Life Insurance And Paying Premiums

Here is a 2004 opinion from the Dallas Court of Appeals that just does not seem right.  The opinion is styled, Royal Maccabees Life Insurance Company v. James.
The insurer was sued by the surviving spouse of a police officer seeking an additional 50,000 in life insurance proceeds after the insurer paid the basic $50,000 upon the officer’s death.  It was undisputed that the insured applied for and paid premiums for over four years for the additional $50,000 in coverage.  It was also undisputed, however, that the insurer never sent a letter to the insured approving the disputed benefit as required by the life insurance policy.  The insurer denied the additional $50,000 in coverage and refunded the premiums paid for this coverage.  The trial court entered judgment on the jury finding that the insurer breached the contract, committed fraud, and violated the DTPA, the Texas Insurance Code, and the duty of good faith and fair dealing.  The judgement included mental anguish damages, punitive damages, attorney’s fees and pre-judgment interest.  This appeal followed.
The Dallas Court of Appeals reversed and rendered judgment in favor of the insurer on the breach of contract, bad faith and the Insurance Code claims and remanded the remaining claims for a new trial.  The appellate court concluded that an insurer’s acceptance of premiums for additional life insurance coverage for more than four years prior to the insured’s death did not waive a policy provision that written approval from the insurer was required before the employee would be entitled to additional life insurance benefits.  he Court began it’s analysis by reviewing the breach of contract claim and recognizing well established principles of Texas insurance law holding that waiver and estoppel cannot be used to create insurance coverage.  The court reviewed policy language that the insured alleged was conflicting, ambiguous and supported a finding of coverage.  Applying equally well settled principles of Texas insurance law holding that jurists should attempt to harmonize two allegedly conflicting provisions, the court found that one of the provisions applied to the first $50,000 of coverage which did not require the insurer’s written approval, while the other provision required written approval for amounts above $50,000.
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