Dallas Fort Worth Insurance Lawyer Blog

Insurance Companies Dropping Policies

October 31, 2009 | Mark S. Humphreys

A recent article originating in Florida, highlights a problem that many homeowners face and none wished they faced. The article title “Insurers dropping Chinese drywall policies”, talks about some new homes being built with a Chinese drywall that emits sulfuric fumes and corrodes pipes. Sounds pretty bad, and it is, especially if it’s your house this drywall is in.

The problem could be very large considering there appears to have been 500 million pounds of this drywall imported into the United States between 2004 and 2008. The houses constructed with this drywall seem to be concentrated in the Southeast, especially Florida and coastal areas of Louisiana and Mississippi. Texas and the Dallas, Fort Worth, Arlington, Weatherford, and most of the areas of the State seem to have escaped this problem

Most the insurance companies are denying the claims submitted by homeowners. The basis for the denials will vary but most of the time the reasons have to do with the problem being a “pre-existing” condition, or some type of construction defect exclusion. Both of these are often times omitted coverages in the homeowners policies.

“Claims Made” v. “Occurrence” Policies In Texas

October 30, 2009 | Mark S. Humphreys

The Supreme Court of Texas decided a case this year wherein the distinction between “claims made” policies and “occurrence” policies was discussed. This case is, Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance Company.

As discussed in an earlier case on this blog, the PAJ case, the main issue was whether or not the inusrance company was still responsible under the terms of the insurance policy even though the insured person or entity did not timely notify the insurance company of the claim. As in PAJ, the court ruled that because the insurance company could not show it was harmed by the delay in being informed of the claim, the court ruled that the insurance company must provide coverage.

The difference in this case, Prodigy, as compared with PAJ, was the different types of policies at issue. When dealing with insurance policies it is important to understand the distinctions between these two types of policies.

Subrogation In Texas Auto Claims

October 29, 2009 | Mark S. Humphreys

Texas Insurance Code, art. 5.06-1 and the particular policy’s “Right to Recover Payment clause create a statutory and contractual right of subrogation against a third party motorist to recover uninsured and underinsured payments the insurance company makes to its customer. If the insurance company makes a payment to any person under this coverage, the insurance company is entitled to recover up to the amount of the payment from the proceeds of any judgement or settlement with the person. This is spelled out in art.5.06(6).

The result of this rule is that a person who collects uninsured or underinsured benefits from their insurance company as the result of someone else’s negligent actions in a car wreck type of situation, cannot turn around and sue that individual. Or, if you do sue the responsible party and they are successful in collecting money from that individual, then they must pay back the insurance company for the benefits they have paid on the insured persons behalf. This of course is limited to paying the insurance company back only up to the amount they have paid out. Any excess would belong to the injured, insurance company customer. The purpose of this rule is to prevent a double recovery by the injured party.

What happens most of the time in real life is that the injured, not at fault person, makes a claim against the person who caused the injury. The injured person then discovers that the atfault person is either uninsured or underinsured. They then make the uninsured or underinsured claim against their own insurance company. Rarely, or almost never does the injured party pursue a further claim against the atfault party. However, the insurance company that paid the benefits will do an asset check on the atfault party and make a determination as to whether or not it is financially worthwhile to pursue the atfault party.

Limitations Periods In Texas Insurance Cases

October 28, 2009 | Mark S. Humphreys

An opinion issued by the Texas Court of Appeals in Houston on October 15, 2009 is noteworthy. Atleast one part of this decision addresses a law in Texas that most attorneys do not know.

The case is Anthony Sheppard v. Travelers Lloyds of Texas Insurance Company. This case discusses limitations periods. Limitiations periods are the timelines within which a lawsuit must be filed or otherwise it is barred. These limitations periods are in Chapter 16 of the Texas Civil Practice & Remedies Code. There are 44 sections in Chapter 16 addressing different causes of actions and the limitations applicable to them. Plus there is a ten page chart that breaks down these sections and tries to make them easier to understand.

A carefull reading of Sheppard goes a long way in making these limitations periods as they relate to insurance contracts understandable. And it is important to understand that breaches of an insurance contract usually go hand in hand with other violations of the Texas Insurance Code. Most Insurance Code violations, which are also violations under the Texas Deceptive Trade Practices Act have a 2 year statute of limitations. Texas Insurance Code, Section 541.162 sets out the limitations period for insurance code violations at two years with some variations to the two year period.

Your Duties After An Accident Or Loss In Texas

October 27, 2009 | Mark S. Humphreys

An appeal from a Dallas, Texas Court decision was decided by the Texas Supreme Court, in the case PAJ, Inc., d/b/a/ Prime Art & Jewel, v. The Hanover Insurance Company. This case was decided in January, 2008. It discussed the responsibilities of holders of an insurance policy as it relates to their duties after an accident or loss and how the failure of fulfilling those duties affects coverage under an insurance policy.

As a general rule almost all insurance policies require the policy holder to do the following: 1) promptly notify the insurance company of any loss or claim, 2) cooperate with the insurance company investigation of the claim or loss, 3) take reasonable actions to protect against further loss.

When a claim is denied due to a policy holder not promptly notifying the company of the claim or loss the insurance company has the burden of proving that this failure to promptly notify caused harm to the insurance company. This was the issue in PAJ.

Cancellation And Nonrenewal Of Certain Liability Policies In Texas

October 26, 2009 | Mark S. Humphreys

In Texas, there are rules regulating the conditions for an insurance company to cancel certain liability policies or to opt to nonrenew the policies. These rules are found primarily in Section 551 of the Texas Insurance Code.

To begin with, one rule found in Section 551.052 says that an insurance company cannot cancel a liability policy that is a renewal or continuation policy. This makes sense, otherwise, why would anybody buy this type of policy.

Another rule in this section says that an insurance company may not cancel a liability policy during the initial policy term after the 60th following the date the policy was issued. So if you buy a one year policy on September 15, it cannot be cancelled after November 15.

What Happens When My Texas Insurance Company Goes Into Receivership

October 25, 2009 | Mark S. Humphreys

The Texas Department of Insurance has a web site that provides some useful information when an insurance company goes into receivership. An earlier blog at this site discusses the financial situation that will result in an insurance company being placed in receivership.

Other than the claims handling process, there are two main questions most people will have concerning their insurance policies when their insurance company is taken over by a receiver. The first is, “What happens to my unearned premium?”, and the second is “What happens to my coverage and benefits?”.

Unearned premium is the amount you paid to the company in advance that did not actually buy coverage. For instance, if you bought a six-month policy and paid all the premiums in advance, but the company failed two months later, you would be due a refund for four months of premiums.

Claims Handling Process For Failed Companies In Texas

October 24, 2009 | Mark S. Humphreys

Let’s say you buy an insurance policy in Dallas or Grand Prairie. You drive over to Fort Worth or Arlington. You actually live in Weatherford or somewhere else in Parker County. Next, you incur a loss that you believe is suppose to be covered under the insurance policy you bought. Okay so far, but you call the insurance company to file a claim and you get told that the company has been having financial problems and is possibly going out of business. What happens now? The result will be the same no mattter where you are in Texas.

Most businesses that need protection because of financial problems they are experiencing file for some form of bankruptcy protection. When an insurance company has severe financial problems they are placed in receivorship.

There are two main classifications for a financially troubled insurance company in Texas. The first is called, “impaired”, meaning that the insurer does not have admitted assets at least equal to all its liabilities together with the minimum surplus required to be maintained under the insurance code. The second is, “insolvency” or “insolvent”, which means an insurer: (A) is unable to pay its obligations when they are due; (B) does not have admitted assets at least equal to all its liabilities; or (C) has total adjusted capital that is less than that required under various chapters of the insurance code.

Significant Under Insured Motorist Case In Texas

October 23, 2009 | Mark S. Humphreys

One of the most significant Texas cases discussing Texas Insurance Law as it relates to underinsured auto coverage was decided in 2006. This Texas Supreme Court case was Lilith Brainard, et al., v. Trinity Universal Insurance Company.

This case involved a head-on collision with a rig owned by a company called Premier. The ultimate decision in the case would have been the same regardless whether the accident occured in Dallas, Fort Worth, Arlington, Weatherford or anywhere else in Texas. Brainard was killed in the wreck. He had an underinsured policy with Trinity. Brainards’ widow and children made a claim for benefits from Trinity and also filed a lawsuit against Premier.

Trinity paid the $5,000 Personal Injury Protection benefits under the policy immediately but nothing on the underinsured portion of the policy. Brainard settled the claim against Premier for the policy limits of $1,000,000. Brainard then requested that Trinity pay its underinsured policy limts of $1,000,000. Trinity refused but did offer $50,000. Brainard proceeded to trial and got a judgment wherein the jury awarded damages of $1,010,000 in actual damages.

General Information About Insurance In Texas

October 22, 2009 | Mark S. Humphreys

All of the states in the United States have some State agency or board that oversees and regulates insurance activity in that State. In Texas, that agency is the Texas Department of Insurance.

Whenever a person has problems or concerns about the way they are being treated or the behavior of an insurance company or an insurance agent the best advice for that person is to talk with an Insurance Law Attorney. The web site for the Texas Department of Insurance is a good resource and a place to visit in order to learn a little bit of general information. Just keep in mind that visiting the web site is not a replacement for good legal advice.

The web site information is available in Spanish. So, if you have a Spanish speaking friend or relative who wants to seek information on their own they can still go to the Texas Department of Insurance web site. But then, speak with an Insurance Law Attorney who has personel who speak Spanish.