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.