Insurance lawyers need to know the various ways other insurance lawyers have attempted to pursue an insurance company and the ways that work and the ways that do not or have not worked.  Here is a different approach that failed to work.

This is an opinion from the Northern District of Texas, Dallas Division.  It is styled, Corinne Pearson v. Allstate Fire and Casualty Insurance Co.

Corinne filed suit in State Court alleging Allstate improperly denied or underpaid a claim after a storm damaged her home.  Allstate removed the case to this Federal Court and obtained an abatement pending an appraisal of the damage to her home.  In June 2019, the Court was notified that appraisal had been completed and the case was reopened.  Allstate immediately filed this motion for summary judgment.

Asserting a claim against an insurance adjuster must be done properly if the goal is to keep the adjuster in the case.

Often times suing the insurance company for the acts of the adjuster is good enough to properly maintain a lawsuit.  Other times the adjuster needs to be brought into the lawsuit.  This is particularly important when the insured wishes to maintain the case in State Court rather than litigating the case in Federal Court.

One example of properly suing the adjuster was discussed in the 2020 opinion, Hill Country Villas Townhome Owners’ Association, Inc. v. Everest Indemnity Insurance Company, et al.  This opinion is from the Western District of Texas, San Antonio Division.

Uninsured motorist protection (UIM) historically has been its on little niche of the law that was not purely tort law or purely contract law.

Creative attorneys have recently been having success seeking UIM claims by way of a Declaratory Judgment Action.  The most recent case is from the Corpus Christi Court of Appeals and is styled, Allstate Fire and Casualty Insurance Company and Allstate Insurance Company v. Jesus Inclan.

Inclan sued Reynaldo Sanchez, the uninsured driver, and Allstate for injuries Inclan sustained in a car wreck with Sanchez.  There were offers made and eventually Inclan sought declaratory relief and attorney fees under the Uniform Declaratory Judgments Act (UDJA) pursuant to the Texas Civil Practices & Remedies Code, Section 37.001 – .011.

Insurance lawyers seem to have a lot of confusion regarding insurance contracts with appraisal provisions contained within them and how to interpret and handle them.  This issue was addressed in a January 2020 opinion from a Southern District of Texas, Houston Division.  The opinion is styled, William A. Linnus and Sarah J. Linnus v. Metropolitan Lloyds Insurance Company of Texas.

Texas insurance policies frequently include provisions requiring or allowing appraisal to resolve disputes about loss amounts.  An appraisal clause binds the parties to have the extent or amount of the loss determined in a particular way.  An appraiser must decide the amount of loss, not to construe the policy or decide whether the insurer should pay.  Unless the amount of loss will never be needed appraisals should generally go forward without preemptive intervention by the courts.

The contractual right to appraisal may be waived.  The Texas Supreme Court in the opinion styled, In re Universal Underwriters of Texas Insurance Co., explained that: to constitute waiver of the right to appraisal the acts relied on must be reasonably calculated to induce the assured to believe that compliance by him with the terms and requirements of the policy is not desired, or would be of no effect if performed.  The acts relied on must amount to a denial of liability, or a refusal to pay the loss.  As the Court more recently concluded, waiver requires intent, either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.

Failure to follow the rules related to Insurance Law can have bad consequences.  This is seen in a September 2019, opinion from the Southern District of Texas, Corpus Christi Division.  The opinion is styled, Libardo Taboada v. State Farm Lloyds.

This case was dismissed by the Court for Libardo’s failure to follow rules set out in the Texas Insurance Code, Sections 542A.003 and 541.154.

First there was non-compliance with the pre-suit notice which was sent on August 21, 2018.

What is a First Party claim versus a Third Party claim?

A “first party” policy typically involves insurance that provides policy benefits directly to the insured or beneficiary in the event of a loss.  The Texas Insurance Code, Section 541.051(2) defines “first party claim” as a claim “by an insured or policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract that must be paid by insurer directly to the insured or beneficiary.  These types of policies generally include health insurance, life insurance, disability insurance, auto policy insurance, homeowner’s property insurance, and commercial property insurance.

In contrast, “third party coverage” is generally considered to include all forms of liability insurance.  This type of insurance is designed to insure against loss to third parties caused by the insured or another covered person for whom the covered person may be legally responsible.

The Texas Prompt Payment of Claims Act (TPPCA) sets forth rules for payment of claims and penalties for violation of those rules.  Here is a case that deals with the TPPCA when there is an appraisal involved.  The case is from the Northern District of Texas, Dallas Division, and is styled, Corinne Pearson v Allstate Fire and Casualty Insurance Co.

In February 2019, Pearson filed suit against Allstate alleging violations of the TPPCA and breach of contract and bad faith.  We will look at the TPPCA claim.  Allstate obtained an abatement of the case pending an appraisal of the damage to Pearson’s property.  In June the parties notified the Court that the appraisal was completed and Allstate filed this summary judgment motion.

The facts in evidence here were that Pearson had a policy with Allstate.  Pearson timely submitted a claim for damages.  After an inspection by Allstate there resulted a repair estimate that was lower than the policy deductible and this lawsuit was filed.

Insurance lawyers need to know ways to hold an insurance company liable for the conduct of one of it’s agents.  Here is why.  Sometimes an insurance agent does not have assets or insurance coverage to pay for his mistakes.  If the insured customer cannot be made whole by pursuing the agent then he needs to have recourse against the company the agent was selling policies for.

An insurance company may be liable for unauthorized conduct of an agent or other person, if the insurance company ratifies the conduct.  Ratification may occur when the insurance company, though having no knowledge of the unauthorized act, retains the benefits of the transaction after acquiring full knowledge of it.  The critical factor is the insurance company knowledge of the transaction and its actions in light of that knowledge.  As discussed in the 1980, Texas Supreme Court opinion, Land Title Co. of Dallas, Inc. v. F. M. Stigler, Inc., Ratification extends to the entire transaction.

As an example, in the 1989, 14th Court of Appeals opinion, Paramount Natl Life Ins. Co. v. Williams, an insurance company issued a hospitalization policy, without further investigation, despite having an application indicating the insured’s advanced age and poor health, and despite having knowledge of the agent’s inexperience.  By nevertheless accepting premiums, the insurance company ratified the agent’s misrepresentations made in the sale of the policy.

Here is something an insurance company does not like.  An insurance company cannot escape liability by showing that it did not authorize the specific wrongful act of an agent.  This was the decision in the 1994, Texas Supreme Court opinion styled, Celtic Life Ins. Co. v. Coats.  Something similar is seen in the 1979, Texas Supreme Court opinion styled, Royal Globe Ins. Co. v. Bar Consultants, Inc.  As the Celtic court said:

In determining a principal’s vicarious liability, the proper question is not whether the principal authorized the specific wrongful act; if that were the case, principals would seldom be liable for their agents’ misconduct.  Rather, the proper inquiry is whether the agent was acting within the scope of the agency relationship at the time of the act … The misrepresentation in the present case was made in the course of explaining the terms of the policy – a task the jury specifically found to be within the scope of the agent’s authority.  Thus, Celtic cannot escape liability on the basis that it did not authorize particular representations concerning the policy.

What if an agent changes insurance contract terms?  Is the insurance company liable?

There are various acts or in-actions that an insurance agent can take that will hold not only the agent responsible but also the insurance carrier.

An insurance company may be liable for unauthorized acts by an agent, if the agent is acting within the scope of his “apparent authority.”  Actual authority is not required.  The insurance company will be liable when by its conduct it has given the agent the appearance of having authority, so that a reasonable person would suppose the agent had authority.  This was made clear in the 1979, Texas Supreme Court opinion styled, Royal Globe Ins. Co. v. Bar Consultants, Inc.

Apparent authority is an estoppel theory that holds the insurer liable because the insurer clothed the agent with indicia of authority that would lead a reasonable person to believe the agent had authority.  If the agent is acting within the scope of his apparent authority, not even instructions not to mislead, nor diligence in preventing misrepresentations, will shield the insurer from liability according to the Royal Globe opinion.  Evidence of apparent authority may include: