Insurance Company Accepting Responsibility For Adjuster

Most Insurance Lawyers are by now, aware of the new insurance law that went into effect in Texas as of September 2017.  This new law is found in the Texas Insurance Code, Section 542A.006(a)-(c).  The law law allows an insurance company to accept liability to for an adjuster.

This new law was at issue in the Southern District of Texas, Houston Division opinion styled, Sucheta Vyas and Davis Vyas v. Atain Specialty Insurance Company and Team One Claims.

The Vyas’ had insurance with Atain.  The Vyas allegedly suffered storm related damage to property they owed, and made a claim with Atain.  Atain hired Team One to adjust the claim.  The Vyas sued Atain and Team One in State District Court alleging that Team One’s unreasonable investigation led to the wrongful underpayment and or denial of their claim.

Atain timely removed the case to this Federal Court asserting that a month before the lawsuit that Atain sent a letter to Vyas wherein they accepted “whatever liability” Team One had to Vyas for its “acts or omissions related to the clam.”  In the letter Atain cited the above Insurance Code section.

Federal District Courts in the Fifth Circuit have disagreed on whether an insurer’s Section 542A.006 election post-lawsuit allows the insurer to remove based on the agent’s improper joinder.  Neither party has cited, nor has the Court found a case in which, as in this case, the insurance company elected to assume liability before the lawsuit was filed naming the agent as a defendant.

Atain points out that its pre-lawsuit election letter to Vyas made Team One’s joinder improper.  The letter clearly stated that Atain Insurance accepted any liability that Team One may have for its purported acts or omissions related to this claim.  As a result of this election, Vyas has no cause of action against Team One and this Court must dismiss the action with prejudice.

The pre-suit election letter means that Vyas has no possibility of recovery against Team One when the lawsuit was actually filed.

The claims against Team One were dismissed with prejudice by this court and the motion to remand was denied.