Dallas Fort Worth Insurance Lawyer Blog

The United States Court of Appeals for the Fifth Circuit has upheld a decision from the Northern District of Texas wherein the District Court Judge upheld a claim denied by National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The stated reason for denial was that the circumstances of death did not fall within the policy’s coverage.

The claimant Mary McMurray and her husband went on a honeymoon cruise with Oceania Cruises. The cruise was paid for by Joe McMurray by using his Platinum Select Citibank Mastercard, which included a $1,000,000 accidental death or dismemberment insurance policy Issued by National Union. As the spouse of Joe, Mary McMurray was eligible for benefits. Among the types of hazards covered by the insurance policy was coverage if the insured person (Joe) was injured or killed while “riding as a passenger in or on (including getting in or out of, or on or off of) any Common Carrier.” The policy defined “common carrier” as “any licensed land, water or air conveyance operated by those whose occupation or business is the transportation of persons for hire.” “Passenger” was defined as “a person not performing as a pilot, operator or crew member of a conveyance.”

Like lots of cruise ship passengers, the McMurrays went on other excursions while on the cruise and purchased a separate whitewater rafting excursion operated by a separate entity. The excursion was charged to the McMurrays’ cruise account and became an additional charge on the Citibank Mastercard. While on the rafting trip, Joe McMurray was thrown from the raft and drowned. National Union denied the claim stating the raft was not a common carrier and the McMurrays were not passengers under the policy while on the raft.

National Union filed what is called a “declaratory judgment action” with the court asking the court to agree with their decision that there was no coverage and declare such by court action.

The court spent time discussing the plain ordinary meaning of the terms “common carrier” and “passenger” and how Texas defined these terms. The court decided that the rafting company was not a “common carrier” as that term is defined and thus no coverage. This was in spite of the McMurray argument that carrying a person from one place to another for hire is transportation and what a common carrier does and that was exactly what was occurring in the raft trip. While the court agreed that the rafting was involved in transportation, transportation was not its primary function. Its primary function was entertaining rafting participants and that transportation was incidental to the primary purpose.

It is unknown whether this ruling in favor of the insurance company will be appealed but it does serve as an example of how some fights arise in the context of trying to recover benefits under insurance policies. Keep in mind that in Texas and most other states the courts are suppose to find in favor of coverage whenever possible. In other words if there is a way to interpret an insurance policy such that the policy should provide benefits, the courts are suppose to interpret the policy in such a way as to allow the benefits.
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Insurance companies are notorious for delaying payment and dragging a claim out and the result being that many people get frustrated and give up or walk away. What the person who was wronged by the insurance company does to “get back” is change insurance companies.

Insurance companies are highly regulated and have lots of rules they have to operate under. What is important to remember is that the rules are designed to make sure they are not taking advantage of you.

It is hard to know the rules as can be seen by reading the ones above and noting that they refer you to more rules and if you go to those rules you are referred further. Beyond that, you still have to know how the rules apply to different situations and how the courts have interpreted the rules.

If you listen or watch the news much, especially around election time you would think that the only thing insurance companies ever do is pay claims. And not only do they pay claims, but they pay nothing but frivolous claims. And of course that is why your insurance rates are so high and why the above title would be a headline.

Politicians scream loud about the need for tort reform and about how there are too many lawsuits and too many people looking for a free ride. This is especially true in a Texas where there is a very conservative political environment. This is an issue that helps get a lot of politicians elected. George Bush was always invoking the evils of “trial lawyers”.

So based on the above you would think it is unusual for an insurance company to actually deny a claim and that the companies only exist to pay people unwarranted claims. This thought is far from reality.