Insurance Coverage – Burden Of Proof

For Experienced Insurance Lawyers, the question of who has the burden of proof is made clear by Texas case law.  (Not)

Pursuant to the 1994, San Antonio Court of Appeals opinion, Telepak v. United Serv. Auto. Ass’n., the insured has the initial burden of proof as to damages covered by their policy.  However, as pointed out in the 1943, Texas Supreme Court opinion, Trevino v. American Nat. Ins. Co., the burden makes a prima facie case by showing that the policy was in force on the date the loss occurred.

The insurance company has the burden of proving the applicability of an exclusion that permits it to deny coverage.  This is pointed out in the 2003, Fort Worth Court Appeals opinion, Venture Encoding Service, Inc. v. Atlantic Mut. Ins. Co.

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

As an example, in the Telepak opinion, 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 insured had to prove a covered loss under the policy, and that the loss fit within the exception.  The insurer had to prove the loss was within the exclusion.

Something for the Experienced Insurance Lawyer to keep in mind is that before 1991, once the insurer pled an exclusion, the insured had the burden of proof to negate it.  However, in 1991, the Texas Legislature passed a statute to shift the burden to the insurer to both plead and prove any exclusions.  But, in 2003, the Texas Legislature repealed the 1991 change and the current state of the burden of proof is uncertain.

This current state of the law is yet another illustration why an insured must seek the help of an Experienced Insurance Lawyer to assist any time a claim for benefits is denied by an insurer.