Articles Posted in Interpreting An Insurance Policy

This Eastern District, Sherman Division opinion is good reading for how the courts look at an insured’s responsibility to comply with policy provisions in an insurance contract.  The opinion is styled, Tommy Wilson v. Allstate Insurance Company.

Wilson made a claim for damages to his home after wind and hail storm damage.  A loss suit resulted based on allegations that Allstate grossly underestimated the amount of damage to the property.  Allstate filed a motion to dismiss based on Wilson not having complied with the policy provision requiring he submit a sworn proof of loss 91 days before filing suit.

The relevant portion of the policy reads:

There are several reasons an insurance company will deny coverage under an insurance policy.  Probably the most common reason is due to a misrepresentation in the policy application.  The second most common reason is based on exclusions or limitations in the policy.  This makes reading the policy and comparing that policy language against the facts in the case to see whether or not the coverage denial can withstand scrutiny.

The U.S. District Court Southern District, Galveston Division, issued a good opinion discussing this issue in 2017.  The opinion is styled, Robert Garner; dba Kustom Kolors Boatworks, Ex Rel, et al v. Nautilus Insurance Company.

Nautilus issued a CGL policy to Garner and during the policy period, Garner was sued by a customer, Andrew Dykes,  who alleged Garner did poor repair on his boat and caused further damage to his boat by the work that Garner performed.  He sued Garner under the Texas Deceptive Trade Practices Act.

Insurance lawyers need to understand how the Courts interpret insurance policies.  The 1991, Texas Supreme Court opinion styled, National Union Fire Insurance Company of Pittsburgh, PA. v. Hudson Energy Company, Inc., is good reading on this subject.

On May 23, 1980, Hudson, the president of Hudson Energy purchased a Cessna P-120 from Johnny Walker, owner of Eastex Aviation.  The plane was a single engine model equipped with dual controls.  Hudson sought Walker’s help in obtaining insurance.  Walker contacted Ragsdale, an employee of Cooper Aviation Insurance.  Walker was the only one to have direct contact with Ragsdale.  Hudson submitted an insurance application showing he was a student pilot.  In a letter to Hudson dated June 10, 1980, Ragsdale explained that the quoted insurance premium was based on an understanding that Hudson was a private pilot and that such information was necessary before a policy could be issued.  Hudson then completed a new application indicating he was a private pilot.  An insurance binder from National Union was issued on May 30, 1980, and the policy was effective for one hear beginning May 23, 1980.

On July 13, 1980, Hudson, his flight instructor (Bishop) and a passenger flew the plane with both having control of the plane’s controls at various times.  The plane crashed when landing while both Hudson and Bishop were attempting to operate the controls.

What do Texas Courts do when a policy is ambiguous?  Guidance on the answer is provided in a 2009, Texas Supreme Court opinion styled, Progressive County Mutual Insurance Company v. Regan Kelley.

Regan Kelley was struck by a car while riding her horse.  Medical expenses for her injuries are alleged to exceed $1 million.  After receiving $100,000 in benefits from the motorist’s insurer, Kelley made a claim with Progressive for underinsured benefits under a policy issued to her parents, which also covered Kelley.  Progressive paid the policy limits of $500,025  to cover the remaining damages.  Kelley then made a claim under an alleged second policy with a limit of $500,025, also issued by Progressive.  At the time of the accident, Progressive insured five of the Kelleys’ vehicles.  Four vehicles were listed on a two page document, and the fifth was listed on a separate two page document.  However, the documents had separate policy numbers.  Nevertheless, Progressive denied there was a second policy and refused to make any additional payments.

Kelley sued Progressive for breach of contract and Insurance Code violations, while Progressive sought a declaratory judgment requiring it to pay the maximum policy limit amount under only one policy.

What if someone with the insurance company does something to cause you to believe you have coverage that you do not have?  Mason County lawyers should read this 2008, Texas Supreme Court opinion.  It is styled, Ulico Casualty Company v. APA.

In this case, the court considered what has become known as the “Wilkinson exception” to the general rule that coverage cannot be created by estoppels or waiver.  The Wilkinson exception stated that if a carrier undertook to defend an insured without issuing a proper reservation of rights that identified all policy defense then known to the carrier, and the insured was prejudiced, then the carrier was estopped to deny coverage and had waived its policy defenses.

In Ulico, the insured reported a claim after the claims-made-and-reported policy had expired.  The carrier mistakenly agreed to defend the insured.  The carrier issued two reservation of rights, sent the insured’s counsel litigation guidelines, and stated that Ulico agreed to reimburse the insured for reasonable defense expenses.  The attorney submitted his invoice of $635,000.00.

Llano County insurance lawyers need to keep up with how the Courts interpret insurance policies.  The 5th Circuit issued an opinion worth reading in 2016.  It is styled, AIG Specialty Insurance Co. v. Tesoro Corp.

In this case the 5th Circuit had to decide whether a subsidiary not designated as an additional insured under an excess policy, was covered, because the insurer ought to have known the insured intended the subsidiary to be covered.

The facts of this case begins with a refinery, subject to a series of federal and state pollution remediation orders, changing hands twice.  First, Tosco Corp. sold the refinery to Unltramar.  Tosco indemnified Ultramar $50 million, and Ultramar acquired $100 million in excess insurance coverage from AIG.  Then Ultramar sold the refinery to Tesoro, and transferred the policy as well.

For those insurance lawyers handling flood claims, a Corpus Christi Court of Appeals opinion issued in 2017, is a must read.  It is styled, Housing & Community Services, Inc. and HCS 401, LLC D/B/A Lantana Square Apartments v. Texas Windstorm Insurance Association.

This is an appeal in favor of TWIA

HCS had policies providing coverage with TWIA through December 2012.  On May 15, 2012, HCS sustained damage to covered property and on May 28, 2013, filed two claims with TWIA.  On July 1, 2013, TWIA denied both claims on the grounds that HCS failed to fulfill its duty to file its claim with TWIA within one year of the loss.

The Insurance Journal published an article on an opinion issued by the Texas Supreme Court that will have an impact on all property owners in the State of Texas.  The title of the article is, Texas High Court Sides With Policyholder In Ike Damaged Property Case.

When is a fence a “dwelling” structure for insurance coverage purposes and when is it an “other structure?”

The Texas Supreme Court, relying on disputed language in a Liberty Mutual homeowners policy, found that a fence is a covered dwelling structure when it is attached to the home.

Persons with homeowners insurance policies are in a better place today than they were before January 27, 2017.  Insurance lawyers in Mason Texas, Menard, Junction, Grand Prairie, Arlington, Dallas, Fort Worth, and all over Texas need to celebrate a recent Texas Supreme Court opinion.  The opinion is styled, Nassar v. Liberty Mutual Fire Insurance Company, et al.

The Nassars’ suffered losses after Hurricane Ike hit there home and damaged various parts of their property.  Disputes arose over the value of various items damaged including the Nassars’ damaged fencing.

In addition to their residence, the Nassars’ property contains barns, outbuildings, and a system of fencing.  The system of fencing spans over 4,000 linear feet, includes a white picket fence at the northeast corner of the dwelling, an ornamental iron fence … in front of the dwelling, numerous cross fences, garden fences and pens, and a large perimeter fence constructed of 2′ x 6′ lumber with wooden posts and eight foot intervals, on which welded wire mesh is attached.

A problem for Kimble County insurance lawyers is knowing and being able to predict how a Judge will interpret an insurance policy.  This topic is discussed in a State Bar of Texas, Insurance Section article.  The article is titled, The Tentative Draft Of The Restatement (Third) Of Liability Insurance: How Could It Affect Texas Insurance Law?

Under Section 5 of the Restatement of Insurance (Third), a party may waive a right under the policy if, with actual or constructive knowledge of the right, the party (a) either expressly relinquishes the right or engages in conduct that would reasonably be regarded by the other party as relinquishing the right, and (b) that waiver is communicated to the other party.

Waiver permits the enforcement of terms different from the original contract or bars enforcement of such terms without creating a new contract.  A party may waive only terms that benefit it; thus, the insured cannot waive policy conditions.  The law of agency determines when the agent’s words or conduct binds the principle and waives its rights.  Waiver necessarily requires extrinsic evidence.