Dallas Fort Worth Insurance Lawyer Blog

Hail Claims And Appraisal = Bad Faith?

December 11, 2016 | Mark S. Humphreys

When an insurance company complies with an appraisal can there still be bad faith? That question was answered with a “no” in a 1996, San Antonio Court of Appeals opinion. The opinion is styled, Toonen v. United Services Automobile Association.

USAA insured Toonen’s home. The policy contained an appraisal clause. Toonen reported a claim for damage as a result of a hail storm. USAA’s adjuster found no storm damage. Toonen hired a private adjusting firm to represent her in handling her claim and to adjust her loss and deal with USAA.

USAA’s adjuster reported her findings to Toonen’s private adjuster. USAA named an appraiser pursuant to the appraisal clause. Toonen then retained an attorney who notified USAA that Toonen would file suit if Toonen had not received $4,914.00. In the meantime, Toonen’s private adjuster reached an agreement and appointed an umpire under the appraisal clause who found that Toonen was entitled to an award of $1,266.35 which USAA tendered to Toonen. Toonen sued USAA for breach of contract and violations of the Insurance Code, DTPA, negligence, intentional infliction of emotional distress, fraud, misrepresentation, and breach of duty of good faith and fair dealing. USAA answered and filed a Motion for Summary Judgment. USAA’s Motion for Summary Judgment was granted. Toonen appealed.

Vacancy Clause

December 10, 2016 | Mark S. Humphreys

Insurance lawyers dealing with homeowners claims will eventually see a situation similar to the one in this San Antonio Court of Appeals opinion. The case style is Lynn v. USAA Casualty Insurance Company and the opinion was issued in 1997.

Mr. and Mrs. Lynn’s country home was insured by USAA. The house was completely destroyed by fire and USAA denied coverage based upon vacancy and arson. The Lynns brought suit against USAA for breach of contract and breach of duty of good faith and fair dealing. The trial court granted USAA’s Motion for Summary Judgment. This San Antonio Court of Appeals confirmed the judgment.

Although there were some contents in the house six months before the fire, the testimony established that the house was vacant when it burned. The Court of Appeals stated that the house was “without contents of substantial utility” due to lack of heating equipment, air conditioning, appliances, sleeping accommodations or efforts to preserve the contents for several months. Therefore, the “vacancy” clause precluded recovery. Furthermore, although the illegal acts (such as arson) of a co-insured do not bar recovery under an insurance policy, the “vacancy” clause, on the other hand, does not have a limitation for who “caused” or was aware of the “vacancy.” The clause excludes coverage regardless of the innocent spouse’s knowledge of the “vacancy.” Finally a bad faith claim is established by showing that the insurer had no reasonable basis for denying the claim or that the insurer failed to investigate. In this case, USAA was justified in denying the claim under the “vacancy” clause. Therefore, there was no bad faith.

Coverage For Innocent Spouse?

December 8, 2016 | Mark S. Humphreys

Insurance attorneys in the Dallas and Fort Worth area will eventually find themselves in a situation like that presented in a 1999, Texas Supreme Court case. The case is styled, Texas Farmers Insurance Company v. Murphy.

Mr. Murphy obtained homeowners insurance with Texas Farmers in 1993. Seven days later the home was ransacked and intentionally burned down. Mr. Murphy submitted a proof of loss claiming $115,000 for damage to the structure and $69,000 for damage to personal property.

Texas Farmers filed a declaratory judgment action seeking a determination that it need not pay the insurance because Mr. Murphy had set or caused the fire to be set. While the action was pending, Mrs. Murphy filed for divorce and obtained a partition of one-half interest in claims against Texas Farmers.

Home Owners Policy And Arbitration

December 6, 2016 | Mark S. Humphreys

Texas attorneys who handle insurance claims will find an article from the Texas Tribune to interesting. The article published on November 3, 2016, and is titled, Texas Insurer Drops Push To Let Homeowners Forgo Right To Sue.

The Texas Farm Bureau has dropped a proposal that would have allowed its homeowner insurance policyholders to pre-emptively sign away their right to sue the company in exchange for a discount on rates.

Consumer advocates on Thursday cheered the withdrawal of the proposition that stirred fierce debate in meetings held by the Texas Department of Insurance, where some called it a raw deal for consumers.

Uninsured / Underinsured Coverage

December 4, 2016 | Mark S. Humphreys

Attorneys handling uninsured / underinsured claims will find this article from the Claims Journal interesting. The law discussed in the article is Missouri law but Texas law is similar and the results would probably be the same in Texas. The article is titled, UIM Endorsement Doesn’t Cover Worker Injured While Not Occupying Employer’s Truck.

On October 6, 2016 the U. S. District Court for the Western District of Kentucky, applying Missouri law, granted a summary judgment for Travelers Property & Casualty Company of America, after holding that the injured plaintiff was not insured by Travelers because at the time of the accident he was not occupying the vehicle that struck him. The decision is titled Spiller v. Travelers Property Casualty Company of America.

The facts were straightforward. Plaintiff was employed by a repaving contractor and was responsible for caulking along a 12 mile stretch of a four lane highway. While plaintiff was working on the roadway, he was followed by a truck with a flashing arrow, warning traffic approaching from the rear to move to the left lane because there was construction work in the right lane. After several hours of work one day, the arrow board attached to the truck was struck from behind by another vehicle driven by one Paul Owens. The force of the collision caused the truck following plaintiff to strike and injure him.

What Proves Bad Faith?

December 3, 2016 | Mark S. Humphreys

For insurance lawyers, the above question captures the ultimate question. Most cases do not involve bad faith. They are simple breaches of the insurance contract. The Northern District, Dallas Division discussed the law in a recent opinion. The opinion is styled, Yasser Alhamzawi v. Geico Casualty Company.

This is a summary judgment opinion. Plaintiff had insurance with Geico and sustained a hail damage loss to his insured car. After an estimate, Geico issued two checks totaling $5,819.19 to Plaintiff and Plaintiff cashed the checks.

Plaintiff then got more estimates for amounts over $30,ooo. Plaintiff sent these estimates to Geico for payment. Geico had instructed Plaintiff to have the repair shop call if the amount they paid was insufficient so that a new estimate could be obtained. Plaintiff did not do this, but instead got his brother to do the repairs. Plaintiff then sued Geico for bad faith, for not fully paying the claim. Geico asserted that Plaintiff had violated the policy by not cooperating with the policy provision requiring cooperation.

Bad Faith And Claim Denial

December 1, 2016 | Mark S. Humphreys

Bad faith attorneys need to know when bad faith in insurance occurs and when it does not. A 1995, Texas Supreme Court case is worth reading. It is styled, Republic Insurance Co. v. Stoker.

The Stokers were involved in a chain reaction car wreck caused by an unidentified pickup truck which dropped a load of furniture causing a chain reaction. The truck was not struck by any of the vehicles. The Stokers had no collision insurance and therefore submitted a claim under their uninsured/underinsured coverage. Republic originally denied the claim because it concluded that Mrs. Stoker, the driver, was more than fifty percent at fault in causing the accident.

The Stokers sued for breach of insurance contract, breach of good faith and fair dealing, of violations of the Deceptive Trade Practices Act, and violations of the Texas Insurance Code. The Stokers alleged that Republic gave an invalid reason for denial of their claim.

Life Insurance Lawyers

November 29, 2016 | Mark S. Humphreys

Life insurance lawyers need to know this 2008, 5th Circuit opinion. It is styled, Liu v. Fidelity and Guaranty Life Insurance Company.

The importance of this opinion is the court stating that warranties are not favored in life insurance policies.

Liu filled out a life insurance application which stated that he had not been diagnosed with cancer within the previous ten years. The policy was issued two days after he was diagnosed with cancer. The carrier denied coverage arguing that the representation in the application was a condition precedent to coverage. The trial court found coverage which was affirmed on this appeal.

Federal Court Pleadings And Remand – The Opposite

November 27, 2016 | Mark S. Humphreys

Palo Pinto County insurance attorneys know the insurance companies want to litigate their cases in Federal Court. Insurance attorneys representing individuals and small businesses know they can often times get a better result for their clients in State or County Court.

Another U.S. McAllen Division opinion discusses the same issue as discussed here two days ago, yet with a different result. The style of the case is, Pablo Martinez v. Allstate Texas Lloyds.

Martinez was insured with Allstate and sued Allstate based on their handling of a claim resulting from a storm. Martinez alleged that Allstate failed to “fully compensate” them. Martinez sued in State Court and Allstate removed the case to Federal Court. Martinez sought a remand of the case.

Federal Court Pleadings And Remand

November 26, 2016 | Mark S. Humphreys

Parker County insurance attorneys know that it is best for their clients to try and keep their case in State or County Court. The insurance lawyers know it is best to get their case in Federal Court. The U.S. McAllen Division had a case where the argument on this issue was a little different from what is usually seen. The case is styled, Ida Rodriguez v. Allstate Texas Lloyds.

Rodriguez sued Allstate for a property damage claim that allegedly was not properly paid. Rodriguez sued Allstate in State Court and Allstate removed the case to Federal Court. Rodriguez filed a Motion to Remand the case back to the State Court.

One argument in this case was that the amount in controversy did not exceed $75,000.