Insurance Cases – Burden Of Proof

So, who has the burden of proof in an insurance case, the insurance company or the insured.  Like most issues in the law, it depends.

According to the 1994, San Antonio Court of Appeals opinion styled, Telepak v. United Service Automobile Association, the insured has the initial burden to prove damages are covered by the policy.  According to the 1943, Texas Supreme Court opinion styled, Trevino v. American National Insurance Company, the insured may make a prima facie case by showing that the policy was in force when the loss occurred.

On the flip side, a 2003, opinion by the Fort Worth Court of Appeals styled, Venture Encoding Service, Inc. v. Atlantic Mutual Insurance Company, the insurance company bears the burden of proving the applicability of an exclusion that permits it to deny coverage.

The insured then has the burden to plead and prove any exceptions to the exclusion, which would bring the loss back within coverage.

In the Telepak case mentioned above, a homeowner’s policy covered “all-risks.”  The policy excluded losses caused by “settling, cracking, bulging, shrinkage, or expansion.”  The exclusion, in turn, did not exclude losses caused by the accidental discharge of water from an air conditioning unit.  The insureds had to prove a covered loss under the policy, and that the loss fit within the exception.  The insurance company had to prove the loss was within the exclusion.

This area of the law has the potential for causing a little confusion on the part of lawyers because before 1991, once the insurance company pled an exclusion, the insured had the burden of proof to negate it.  In 1991, the Texas Legislature passed law to shift the burden to the insurance company to both plead and prove any exclusions.  However, in 2003, the Texas Legislature repealed the change of 2003, leaving the current state of the burden of proof being uncertain.

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