Insurance Company Referrals

It happens in Grand Prairie, Weatherford, Arlington, Dallas, Fort Worth, Roanoke, Keller, Colleyville, North Richland Hills, Grapevine, and all over the state. Someone has some property damage. They call their insurance company. The insurance company suggests they call XYZ company. The insured calls XYZ company. XYZ company does something wrong in their dealings with the insured. The question becomes: Is the insurance company responsible for any wrong committed by XYZ company?
The most common situations where the above happens is car wrecks. After a car wreck the insurance company often suggests a repair shop to take the car to for repairs. The second most common situation is home repairs. A home owner has hail damage, flood, or fire and the insurance company suggests a company to make the repairs.
The Texas Court of Appeals in Dallas recently had a case that involved a theft. The opinion was issued on February 8, 2011, and the case is styled, J. Howard Jaster, Individually and as Assignee of the Edinberg Trust v. Shelter Mutual Insurance Company. In this case Jaster alleged that Shelter Mutual Insurance Company (Shelter) was an agent of Michael Hanna d/b/a Cornerstone Replacement Services (Cornerstone).
Here is some background. In 2004, Jaster moved from Tennessee to Texas. Shorty after he arrived, the U-Haul truck containing his personal property was stolen. The stolen propery included valuable antique furniture, paintings, and other items of high value. Jaster filed a claim with his insurance company, Shelter. Shelter contacted Cornerstone to do an appraisal and told Jaster that Cornerstone would be contacting him. Because Jaster decided to go with Cornerstone to replace the stolen property, he asked Shelter to pay the settlement funds directly to Cornerstone. A check for $189,875.03 was issued to Jaster with Jasters’ name and Cornerstone. Jaster endorsed the check over to Cornerstone.
Soon thereafter, Jaster canceled his order with Cornerstone and requested a refund. Cornerstone issued a refund but the check bounced. Ultimately, Cornerstone returned $140,000, but never repaid the remaining amount. After talking with Shelter for a period of time, Jaster eventually sued Shelter and Cornerstone alleging that Cornerstone was an agent of Shelter.
This case evolves into a case where the issue became an arguement about the questions that were submitted to the jury. In these questions, Jaster was trying to get the jury to answer in such a way as to agree that the evidence established that Cornerstone was an agent of Shelter. The appeal point in this case was whether or not these questions proved the point that Jaster was trying to establish.
The lesson to be taken from this case for insureds who are making an insurance claim where the insurance company refers the insured to other vendors is to be aware how courts look at the facts in these cases. For the insured, the first thing to keep in mind is that they should be working with an experienced Insurance Law Attorney to make sure their rights are protected. Beyond that, is to keep good records of what happens. The insured would want to keep copies of all letters, memos, e-mails, and text messages related to the claim. While the claim is going on, the insured should keep a small notebook or computer message detailing all oral conversations with the adjuster and the vendor. Hopefully the claim goes smooth and the case is resolved and the insured can get on with their life. But, too many times problems arise. When they do, it is often times difficult to go back and try to remember all that was said, when it was said, and the context in which it was said. It is important to keep in mind that this is a business transaction taking place between the insurance company and the insured and in that setting it is important to keep a record of what has transpired in the event there is a conflict at some point.
Whether or not there is an agency relationship between the insurance company and the vendor is not always clear. Where it is not clear, then the evidence of what happened including all the communications mentioned above become relevant in determining whether or not the agency relationship is able to be established. It is often times important to prove this relationship because many times the vendor is insolvent or not insured or does not have sufficient monies to pay for the wrongs they may commit thus being able to look back at the insurance company for compensation becomes vital.

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