Insurance Policies

According to the Fort Worth Court of Appeals opinion from 1995, styled, Truck Insurance Exchange v. Musick, insurance policies are normally issued on standard forms containing terms drafted by the insurance company.

Keep in mind that Texas has standard automobile policy forms approved by the Texas Department of Insurance.  For homeowners insurance there are three standard policies — the HO-A, HO-B, and HO-C.  In addition insurers may offer alternative policies, if approved by the Texas Department of Insurance.

As stated by the 1999, Texarkana Court of Appeals opinion, Tri-State Pipe & Equipment, Inc. v. Southern County Mutual Insurance Co., because the insurance company prepares the standard forms of its insurance policies, it controls what clauses are contained in the policies, and the insured has little or no bargaining power over the nature and extent of those clauses.  Therefore, the law places on the insurance company the burden to include in its policies the various provisions relating to the kind and extent of coverage that the law requires.

One benefit of standardization of insurance forms is that it fosters a better understanding of policy provisions among the insured and insurance companies.  In addition, standardization promotes more uniform interpretation by the judiciary.

Because insurance policies derive from common forms, courts strive for uniformity and often look to decisions from other jurisdictions and to treatises.

The insurance company often modifies standard forms by “endorsements.”  Endorsements are attached to the policy to set forth more precise limitations on the covered persons or the covered events.

As can be seen in the 1996, Houston Court of Appeals [1st Dist.] opinion, Matthews v. Home Insurance Co., and the 1991, Austin Court of Appeals opinion, U.S. Fid. & Guar. Co. v. Travis Eckert Agency, Inc., endorsements are written especially for the risk and therefore normally prevail over conflicting provisions in the standard form policy.