less because of the wreck than it would have been had it not been involved in a wreck. This is called the “diminished value”.

The nest question is: What can you do about it? This question was answered by the Texas Supreme Court in 2003. In 2003, the Court decided the case, American Manufacturers Mutual Insurance Company v. Schaefer. Maunufacturers was Schaefers insurance company. They fixed Schaefers car. Schaefer did not dispute the quality or adequacy of the repairs. But he did say that Manufacturers owed him an additional $2600 due to market perceptions that a damaged and subsequently repaired vehicle is worth less than one that has never been damaged. Again, this is called the diminished value and he expected Manufacturers to pay the extra money to compensate him for the lose.

Getting Insurance Company Records

November 6, 2009 | Mark S. Humphreys

In the State of Mississippi, a policy holder filed a lawsuit seeking access to Mississippi Insurance Department records. The lawsuit is seeking records that would show the dollar amount of Katrina claims denied by insurance companies.

The courts in Mississippi and other coastal areas have loaded up with lawsuits related to claims denials by insurance companies. The claims get denied for a range of reasons but a lot deal with issues of whether or not the damage to property is the result of floods, the result of winds, storm surge, or flying debris.

The person filing the lawsuit, a Kevin Buckel, is also trying to get passed into law in Mississippi, a Policyholders Bill of Rights. Each time this proposal has been introduced into the State Legislature, the legislation has died in committee.

Insurance Fraud In Texas

November 1, 2009 | Mark S. Humphreys

Insurance Fraud is a crime in Texas. A person can go on-line to the Texas Department of Insurance to get a lot of information about insurance fraud.

According to the National Insurance Crime Bureau (NICB), insurance fraud is one of the most costly white collar crimes in America, ranking second only to tax evasion. NICB also says that 10% of all property and casualty insurance claims are fraudulent.

NICB has figures showing that property and casualty based insurance fraud costs Americans about $30 billion each year. To make a comparison, Hurricane Andrew, which was a devastating storm, only cost about $17 billion. Further if you added all types of insurance claims that are thought to be fraud, then the number jumps to $120 billion each year. What these numbers mean to the person buying insurance is an average of $200 to $300 each year in increased premiums. The hidden costs in the form of higher goods and services makes the costs to the average family about $1,000 per year.

Insurance Companies Dropping Policies

October 31, 2009 | Mark S. Humphreys

A recent article originating in Florida, highlights a problem that many homeowners face and none wished they faced. The article title “Insurers dropping Chinese drywall policies”, talks about some new homes being built with a Chinese drywall that emits sulfuric fumes and corrodes pipes. Sounds pretty bad, and it is, especially if it’s your house this drywall is in.

The problem could be very large considering there appears to have been 500 million pounds of this drywall imported into the United States between 2004 and 2008. The houses constructed with this drywall seem to be concentrated in the Southeast, especially Florida and coastal areas of Louisiana and Mississippi. Texas and the Dallas, Fort Worth, Arlington, Weatherford, and most of the areas of the State seem to have escaped this problem

Most the insurance companies are denying the claims submitted by homeowners. The basis for the denials will vary but most of the time the reasons have to do with the problem being a “pre-existing” condition, or some type of construction defect exclusion. Both of these are often times omitted coverages in the homeowners policies.

“Claims Made” v. “Occurrence” Policies In Texas

October 30, 2009 | Mark S. Humphreys

The Supreme Court of Texas decided a case this year wherein the distinction between “claims made” policies and “occurrence” policies was discussed. This case is, Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance Company.

As discussed in an earlier case on this blog, the PAJ case, the main issue was whether or not the inusrance company was still responsible under the terms of the insurance policy even though the insured person or entity did not timely notify the insurance company of the claim. As in PAJ, the court ruled that because the insurance company could not show it was harmed by the delay in being informed of the claim, the court ruled that the insurance company must provide coverage.

The difference in this case, Prodigy, as compared with PAJ, was the different types of policies at issue. When dealing with insurance policies it is important to understand the distinctions between these two types of policies.

Limitations Periods In Texas Insurance Cases

October 28, 2009 | Mark S. Humphreys

An opinion issued by the Texas Court of Appeals in Houston on October 15, 2009 is noteworthy. Atleast one part of this decision addresses a law in Texas that most attorneys do not know.

The case is Anthony Sheppard v. Travelers Lloyds of Texas Insurance Company. This case discusses limitations periods. Limitiations periods are the timelines within which a lawsuit must be filed or otherwise it is barred. These limitations periods are in Chapter 16 of the Texas Civil Practice & Remedies Code. There are 44 sections in Chapter 16 addressing different causes of actions and the limitations applicable to them. Plus there is a ten page chart that breaks down these sections and tries to make them easier to understand.

A carefull reading of Sheppard goes a long way in making these limitations periods as they relate to insurance contracts understandable. And it is important to understand that breaches of an insurance contract usually go hand in hand with other violations of the Texas Insurance Code. Most Insurance Code violations, which are also violations under the Texas Deceptive Trade Practices Act have a 2 year statute of limitations. Texas Insurance Code, Section 541.162 sets out the limitations period for insurance code violations at two years with some variations to the two year period.

Your Duties After An Accident Or Loss In Texas

October 27, 2009 | Mark S. Humphreys

An appeal from a Dallas, Texas Court decision was decided by the Texas Supreme Court, in the case PAJ, Inc., d/b/a/ Prime Art & Jewel, v. The Hanover Insurance Company. This case was decided in January, 2008. It discussed the responsibilities of holders of an insurance policy as it relates to their duties after an accident or loss and how the failure of fulfilling those duties affects coverage under an insurance policy.

As a general rule almost all insurance policies require the policy holder to do the following: 1) promptly notify the insurance company of any loss or claim, 2) cooperate with the insurance company investigation of the claim or loss, 3) take reasonable actions to protect against further loss.

When a claim is denied due to a policy holder not promptly notifying the company of the claim or loss the insurance company has the burden of proving that this failure to promptly notify caused harm to the insurance company. This was the issue in PAJ.

What Happens When My Texas Insurance Company Goes Into Receivership

October 25, 2009 | Mark S. Humphreys

The Texas Department of Insurance has a web site that provides some useful information when an insurance company goes into receivership. An earlier blog at this site discusses the financial situation that will result in an insurance company being placed in receivership.

Other than the claims handling process, there are two main questions most people will have concerning their insurance policies when their insurance company is taken over by a receiver. The first is, “What happens to my unearned premium?”, and the second is “What happens to my coverage and benefits?”.

Unearned premium is the amount you paid to the company in advance that did not actually buy coverage. For instance, if you bought a six-month policy and paid all the premiums in advance, but the company failed two months later, you would be due a refund for four months of premiums.

Claims Handling Process For Failed Companies In Texas

October 24, 2009 | Mark S. Humphreys

Let’s say you buy an insurance policy in Dallas or Grand Prairie. You drive over to Fort Worth or Arlington. You actually live in Weatherford or somewhere else in Parker County. Next, you incur a loss that you believe is suppose to be covered under the insurance policy you bought. Okay so far, but you call the insurance company to file a claim and you get told that the company has been having financial problems and is possibly going out of business. What happens now? The result will be the same no mattter where you are in Texas.

Most businesses that need protection because of financial problems they are experiencing file for some form of bankruptcy protection. When an insurance company has severe financial problems they are placed in receivorship.

There are two main classifications for a financially troubled insurance company in Texas. The first is called, “impaired”, meaning that the insurer does not have admitted assets at least equal to all its liabilities together with the minimum surplus required to be maintained under the insurance code. The second is, “insolvency” or “insolvent”, which means an insurer: (A) is unable to pay its obligations when they are due; (B) does not have admitted assets at least equal to all its liabilities; or (C) has total adjusted capital that is less than that required under various chapters of the insurance code.

General Information About Insurance In Texas

October 22, 2009 | Mark S. Humphreys

All of the states in the United States have some State agency or board that oversees and regulates insurance activity in that State. In Texas, that agency is the Texas Department of Insurance.

Whenever a person has problems or concerns about the way they are being treated or the behavior of an insurance company or an insurance agent the best advice for that person is to talk with an Insurance Law Attorney. The web site for the Texas Department of Insurance is a good resource and a place to visit in order to learn a little bit of general information. Just keep in mind that visiting the web site is not a replacement for good legal advice.

The web site information is available in Spanish. So, if you have a Spanish speaking friend or relative who wants to seek information on their own they can still go to the Texas Department of Insurance web site. But then, speak with an Insurance Law Attorney who has personel who speak Spanish.