Articles Posted in Home Owners Policies

As it relates to homeowner’s policies, the Texas courts have adopted a rigid rule for when a loss occurs.  The Texas Supreme Court in, Don’s Building Supply, Inc. v. OneBeacon Ins. Co. has emphasized that the applicable rule for when a loss occurs depends upon the language in the policy.

In Don’s Building Supply, the Court interpreted a policy that provided coverage for “bodily injury” or “property damage” that was “caused by an ‘occurrence’ that takes place in the ‘covered territory;'” and “occurs during the policy period.”  The policy defined “property damage” to mean “Physical injury to tangible property, including all resulting loss of use of that property.  All such loss of use shall be deemed to occur at the time of the physical injury that caused it,” or “Loss of use of tangible property that is not physically injured.  All such loss shall be deemed to occur at the time of the ‘occurrence’ that caused it.  Based on this language, the court determined that “property damage under this policy occurred when actual physical damage to the property occurred.”

In Don’s Building Supply, the Court stressed that it was not attempting to fashion a universally applicable rule.  Accordingly, the actual injury or injury-in-fact rule may not apply in all situations.  For example, other cases have determined that a “loss” occurs when the physical damage first manifests itself or becomes apparent.

Insurance lawyers who handle home owners claims need to read this opinion from the 14th Court of Appeals.  It is styled, Ron Pounds v. Liberty Lloyds of Texas Insurance Company.

This case concerns whether an insurer waived appraisal of a homeowner’s insurance claim by denying it.  A summary judgment in favor of Liberty was granted by the trial court.

The facts in this case are undisputed.  Pounds purchased a home insurance policy from Liberty.  The policy covered damage caused by wind and or hail.

Texas insurance lawyers need to know what an insured’s duties are after a loss.  One of the most common homeowners policies for Texas home owners is an HOB policy.  The HOB policy requires that the insured cooperate with the insurer’s investigation of the claim by promptly submitting notice of the claim, completing an inventory of the damaged property, providing access to the damaged property and records, and signing a sworn proof of loss form.  These requirements on the insured constitute a condition precedent to coverage under the policy according to our 5th Circuit in the 1999 opinion styled, Griggs v. State Farm Lloyds.

In Griggs, the court stated that absent the insured’s compliance with the conditions precedent to coverage, the insurance company has no duty to provide benefits under the contract.

HOB Policy language is this:

When two elements combine to cause damage, one being covered and the other not covered, issues arise regarding whether the loss is covered, and who bears the burden of proof to allocate causation between the covered cause and the excluded cause.

Courts have held that the insurance company will only be liable for that portion of the damage that was caused by a covered event.  In the 1999, San Antonio Court of Appeals opinion, Wallis v. United Services Automobile Association, the court noted that a “straight Balandran analysis” would not apply in a situation involving multiple causes.  Thus, as a practical matter, the practitioner must evaluate the claim underlying any lawsuit to determine if it involves allegations of damage allegedly attributable to multiple causes or simply one peril deemed to have caused the entire loss.

When covered and excluded perils combine to cause an injury, the Texas Supreme Court has held that the insured must present some evidence affording the jury a reasonable basis on which to allocate the damage.  This is seen in the 1993 opinion, Lyons v. Millers Casualty Insurance opinion and in the 1965 opinion, Paulson v. Fire Insurance Exchange opinion.

When two events combine to cause damage, one being covered and the other not covered, issues arise regarding whether the loss is covered, and who bears the burden of proof to allocate causation between the covered cause and the excluded cause.  In the San Antonio Court of Appeals case, Wallis v. United Serv. Auto. Assoc., the court held that the insurance company will only be liable for that portion of the damage that was caused by a covered event.

When the covered and excluded perils combine to cause injury, the Texas Supreme Court has held that the insured must present some evidence affording the jury a reasonable basis on which to allocate the damages.

Generally, courts have held that if a loss occurs as a result of two concurring perils, one insured and one not, then the loss is covered only to the extent that it can be traced to the covered peril.  Expert testimony allocating damage between covered and excluded causes may satisfy this burden of proof, according the United States 5th Circuit, in Fiess v. State Farm Lloyds.

News from Law 360.  While some Texas lawyers are encouraging property owners to quickly lodge claims for Hurricane Harvey damage before a new state property insurance law takes effect on Friday, the reality is that the potential downsides of the legislation — including a lower interest rate on successful lawsuits against insurers — don’t warrant such swift filings, several attorneys told Law360.

Starting at the beginning of the week, a slew of law firms began to issue alerts on social media platforms recommending that homeowners and business owners file claims for Harvey losses with their insurers prior to the Friday effective date of House Bill 1774, which Gov. Greg Abbott signed into law in May.  Among other things, the law reduces from 18 percent to about 10 percent the amount of prejudgment interest an insurer must pay if it is found to have delayed payment on or wrongfully denied a meritorious claim.

Opponents of HB 1774 say the law scales back important deterrents for insurers to comply with statutory deadlines for responding to and paying claims for losses tied to natural disasters.  As such, some attorneys say, property owners would be well-served to file Harvey claims before the new law takes effect, so that if those claims wind up in litigation down the road, they will still be subject to current law.

Stephenville homeowner lawyers need to read this opinion from the United States 5th Circuit Court of Appeals.  The opinion is styled, State Farm Fire & Casualty v. Cedric Flowers.

This is a appeal from a summary judgment granted in favor of State Farm in a declaratory judgement action.

In 2008, Cedric and Renee Flowers purchased a plot of land and asked Ricky and Jennifer Scott to build a house for them on the property.  The Flower’s were unable to get financing, so they quit claimed the property to the Scotts, who then obtained a construction loan under their own names, using the property as collateral.  The property was to be conveyed back to the Flowers after the house was built.  The Scotts eventually defaulted on the loan amid disputes with the Flower’s and a lawsuit resulted over the property.

Parker county insurance lawyers will see lots of homeowners claims resulting from hail damage claims.  When this occurs and the insurance company does not want to pay the claim and a lawsuit is filed, the likely result is the insurance company trying to have the case heard in Federal Court.  An Eastern District, Sherman Division opinion deals with this situation.  The opinion is styled, Lopez v. Allstate Vehicle and Property Insurance Company.

When a hail storm hit the Lopez home, a claim was filed with Allstate.  The adjuster, Gary Harbison was assigned to investigate the claim and he concluded there was no damage and any potential damage had occurred prior to the storm.  A lawsuit was filed and Harbison was sued with the allegations against him being that he conducted a substandard and improper investigation, that he was scared of losing his job, and he was fraudulent in his report because the Lopez’s public adjuster had found much more damage.  Lopez claims damages totaling $30,646.73.

The lawsuit was filed in Denton County Court alleging breach of contract, violations of the Texas DTPA, and violations of the Texas Insurance Code, fraud, negligence, and gross negligence.

House fire claims being denied is a regular part of doing for insurance law lawyers.  “The Tribune” published a story in March titled, Tracking Phones: Insurers Deny Claims Based On Doubtful Data.  Here is what the story tells us.

It took Jaclyn Bentley nearly three years to prove she didn’t burn her house down for the insurance money, allegations she and her lawyer say were born of the junk practice of analyzing cellphone tower data.

She was camping with her husband and co-workers at least 17 miles from her Iowa home in May 2014 when it burned down, she says.  An investigator for State Farm Fire said cell tower data showed Bentley’s phone was 5 to 12 miles from the campsite in the direction of her home just after the fire was reported – the suggestion being she could have been heading back to camp after starting the blaze.

Coastal Texans – you have to know your flood insurance policies.  This is perfectly illustrated in a 2016, Southern District, Galveston Division, opinion.  It is styled, Lobeck v. Licatino, et al.

The case was decided on a summary judgment.

In a nutshell, Lobeck bought property that, unknown to her, was located within the boundaries of the Coastal Barrier Resources System (CBRS).  Lobeck’s mortgage loan required her to maintain flood insurance on the property so she innocently procured an NFIP through the Defendants in this case.  The policy was subsequently reissued and then renewed the following year.  During the renewal year Hurricane Ike completely destroyed the building on the property and only then was Lobeck informed that her policy was void and had never afforded overage.  She received nothing for her property damage.  Consequently, Lobeck filed suit alleging that the Defendants knew or should have known that the property was ineligible for flood insurance under the NFIP, that the policy was void when issued, and that the policy offered absolutely no coverage.  According to Lobeck, the express and implicit misrepresentations of the Defendants, upon which she ignorantly, but reasonably relied, caused her losses.