Insurance claims denial and negligence related to the insurance policy and claims are questions for insurers and the insured. Here is a few things to keep in mind.
Negligence, in the insurance context as in others, consists of three elements:
(1) a legal duty owed by one person to another;
(2) a breach of that duty; and
(3) damages proximately resulting from the breach.
The above is discussed in lots of Texas cases. Here are a few to start with: The 1994 Texas Supreme Court opinion, Chicago Title Insurance Company v. McDaniel, then, the 1994, 14th Court of Appeals opinion, Tri-Legends Corp. v. Ticor Title Insurance Company, then, the 2002 San Antonio Court of Appeals opinion, Nast v. State Farm Fire and Casualty Company.
The Restatement of Torts, Section 552(1) provides: One who, in the course of his business, profession or employment, or in any transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused by them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Here’s some examples:
In the Nast case mentioned above, Plaintiffs stated a negligence claim against their agent for affirmative misrepresentations about coverage, saying they were not eligible for flood insurance and that neighbors who had flood insurance had purchased “fake” insurance from a “shyster.”
In the San Antonio Court of Appeals opinion, MacIntire v. Armed Forces Benefit Ass’n, a life insurer owned no duty to provide notices regarding the policy status or termination for failure to provide premiums.
This topic on negligence will be discussed more in future blogs.