Interpreting An Insurance Policy

Cooperating With Your Own Insurance Company

February 24, 2010 | Mark S. Humphreys

A case decided in Fort Worth, Texas on June 11, 2009, is important to understand. The result of this case is the same in Weatherford, Grand Prairie, Arlington, or Dallas.

The style of this case is Garry Jenkins v. State and County Mutual Fire Insurance Company. The facts in this case are undisputed. Garry Jenkins foot was crushed when a tank skid fell off a truck driven by Mark Lemmon. The accident happened when Mark applied the brakes too quickly, causing the skid to break free and fall on Garry’s foot. Both Garry and Mark were working as independent contractors for L & G Pipe. L & G Pipe was owned by two people, Deborah Grisamer and Richard Lemmon.

At the time of the accident, State and County Mutual Fire Insurance Company had a policy of insurance with Deborah as the named insured. The policy was in effect on the date of the accident and the policy listed the truck as a “covered auto.” The wording in the policy is important in this case and provided as follows:

How To Beat Appraisal Clause In Insurance Contract

February 22, 2010 | Mark S. Humphreys

A lot of homeowners insurance policies in Texas have “appraisal” clauses written into them. So whether you live in Weatherford, Texas, or in Grand Prairie, Arlington, Fort Worth or Dallas, if you have homeowners insurance you need to be aware of these appraisal paragraphs.

An appraisal paragraph is of benefit to the insurance company. That is why they put it into the insurance policy. When the homeowner and the insurance company cannot reach an agreement on the amount of money that should be paid on a claim, the insurance company will try to invoke the appraisal clause in the insurance contract. Appraisal happens when the insurance company knows they owe the homeowner money, but there is a dispute as to how much money is owed.

The United States District Court, Southern Division, recently handled a case where the issue was whether the homeowner properly defeated the insurance company trying to invoke the appraisal process. The style of the case is, Hector Sanchez v. Property and Casualty Insurance Company of Hartford and Irene Bernardo. The courts’ opinion was handed down on January 27, 2010.

Uninsured Coverage and Punative Damages In Texas

February 20, 2010 | Mark S. Humphreys

Punative damages and “exemplary” damages are essentially the same thing in Texas. The way exemplary damages works in Texas is the same regardless of whether you live in Arlington, Grand Prairie, Fort Worth, Dallas, or Weatherford.

The Texas Court of Appeals in Houston, Texas, recently dealt with the issue of how exemplary damages are handled when the claim made is a claim against a person’s own insurance carrier for uninsured motorist benefits. This case was decided on February 4, 2010. The style of the case is, Sandra Gervais Laine, v. Farmers Insurance Exchange.

In this case Laine’s mother was killed in an auto accident. The other driver was at fault and was intoxicated. Laine made a claim against Farmers Insurance Exchange for benefits under her uninsured motorist benefits portion of the auto policy. Farmers paid the uninsured benefits limit of $250,000. She then made a claim against her umbrella policy which provided the same benefits as the auto policy except for a higher amount. The limit under the umbrella policy was $1,000,000.

Where Will An Insurance Company Lawsuit Be Fought?

February 18, 2010 | Mark S. Humphreys

Most insurance company’s have their main offices located outside of Texas. If you live in Weatherford, Texas, Arlington, Grand Prairie, or the Dallas – Fort Worth area, and you sue an insurance company, how do you know you won’t have to travel to Delaware or some other state to fight the lawsuit?

The United State District Court, Southern District, Houston Division, recently had a case dealing with this issue. The case decision was handed down on January 26, 2010, and was styled, Houston Baptist University, v. Ace American Insurance Company and York Claims Service, Inc.

Houston Baptist University (HBU) had a policy of insurance with Ace American Insurance Company (Ace). HBU suffered losses as the result of Hurricane Ike hitting the Houston area and made a claim against Ace. Ace assigned York Claims Service, Inc. (York) to adjust and inspect the claim. HBU and Ace could not reach an agreement on the value of the claim and HBU filed a lawsuit against Ace and York. The insurance policy had a policy provision that read: Any dispute arising under this policy shall be exclusively subject to the jurisdiction of the federal and state courts located in the Commonwealth of Pennsylvania.

Insurance Policy Language “Arising Out Of”

February 17, 2010 | Mark S. Humphreys

A decision in a Dallas, Texas, case was handed down on January 22, 2010. The results should have been the same in Fort Worth, Grand Prairie, Arlington, or Weatherford. This case was decided by the United States District Court, Northern District, Dallas Division.

The style of the case is Gemini Insurance Company v. Trident Roofing Company, L.L.C. The lawsuit arises from an incident where the Roman Catholic Diocese of Dallas and Our Lady of the Lake Catholic Church hired Trident Roofing Company, L.L.C., to perform roofing work on a Church building. In doing the roof work, Trident performed “torch down roofing”. “Torch down roofing” is defined in the insurance policy as “the use of any roofing system that requires the applying of a direct flame (torch) to asphalt/modified bitumen or in the application of any other roofing material.” The Church sued Trident after a fire started while Trident was using this roofing method.

Trident looked to their insurance policy with Gemini Insurance Company and demanded that Geminin protect them in the lawsuit including paying for defense costs and indemnity costs. Gemini denied coverage citing an exclusion in the insurance contract for work performed using “torch down roofing”. The specific language in the policy states: “It is agreed no coverage is afforded for any liability or claim that arise(s) out of, is related to, or connected with the following: TORCH DOWN ROOFING.”

Insurance Companies Duty To Defend Lawsuit In Texas

January 31, 2010 | Mark S. Humphreys

The United States Court of Appeals for the Fifth Circuit, decided another case this month dealing with the duty of an insurance company to defend a lawsuit filed against one of its insureds. The decision on this case was handed down by the court on January 4, 2010. The case was an appeal from the United States District Court for the Southern District of Texas. The Fifth Circuit, located in Louisiana, handles appeals that would arise out of Dallas, Fort Worth, Arlington, Grand Prairie, small towns like Weatherford, and all other places in Texas.

In the opening paragraph of the decision the court makes the following statement, “We have occasion once again to take up the seemingly simple task of determining whether an insurance company owes a duty to defend an underlying liability lawsuit, and because the insurer in this case indeed has such a duty, it is also an occasion to again remind: when in doubt, defend.” As stated in this blog in the past, the courts draw a distinction between the obligation of an insurance company to defend an insured who has been sued and the obligation of an insurance company to pay a claim.

The case at issue here is styled, Essex Insurance Company v. Hines. The policy was a “Commercial General Liability Coverage” and another one called a “Commercial Property Coverge” policy. The facts here are relevant to deciding the existence or lack there of, as it relates to coverage in the wording in the policy. What Essex was failing to see was how Texas law applies in the difference between the duty to defend and the duty to pay under a policy of insurance.

Competing Insurance Policies In Texas

January 27, 2010 | Mark S. Humphreys

Let’s pretend your sister in Dallas, is driving her brothers car, who lives in Fort Worth. The car is insured on hthe parents Safeco auto policy that was bought in Grand Prairie. Your sister has a wreck in Weatherford, Texas. Your sister also had insurance with Allstate on her own car she had purchased in Arlington. Your sister is at fault and the other driver suffers personal injury and property damage. Both Allstate and Safeco refuse to settle the claim being asserted against you and your sister because they believe the other company should be paying the claim or paying the claim on a pro-rata basis.

This can be a very frustrating position for someone to find themselves involved and is referred to as an “other insurance” issue. The above is roughly what happened in the case, Safeco Lloyds Insurance Company v. Allstate Insurance Company. This case was tried and then appealed to the Court of Appeals of Texas, San Antonio.

The general rule in the past has been that auto insurance coverage goes with the vehicle. If the coverage on the vehicle is not sufficient to pay all the lose incurred then, the driver of the vehicle who has separate coverage has this separate coverage kick in as secondary coverage. However, the laws have changed and each insurance policy has to be looked at and compared with the other policy that may provide coverage to see what the result may be in any particular situation.

Recent Texas Insurance Policy Interpretation

November 10, 2009 | Mark S. Humphreys

The Texas Supreme Court ruled on an insurance policy interpretation case on October 30,2009. This case is, Chrysler Insurance Company v. Greenspoint Dodge of Houston, Inc.

This case involves an insurance coverage dispute, the topic of which is liability policies insuring a corporation and its officers and others. The corporation was sued for defamation. One key here is that the policies at issue excluded coverage for defamatory statements made by the insured, that the insured knew to be false. The lower court said that the employees involved may not have been “principles”, but were “vice-principles” and thus were covered under the policy.

Some facts here are that a Noe Martinez was fired by Greenspoint after the Greenspoint’s general manager, comptroller, and used car sales manager defamed and disparaged Martinez. The general manager’s nephew was hired to take Martinez’s place. Martinez sued and won.

Texas Insurance Policy Interpretation

October 20, 2009 | Mark S. Humphreys

The Fort Worth Court of Appeals recently decided a case wherein the Court had to apply Texas Insurance Laws and Texas Labor Code Laws in interpreting an insurance policy. The case was, Paul Robertson v. Home State County Mutual Insurance Company.

In this case, Robertson was an employee of a company called Redi-Mix. Robertson was injured while on the job for Redi-Mix. Redi-Mix had a policy of insurance with Home State. The policy in relevant part said that it provided coverage for “all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies”. The policy contained the following relevant exclusion to which coverage did not apply:

3. WORKERS COMPENSATION Any obligation for which the insured or the insured’s insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.

Insurance Policies In Texas Are Contracts

October 19, 2009 | Mark S. Humphreys

The Texas Supreme Court stated in 2008 that insurance policies are contracts. This was stated in the case Ulico Casualty Company v. Allied Pilots Association. This is not new in Texas. In the Ulico case the court cited earlier Texas case law. The earlier case law was a Texas Supreme Court case styled Barnett v. Aetna Life Insurance Company and was decided in 1987.

What this means is that rights and obligations arising from an insurance policy, and the rules used to construe them, are those rules generally pertaining to contracts. One relevant concept here is that when a court construes or tries to interpret a contract and that contract can be read to mean more than one thing, then the interpretation is suppose to be in favor of the party who did not draft the contract. The burden is on the party drafting the contract to make it clear. Since an insurance company is always the party who drafts the insurance policy, the result is that if the reading of the policy can be interpreted in more than one way, the court is supppose to interpret it in such a way as to find coverage under the policy.

When an insurance contract covers certain risks, such as liability, but the policy contains exclusions or limitations of coverage, then when the insured customer makes a claim for coverage benefits, the insurance company must assert any applicable exclusion or limitation to avoid liability. This would be called an avoidance or in the Texas Rules of Civil Procedure it is called an affirmative defense. The burden of proof here then falls on the insurance company. This law is found in the Texas Insurance Code, Section 554.002.