Articles Posted in Interpreting An Insurance Policy

Insurance attorneys need to read an August 2017, opinion from the 14th Court of Appeals.  It is styled, Tiffany Falkenhagen Thompson v. Geico Insurance Agency, Inc.

Texas Personal Automobile Policy’s require the policyholder to notify the insurer of the policyholder’s acquisition of a replacement vehicle for the coverage to extend to damage to the newly acquired vehicle.  This case is presented on cross motions for summary judgment regarding the notification requirement in the policy.  Tiffany says the policy provision does not apply to leased vehicles or alternatively, the policy language is ambiguous.  Geico says they were not timely notified of the replacement vehicle and thus, there is no coverage.  The trial court ruled in favor of Geico and this appeals court upholds that ruling.

Tiffany owned a 201  Infiniti G37 auto and secured insurance from Geico.  She traded in the G37 and leased a 2015 Infiniti Q50 auto.  A few months later while driving the Q50, Tiffany was involved in an accident.

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.

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.

The San Antonio Court of Appeals issued an opinion in USAA Texas Lloyd’s Company v. John Doe and Jane Doe, and as next friends of XXX, a Minor.  The case is an appeal from a motion for summary judgment in a declaratory judgment action filed by USAA seeking a declaration that it had no duties under a renters policy insuring the Doe’s.

The Doe’s thirteen year old son had sexually assaulted a five year old and the Doe’s were sued by the parents of the five year old and the Doe’s sought to have USAA defend them under the renters policy.

USAA claimed there was no coverage for the incident, pointing to the liability section of the policy which read:

Insurance lawyers often will hear a story that goes like this.  – I was involved in an accident last year.  The other guy was at fault.  I let my insurance company know about the wreck and then I found out that my insurance company paid the other guy.  Can I sue them for doing that?

This issue is addressed in a 2000, Dallas Court of Appeals opinion styled, Stevens Transport, Inc. v. National Continental Insurance Company, et al.

Here are the facts of the case:  National Continental Insurance Company, Progressive County Mutual Insurance Company, and Progressive Casualty Insurance Company provided a truckers insurance policy to Stevens Transport, Inc.  The policy included a right to defend and settle any suit involving damages resulting from an accident caused by the use of a covered automobile.  The policy had a $250,000 deductible.

Either the insurance company or the insured has a right to demand an appraisal in lots of property insurance contracts.  The Waco Court of Appeals issued an opinion recently that discusses these appraisal clauses.  The case is styled, In Re GuideOne Mutual Insurance Company.

This case is a writ of mandamus complaining of the trial court’s refusal order appraisal to proceed as allowed in the insurance contract.

Appraisal clauses, commonly found in homeowners, automobile, and property policies in Texas, provide a means to resolve disputes about the amount of loss for a covered claim.  These clause are generally enforceable, absent illegality or waiver.

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.