As it relates to homeowner’s policies, the Texas courts have adopted a rigid rule for when a loss occurs.  The Texas Supreme Court in, Don’s Building Supply, Inc. v. OneBeacon Ins. Co. has emphasized that the applicable rule for when a loss occurs depends upon the language in the policy.

In Don’s Building Supply, the Court interpreted a policy that provided coverage for “bodily injury” or “property damage” that was “caused by an ‘occurrence’ that takes place in the ‘covered territory;'” and “occurs during the policy period.”  The policy defined “property damage” to mean “Physical injury to tangible property, including all resulting loss of use of that property.  All such loss of use shall be deemed to occur at the time of the physical injury that caused it,” or “Loss of use of tangible property that is not physically injured.  All such loss shall be deemed to occur at the time of the ‘occurrence’ that caused it.  Based on this language, the court determined that “property damage under this policy occurred when actual physical damage to the property occurred.”

In Don’s Building Supply, the Court stressed that it was not attempting to fashion a universally applicable rule.  Accordingly, the actual injury or injury-in-fact rule may not apply in all situations.  For example, other cases have determined that a “loss” occurs when the physical damage first manifests itself or becomes apparent.

Insurance attorneys need to read an August 2017, opinion from the 14th Court of Appeals.  It is styled, Tiffany Falkenhagen Thompson v. Geico Insurance Agency, Inc.

Texas Personal Automobile Policy’s require the policyholder to notify the insurer of the policyholder’s acquisition of a replacement vehicle for the coverage to extend to damage to the newly acquired vehicle.  This case is presented on cross motions for summary judgment regarding the notification requirement in the policy.  Tiffany says the policy provision does not apply to leased vehicles or alternatively, the policy language is ambiguous.  Geico says they were not timely notified of the replacement vehicle and thus, there is no coverage.  The trial court ruled in favor of Geico and this appeals court upholds that ruling.

Tiffany owned a 201  Infiniti G37 auto and secured insurance from Geico.  She traded in the G37 and leased a 2015 Infiniti Q50 auto.  A few months later while driving the Q50, Tiffany was involved in an accident.

Here is a United States District Court, Southern Division opinion.  It is styled, Lauger Companies, Inc. v. Mid-Continent Casualty Company and is a commercial case opinion.

A company sold defective concrete to a builder.  The builder seeks to recover damages caused by the concrete’s failure in the building from the seller’s insurer.  The builder will recover by way of summary judgment.

M.W. Rentals & Services, Inc., hired Lauger Companies to build a warehouse in Victoria, Texas, to store heavy construction equipment.

Insurance lawyers who handle home owners claims need to read this opinion from the 14th Court of Appeals.  It is styled, Ron Pounds v. Liberty Lloyds of Texas Insurance Company.

This case concerns whether an insurer waived appraisal of a homeowner’s insurance claim by denying it.  A summary judgment in favor of Liberty was granted by the trial court.

The facts in this case are undisputed.  Pounds purchased a home insurance policy from Liberty.  The policy covered damage caused by wind and or hail.

A 2017, Southern District, Houston Division opinion needs to be read by ERISA lawyers.  The opinion is styled, Samuel Heron, III v. ExxonMobil Disability Plan.

This ERISA case challenges a plan administrator’s denial of benefits.  Heron alleges that the decision to end his long-term disability benefits after an initial two year period violated 29 U.S.C. Section 1132(a)(1)(B).  Exxon filed a motion for summary judgment which was granted by the Court.

Heron is a 60 year old man who suffers from a variety of illnesses.  He worked in the procurement department at Exxon where he negotiated and managed worldwide material and services agreements.  The Plan covering him divided benefits into two periods, the first is the period that begins on the last day the person was actively at work, and ends two years later.  In this first period, an individual is incapacitated “if the person is wholly and continuously unable, by reason of physical or mental health impairment, to perform any work suitable to the person’s capabilities, training and experience, that the person’s employer has available during the initial period, and such inability to perform work is expected to continue for … at least six months form the date the person’s ability to perform work is determined.”  After the initial two year period, an individual is incapacitated “if the person is wholly and continuously unable, by reason of a physical or mental health impairment, to perform any work for compensation or profit for which the person is or may become reasonably fitted by education, training or experience, and such inability to perform work is expected to continue for  … at least six months from the date the person’s ability to perform work is determined.”  In the initial period, the definition of incapacitated looks only to the ability to perform any work that the person can do or reasonably could do with training.

Going back to the 1894, Texas Supreme Court opinion, Cheeves v. Anders, it is a well settled proposition in Texas law that it is well-settled that a life insurance beneficiary must have an insurable interest in the insured’s life.

The basis for the rule is twofold: no should have a financial inducement to take the life of another; and a life insurance policy for the benefit of one without an insurable interest is a wagering contract.

As an example, in the 1998 Houston Court of Appeals [14th.] opinion, Tamez v. Certain Underwriters at Lloyd’s, London Int’l Acc. Facilities, an employer bought a life insurance policy on the life of its employee.  The employer argued that the Texas Insurance Code does not require an insurable interest.  The court held that the statute does not eliminate the judicial requirement of a beneficiary’s insurable interest in the insured’s life.

What is subrogation?  This is discussed in a Claims Journal Article.  The Article is titled, Navigating the Anti-Subrogation Rule.

Subrogation is the legal doctrine which allows one party, usually an insurance company, that pays a loss by its insured which was caused by a third party, to take over the rights of its insured against the third party and recover its claim payments.  It wouldn’t make much sense if, after paying a first-party insurance claim that its insured was partly responsible for, an insurance company could sue its insured to get their money back.  It would defeat the purpose of insurance.  Preventing precisely that sort of inequitable scenario is the purpose of the anti-subrogation rule (ASR).  Sometimes known as the “suing your own insured” defense, the ASR was originally developed based on the logical premise that because the carrier stands in the shoes of it’s insured, it would essentially be suing itself.  Therefore, no right of subrogation can arise in favor of an insurance company against its own insured.

The public policy behind the ASR is two-fold: (1) the insurer should not be able to pass its loss on to its own insured, avoiding coverage which the insured has paid for; and (2) the insurance company should not be placed in a situation where there is a potential conflict of interest.  However, this seemingly simple concept has many tentacles and each state has developed their own body of law with regard to how and when the ASR will be applied, setting forth numerous exceptions and rules regarding its application.

Pursuant to Texas Insurance Code, Section 1103.151 and Section 887.205, a life insurance beneficiary who willfully participates in bringing about the insured’s death, either as a principle or as an accomplice, forfeits any right to benefits.  The benefits are payable to any innocent contingent beneficiary or to the insured’s nearest relative.  This is discussed in the 1987, Texas Supreme Court opinion styled, Crawford v. Coleman.

Sandra Shoaf was stabbed to death by her husband, Cornelius Shoaf.  Sandra’s life was insured under four insurance policies, each designating Cornelius as the primary beneficiary.  The trial court disqualified Cornelius from receiving Sandra’s death benefits because the jury found that Cornelius willfully caused Sandra’s death.  The contingent beneficiaries under the policies are Sandra’s parents, Phynies and Flora Crawford (the Crawfords) and Sandra’s stepson, Cornell.  Cornell is Cornelius’s son by a prior marriage. Martha Coleman is Cornell’s mother.

After disqualifying Cornelius, the trial court awarded the proceeds of two of the four policies to the Crawfords as the contingent beneficiaries under those policies.  Those proceeds awarded to the Crawfords are not a part of this appeal.  The trial court also awarded the proceeds of the remaining two policies, Equitable Life Insurance Society of the United States and Metropolitan Life Insurance Company, to Cornell Shoaf as the contingent beneficiary.  The Crawfords dispute the award of the benefits of these two policies to Cornell.

What are some of the rules related to the naming of a spouse as the beneficiary in a life insurance policy?

One spouse can designate his or her estate as the beneficiary of the policy, at the expense of the other spouse, absent a showing of actual or constructive fraud.  This was the opinion is a 1994, Fort Worth Court of Appeals opinion styled, Street v. Skipper.

Policies may contain provisions automatically divesting a spouse of any interest in the proceeds, if the parties are “legally separated” or divorced.  This is what was stated in the 1981, Eastland Court of Appeals opinion styled, Pilot Life Insurance Co. v. Koch.  Also, the divorce decree may divest the former spouse of any right to the insurance proceeds, pursuant to the opinion issued in the 1987, Houston [14th] Court of Appeals opinion styled, Novotny v. Wittner.  By statute, Texas Family Code, Section 9.301, a divorce invalidates any pre-divorce designation of the former spouse as beneficiary, 1) unless the former spouse is re-designated, 2) the insured redesignates the former spouse as the beneficiary after rendition of the decree, or 3) the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse.  If the pre-divorce designation is invalidated, the proceeds go to any alternate beneficiary or to the insured’s estate.  If the insurer pays the former spouse based on an invalidated designation, the insurer is liable to pay the proper beneficiary.

Who is entitled to life insurance benefits?  This may seem an easy answer and is most of the time, but not always.

According to the Texas Supreme Court and Texas Insurance Code, Section 1103.102, the designated beneficiary of a life insurance policy generally is entitled to the proceeds upon the death of the insured.  Absent an adverse claim, the insurance company may pay the benefits to the designated beneficiary.

However, the insured’s pledge of the policy proceeds may give a creditor rights superior to the named beneficiary’s according to the 1968, Texas Supreme Court opinion, McAllen State Bank v. Texas Bank & Trust Co.