Dallas Fort Worth Insurance Lawyer Blog

Pipe Burst – Covered?

May 3, 2021 | Mark S. Humphreys

Insurance policy language and the Facts of a situation have to be read together to determine whether or not coverage applies to a claim.

Here is a 2021, opinion from the Southern District of Texas, Houston Division, that originates from a claimed pipe burst and the insurance company denial of the claim. The opinion is styled Lee & Charletha Henry v. Allstate Vehicle and Property Insurance Company.

The Henry’s had a homeowners insurance policy with Allstate. The Henry’s claim a pipe burst on the second-floor bathroom, causing damage to the first-floor kitchen area. Allstate denied the claim asserting the policy does not cover the claimed damage because the damage to the kitchen wall and the interior does not appear to be sudden and accidental but the result of ongoing water intrusion from the expansion joint. The Henry’s sued for breach of contract and various violations of the Texas Insurance Code, Prompt Payment of Claims Act, and the Texas Deceptive Trade Practices Act.

Insurance Law And Summary Judgment

May 1, 2021 | Mark S. Humphreys

Insurance attorneys understand that when a claim gets denied that the majority of the time, the insured will either walk away or will hire an attorney to fight the claim denial. When the claim is denied and an attorney is hired, the case is going to end up a lawsuit. One weapon used by insurance companies in litigation is to litigate the case up to a point and then file a motion for summary judgement.

Understanding how the courts view motions for summary judgment is vital to being able to prepare for and handle these situations. The motion for summary judgment standard is briefly discussed in a case from the Northern District of Texas, Wichita Falls Division. The case is styled, Great Lakes Insurance SE v. Horton Family Trust, LLC.

The facts of this case can be read in the opinion. The focus here is the way the courts look at motions for summary judgment.

– Prompt Payment Of Claims Act –

April 26, 2021 | Mark S. Humphreys

Insurance attorneys need to be know this 2021, opinion from the Texas Supreme Court. It is styled, Louis Hinojos v. State Farm Lloyds and Paul Pulido.

The Texas Prompt Payment of Claims Act, codified in Insurance Code Chapter 542, imposes deadlines on insurers to pay valid claims. If an insurer fails to comply with Chapter 542, then it is liable for statutory interest on the amount of the claim and attorney’s fees. The insurer in this case accepted a homeowner’s claim and paid part of it before the statutory deadline.

Dissatisfied with that amount, the homeowner sued, seeking full payment of the claim plus interest and attorney’s fees under Chapter 542. While suit was pending—and after the statutory deadline for payment had passed—the insurer invoked the policy’s appraisal process. The appraisers awarded the homeowner substantially more than the amount the insurer had paid.

Insurance Lawsuits

April 24, 2021 | Mark S. Humphreys

Denied insurance claims can vary greatly in value. Factors that figure into the value of the claim include, 1) the base amount of the claim, 2) exemplary damages, 3) Prompt Payment of Claims damages, and 4) attorney fees.

The goal of insurance companies is to litigate cases in Federal Court, while attorneys representing insured would rather litigate case in the State or County Courts.

There are two main issues the Courts look to for deciding whether a case which is removed to a Federal Court by an insurance company gets to be litigated in Federal Court or whether the case gets remanded to the State or County Court.

Cancellation Of Insurance Policy – Claim Denial

April 19, 2021 | Mark S. Humphreys

Many times an insurance lawyer is approached by someone who has a claim denied due to the insurance company assertion that the policy has been cancelled. In this regard, understanding the reasons for cancellation are important.

“Cancellation” refers to the insurance company’s termination of coverage before the end of the policy period. A cancellation is in contrast to a non-renewal, which involves an insurer’s unwillingness to reissue the policy following the completion of the policy term of coverage.

As seen in the 1994, opinion from the Waco Court of Appeals opinion, Truck Ins. Exch. v. E.H. Martin, Inc., insurance policies often contain provisions regarding cancellation. In E. H. Martin, the insurer complied with its own policy provision regarding cancellation when it cancelled the policy for nonpayment of premiums. Specific provisions for cancellation of coverage must be precisely followed by the insurer and will be strictly construed by courts. This is seen in numerous cases, including, the 1993, Texarkana Court of Appeals opinion, Cruz v. Liberty Mut. Ins. Co. and the 2001, Corpus Christi Court of Appeals opinion, Jones v. Ray Ins. Agency.

Reading And Understanding An Insurance Policy

April 17, 2021 | Mark S. Humphreys

Life insurance lawyers, disability lawyers, auto policy lawyers, homeowners policy lawyers, and any other type of insurance lawyer needs to be able to read an insurance policy and know how the Courts interpret policies.

A principle that has particular impact is the rule that insurance policies are strictly construed in favor of the insured to avoid excluding coverage. This is stated in the 1984, Texas Supreme Court opinion styled, Puckett v. U.S. Fire Ins. Co. Exceptions or limitations on liability are strictly construed against the insurer and liberally in favor of the insured. This is illustrated in numerous cases from the Texas Supreme Court – 1) the 1991, opinion, National Union Fire Ins. Co. v. Hudson Energy Co., 2) the 1987, opinion, Barnett v. Aetna Life Ins. Co., 3) the 1982, opinion, Blaylock v. American Guar. Bank Liab. Ins. Co., 4) the 1977, opinion, Glover v. National Ins. Underwriters, and 5) the 1896, opinion, Brown v. Palatine Ins. Co.

Stated another way, “An intent to exclude coverage must be expressed in clear and unambiguous language” according to the 1993, opinion styled, State Farm Fire & Cas. Co. v. Reed.

How Are Insurance Contracts Interpreted

April 12, 2021 | Mark S. Humphreys

Insurance lawyers need to know how insurance contracts are interpreted by the Courts.

The 1984, Texas Supreme Court opinion styled, Puckett v. U.S. Fire Ins. Co., says that the rule for insurance policies is that they are strictly construed in favor of the insured to avoid excluding coverage. Exceptions or limitations on liability are strictly construed against the insurer and liberally in favor or the insured. This is made clear in the 1991, Texas Supreme Court opinion, National Union Fire Ins. Co. v. Hudson Energy Co., and in the 1987, Texas Supreme Court opinion styled, Barnett v. Aetna Life Ins. Co., and the 1987, Texas Supreme Court opinion styled, Blaylock v. American Guar. Bank Liab. Ins. Co., and the 1977, Texas Supreme Court opinion styled, Glover v. National Ins. Underwriters, and as far back as the 1896, Texas Supreme Court opinion styled, Brown v. Palatine Ins. Co.

Stated another way in the 1993, Texas Supreme Court opinion styled, State Farm Fire & Cas. Co. v. Reed, “an intent to exclude coverage must be expressed in clear and unambiguous language.”

Ambiguity In Insurance Contracts

April 10, 2021 | Mark S. Humphreys

Bad faith insurance lawyers always want to see the policy a potential client has when a claim is denied. The words in the policy compared with the facts of the case will often determine whether or not the attorney can be helpful.

When a policy has words or wording that is difficult to understand, then the rules of “ambiguity” apply.

These rules apply to ambiguities in insurance policies:

Prompt Payment Of Claims Act – Court Interptetation

April 5, 2021 | Mark S. Humphreys

When an insurance company delays in paying a claim, there is likely a violation of the Texas Prompt Payment of Claims Act. As a result it is important to have a good understanding of how the Prompt Payment of Claims Act is interpreted by the Courts.

The statute, at Section 542.054, provides that “This subchapter shall be liberally construed to promote the prompt payment of insurance claims.” This purpose is re-inforced in case law supporting this goal including, Dunn v. Southern Farm Bur. Cas. Ins. Co., a 1999, Tyler Court of Appeals opinion. And it is supported in the 1997, Texarkana Court of Appeals opinion, Bekins Moving & Storage Co. v. Williams. The Federal Courts follow this purpose as is illustrated in the 1997, Eastern District of Texas opinion, Teate v. Mutual Life Ins. Co. of New York.

The meaning of “liberal construction” has been applied expansively under other consumer statutes. This was seen in the 1981, Texas Supreme Court opinion, Cameron v. Terrell & Garrett, Inc., wherein the court said that a liberal construction mandates that court give statute most comprehensive application possible without doing violence to the statute’s terms.

Life Insurance – ERISA – Part 3

April 3, 2021 | Mark S. Humphreys

Repeating what was stated in the post immediate to this one, “It is important to understand how difficult claims that are governed by the Employee Retirement Income Security Act (ERISA) can be. The law in this area of law is very tough for claimants.” This is illustrated again in a December 2020, opinion styled, Erica Talasek v. Unum Life Insurance Company of America, et al. The opinion is from the Southern District of Texas, Houston Division.

The insured, Ben Talasek, had life insurance through a Plan his employer, NOV, offered. NOV delegated authority and discretion to UNUM to handle claims and made benefit determinations.

Ben was covered by basic life insurance coverage and Ben also enrolled in a voluntary supplemental plan during November 2013. Unlike the basic life insurance, which did not require medical underwriting, the supplemental life insurance required an employee to submit evidence of insurability and obtain approval for coverage by Unum. On January 18, 2014, Unum sent Ben a letter informing him of an error in his application and the need for additional information. Around this time, Ben was diagnosed with pancreatic cancer. Ben called Unum on January 21, 2014 to check on the status of his application and was told about the January 18 letter. Ben corrected the error on the Evidence of Insurability Form and supplied additional information. Ben called Unum again on February 12, 2014 to check on the status of the application and was told that the standard turnaround time for a coverage decision was 4-6 weeks. On March 3, 2014,several weeks after receiving his cancer diagnosis, Ben provided blood and urine samples and basic health history as part of Unum’s requirement that he prove insurability prior to approval of coverage. He did not mention the cancer diagnosis.