Liability Insurance Dispute

The Penn Record published an article on March 18, 2019, discussing changes in insurance law in Texas.  The article is titled “Texas Lawmakers Say The ALI’s Insurance Law Project Not Worthy Of Recognition By The Courts“.

Legislation has recently been filed by Texas legislators to discourage Texas courts from relying on the controversial passage of the American Law Institute’s Restatement of the Law of Liability Insurance.

Philadelphia based, ALI has a history of publishing Restatements with the goal of providing summaries to judges who deal with these types of legal issues.  People question whether the group has started proposing new laws rather than restating existing ones.  As a result the Texas legislature has filed three measures this year in response.

HCR 58, which is supported by the National Association of Mutual Insurance Companies, was filed in February and referred to the Judiciary and Civil Jurisprudence Committee.

The bills states that “The ALI’s recent Restatement is neither consistent with well-established insurance law nor respectful of the role of state legislators in establishing legal standards and practice for the insurance industry, and it is not worthy of recognition by the courts as an authoritative reference.”

The purpose of the bill is to discourage courts from relying on the Restatement as an authoritative source regarding established rules and principles of law.

This particular Restatement concerns when insurance companies can be found liable in civil lawsuits and has been referred to as litigation fuel.  Notably calling for insurance companies to cover punitive damages in some instances, rather than the insured, even it the coverage is provided for in the policy.

Texas is not the only state legislature to express opposition to the Restatement.

Another bill, HB 2757, seeks to amend Civil Practice & Remedies Code, Section 5.001.

SB 2303, looks to add Civil Practice & Remedies Code, Section 1.004 and take effect immediately upon a two-thirds majority vote, or alternatively on Sept 1, 2019.

The article discusses similar bills introduced in other states.

Most of the Restatement of Law of Liability Insurance is made up of statements of law or definitions that are uncontroversial and well established across the country.