Damages For Claim Denial

Mineral Wells insurance lawyers need to be able to discuss the value of a claim with a client when asked. It is often times difficult to do so. Sometimes part of the value is easy to determine while other parts are very difficult. For instance:
If a $200,000 house burns down and your insurance company denies the claim, it is easy to calculate the base value of the claim, i.e., the $200,000 for the value of the house. Losses such as mental anguish, if it can be proved the insurance company acted improperly in a knowing and intentional manner in the denial of your claim, is harder to determine.
The United States District Court, Northern District of Texas, issued an opinion in 2008, that helps determine damages as it relates to the attorney fees incurred by the claimant due to the wrongful denial of benefits by the insurance company. The style of the case is, Trammell Crow Residential Co. v. Virginia Surety Co., Inc. Here is some of the relevant information to know.
This was a case of first impression for the court. They had to determine whether a policyholder was entitled to damages under Chapter 542 of the Texas Insurance Code, also known as the Prompt Payment of Claims Act, beginning before the legal bills were submitted for payment. Trammell Crow sued its insurance company seeking a declarataion of Virginia Surety’s duty to defend it in an underlying lawsuit involving claims alleging that Trammell Crow discriminated against persons with disabilities. After determining that Trammell Crow was owed a defense, the court turned to whether Trammell Crow was entitled to damages for Virginia Surety’s alleged breach of Chapter 542 in refusing to provide a defense. Despite the court’s determination that a duty to defend was triggered, Virginia Surety argued that Trammell Crow was not entitled to damages under Chapter 542 because Trammell Crow never submitted any legal bills or invoices for expenses incurred in defending the underlying litigation. Virginia Surety argued that without these bills Trammell Crow had not submitted information to make a final proof of loss as required under Chapter 542.
In rejecting this argument, the court looked to the original Texas Supreme Court opinion dealing with calculating attorney fees in Chapter 542 cases, Lamar Homes, and interpreted it to instruct that the invoices are only required to value the loss because the actual loss has already occurred when the defense was wrongfully refused. The court concluded that Trammell Crow was entitled to damages and interest under Chapter 542, and will allow Trammell Crow to present evidence of its damages at trial.

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