Attorneys who handle life insurance cases can tell you that the application being attached to the policy is one of the basic rules of life insurance.  This is illustrated in the 1994, Texas Supreme Court opinion styled, Fredonia State Bank v. General Life Insurance Company.
In this case, the insured died as a result of a gunshot wound to the head.  Prior to his death, he had purchased two life insurance policies, each in the amount of $250,000.00 issued by General American Life Insurance Company.  General American denied the beneficiary’s claims for benefits.  Fredonia State Bank, an assignee of one of the two policies and executor of the insured’s estate, sued to collect the proceeds of the policy.
General American asserted as defenses that the insured had committed suicide and that the insured had made misrepresentations regarding his medical history, which were material to the risk assumed by General American.

The life insurance application has to be attached to the life insurance policy when it is delivered to the owner of the policy.
Following his divorce in 1994, Mr. Marriott wanted to replace his life insurance policy, naming his daughters (Riner and Ms Marriott) as beneficiaries.  Mr. Marriott had endured five back surgeries and was in chronic pain at the time the Allstate agent took his application.  In the application, Mr. Marriott disclosed that he had chronic back problems and certain other medical problems.  The application, however, was marked “no” with respect to whether he had ever received treatment for the use of alcohol or depression within the last three years.

Here is a 1998, opinion issued as the result of an employer purchasing a life insurance on an employee and naming itself as the beneficiary.  The opinion is from the Tyler Court of Appeals and styled, Stillwagoner v. Travelers Insurance Co.
The decedent was a registered nurse employed by Advantage Medical Services, Inc.  Unbeknownest to the decedent’s family, the employer took out a $200,000 life insurance policy insuring against accidental death, dismemberment, and total disability from Travelers designating Advantage as the beneficiary of the policy.  Advantage purchased such life insurance policies covering all of its employees.  The decedent was killed in a car accident while driving a company car.  Although Travelers disputed that the decedent was in the course and scope of her employment at the time of her death, Travelers eventually settled with Advantage and paid Advantage $190,000.
The decedent’s husband discovered the policy and sued Advantage and Travelers.  Judgment in favor of Advantage and Travelers is reversed and rendered.  Advantage did not have an insurable interest and, therefore, the proceeds belong to the decedent’s estate.

Life Insurance Lawyers should find this interesting in case they did not already know it.  It is a 2023 opinion from the U.S. Court of Appeals for the Fifth Circuit.  The opinion is styled, In The Matter Of Frank W. Gordon; Judith B. Gordon, John Patrick Lowe v. Frank W. Gordon; Judith B. Gordon.
Lowe is the duly appointed Chapter 7 Trustee of the bankruptcy estate of the Gordons.
The Gordons claimed the surrender value of two life insurance policies as exempt from the bankruptcy proceedings under Texas state law..  Lowe objected to the exemption and the bankruptcy court overruled the objection.  This appeals Court affirms the District Court ruling.

Life Insurance Attorneys need to understand that an employer cannot make itself the beneficiary of an employees life insurance policy.  This is discussed in a 1998, opinion from the 14th District Court of Appeals.  The opinion is styled, Tamez, et al v. Certain Underwriters at Lloyd’s, London, International Accident Facilities, Inc., et al.
In 1991, National Convenience Stores (NCS) purchased an accidental death insurance policy from Lloyd’s.  The policy provided that Lloyd’s would pay NCS $250,000 upon the accidental death of any NCS Texas employee killed during the course and scope of employment with NCS.  NCS did not have workers’ compensation insurance.
Ramon Tamez and Cheryl McCarthy were both killed while employed by NCS, although it was disputed whether McCarthy was in course and scope.  NCS filed a claim for proceeds under the policy as a result of the death of both individuals.  NCS was paid by Lloyd’s, but NCS later returned the benefits paid as a result of McCarry’s death stating McCarty was not in course and scope at the time of her death.  The representatives of both Tamez and McCarty sued Lloyd’s and NCS in an attempt to recover the benefits under the policy.  The primary issue in dispute is whether NCS had an insurable interest in the life of its employees.  The causes of action asserted against Lloyd’s included breach of contract, breach of the duty of good faith and fair dealing, conspiracy, conversion, and violations of the Texas Insurance Code.  As to NCS, the representatives alleged that NCS held the insurance benefits in a constructive trust for their benefit.

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.

Fortunately, most insurance claims do not require expert testimony.  If expert testimony is needed, here is a 2023 opinion from the United States Fifth Circuit Court of Appeals which needs to be known.  The opinion is styled, Cody Horton v. Allstate Vehicle And Property Insurance Company.
Horton reported a claim to Allstate for hail and wind damage to Horton’s metal roof arising from a storm in 2019. However, Horton’s homeowner insurance policy excludes “cosmetic damage caused by hail to the surface of a metal roof…”  After investigating and concluding that the damage was only cosmetic, Allstate denied coverage.  Horton then sued Allstate for breach of contract.
Allstate filed two motions relevant to this appeal: (1) a motion to exclude the expert testimony of Horton’s expert witness, David Wilson, a licensed and independent insurance adjuster; and (2) a motion for summary judgment based, inter alia, on the cosmetic damage exclusion.

Insurance lawyers who handle hail damage claims need to be aware of this 2023 opinion from the United States Fifth Circuit Court of Appeals.  The opinion is styled, Cody Horton v. Allstate Vehicle And Property Insurance Company.
In this insurance coverage dispute, the district court held for Allstate, the insurer, and, on summary judgment, dismissed the complaint of Horton, the insured.  The dispositive question is whether the district court’s evidentiary rulings, to which Horton did not object, excluded Horton’s expert’s opinion as expressed in his deposition: that the damage to Horton’s metal roof was not merely uncovered cosmetic damage, but covered functional damage.  Because we hold that the court’s rulings did not exclude this expert testimony, the record before us demonstrates a tryable issue of fact, i.e., whether the damage to Horton’s roof was cosmetic or functional.
A contractor for Horton reported a claim to Allstate for hail and wind damage to Horton’s metal roof arising from a storm.  Horton’s homeowner insurance policy excludes “cosmetic damage caused by hail to the surface of a metal roof…”  After investigating and concluding that the damage was only cosmetic, Allstate denied coverage.  Horton then sued Allstate for breach of contract.

Attorneys handling homeowner claims must be aware of the most recent case law regarding the notice provisions of Texas Insurance Code, section 542A.  Here is a 2023 opinion from the Northern District of Texas, Amarillo Division, dealing with this issue.  The opinion is styled, Toby Brohlin, et al. v. Meridian Security Insurance Company.
Before the Court is Meridian’s Motion to Deny Plaintiff’s Claim for Attorney Fees under Section 542A.007 of the Texas Insurance Code.  The Court granted Meridian’s motion.  A reading of the opinion gives brief facts and states the law statutes and law on this matter.  This writing is the analysis of the law by the Court.
The Brohlins lawsuit implicated the pre-suit notice requirement contained in section 542A.002(a).  The Brohlin’s did not provide the pre-suit notice.  Thus, the Brohlins are precluded from recovering their attorney fees.

When a life insurance claim is denied due to non-payment of premiums, what can be done.  First, see an experienced life insurance lawyer.  Second, be aware of cases like this 2000 opinion from the San Antonio Court of Appeals.  It is styled, MacIntire v. Armed Forces Benefit Ass’n.
Linda and Scott MacIntire submitted a joint application for term life insurance to the Armed Forces Benefit Ass’n (AFBA) in April of 1996.  The payments were to be made automatically via a computerized bank deposit scheme, but for unknown reasons, the payments were never made.  The few payments made were not enough to keep the policy in force an it lapsed on March 31, 1998 according to AFBA.  Scott died from a terminal illness in August 1998 and Linda inquired regarding the policy in September of that year.  Upon discovery of the failed automatic deposit setup, Linda tried to pay delinquent payments directly to AFBA, but AFBA denied the payments and coverage, stating that Scott’s policy had already been canceled.  Linda sued AFBA, alleging violations of the Texas Insurance Code, the DTPA, breach of contract, negligence, breach of the duty of good faith and fair dealing, breach of implied warranty, ambiguity of contract, seeking to recover the death benefits and additional damages.  The trial court granted AFBA’s motion for summary judgment on the basis that no genuine issue of material fact existed.  Linda appealed, claiming that genuine issue of material fact existed in her claims of breach of contract, DTPA violations, Texas Insurance Code, breach of duty of good faith and fair dealing, and negligence.
The summary judgment in favor of AFBA was upheld.  The Appellate Court held that an Insurer had no duty to advise the insured of a cancellation due to nonpayment.  The Appellate Court held that the insurance contract was not ambiguous and the breach did not occur since the contract was no longer in force.  Regarding implied warranty, the Court held that “implied warranty for good and workman like performance was applicable to tangible goods and products, and no precedent existed for applying the doctrine to insurance companies.  Regarding the issue of good faith and fair dealing, the Court examined the two prong test used by the Texas Supreme Court: (1) there is an absence of a reasonable basis for denying or delaying payment of benefits under the policy and (2)the carrier knew or should have known that there was not a reasonable basis for denying the claim or delaying payment of the claim.  The Court ruled that AFBA had a reasonable basis for denying the claim.  Plaintiff also asserted claims under the DTPA and TExas Insurance Code, to which the Court stated that, if an insurer had a reasonable basis for denial of the claim – however erroneous – that the insurer enjoys immunity from statutory bad faith under the Texas Insurance Code and the DTPA.
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