Dallas Fort Worth Insurance Lawyer Blog

Insurance Policy – Statute Of Limitations

August 14, 2018 | Mark S. Humphreys

Knowing the statute of limitations on a case is vital. This is illustrated in a 2018, Southern District of Texas, Houston Division opinion styled, Lillian Smith v. Travelers Casualty Insurance Company of America.

Smith sued Travelers for violations of the Texas Deceptive Trade Practices Act (DTPS), Texas Insurance Code violations, and breach of contract. Travelers filed a motion for summary judgment based on the statute of limitations.

The allegations in the case are that a lightening strike caused damage to Smith’s home and air conditioner. The claim was reported on September 5, 2013, and acknowledged on September 7, 2013. An investigation was conducted in September and October of 2013. Travelers issued a denial letter on November 13, 2013.

Life Insurance And ERISA Ruling

August 12, 2018 | Mark S. Humphreys

Here is a case from the United States 7th Circuit that deals with life insurance when the policy is an Employee Retirement Income Security Act (ERISA) policy. The case is styled, Emma Cehovic-Dixneuf v. Lisa Wong.

Pursuant to 29 U.S.C., Section 1104(a)(1)(D), ERISA requires administrators of employee benefit plans to comply with documents that control the plans. In the case of life insurance policies, that means death benefits are paid to the beneficiary designated in the policy, notwithstanding equitable arguments or claims that others might assert.

In this case, the employee, Georges Cehovic, had two life insurance policies through his employer and the policies named his sister Emma as the sole and primary beneficiary. When Georges died, his ex-wife, Wong, claimed that she and the child she had with Georges were entitled to the policy benefits.

Insurance And Subrogation Issues

August 11, 2018 | Mark S. Humphreys

The United States Southern District of Texas, Houston Division, issued an opinion on July 3, 2018, that is not usually relevant to most claims but in case a situation arises where it is relevant, it is good to know. The opinion is styled, Zurich American Insurance Company a/s/o Precision Castparts Corp. v. Rajwant Kaur d/b/a Lifetime Cargo, et al.

This case is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction. The motion was denied.

Precision Castparts (PCC) manufactures structural castings and forged components and owned a Behringer HBM-540A automatic horizontal bandsaw machine used in its business.

Notice To Insurance Company Is Required

August 9, 2018 | Mark S. Humphreys

Texas law requires pre-suit notice in many situations. The Texas Insurance Code requires pre-suit notice before certain homeowners claims can be litigated. An example of this is found in the 2018 opinion, Dwight Davis v. Allstate Fire and Casualty Insurance Company. The opinion is from the Eastern District of Texas, Sherman Division.

Davis filed a first party lawsuit against Allstate. Allstate filed a Verified Motion to Abate Pursuant to Texas Insurance Code, Section 542A.103.

The purpose of the notice requirement is to discourage litigation and encourage settlements. The statute reads in part:

Insurance Company Failure To Effectuate A Prompt, Fair, And Equitable Settlement

August 7, 2018 | Mark S. Humphreys

The United States District Court, Eastern District, Marshall Division, issued an opinion on June 27, 2018, that discusses the law regarding the above title. The opinion is styled, Medallion Transport & Logistics, LLC v. AIG Claims, Inc., Granite State Insurance Co., and Jay Carman.

The facts of the case will not be discussed here but can be read in the opinion. It deals with the refusal of an insurer to pay a Stowers demand. The opinion is a good read for it’s discussion of Texas Insurance Code, Section 541.060(a). The allegation was that the defendants in the case failed to effectuate a prompt, fair, and equitable settlement of a claim for which the insurer’s liability had become reasonably clear. Also, part of the claim dealt with Texas Insurance Code, Section 541.060(a)(7) wherein the defendants were accused of refusing to pay a claim without conducting a reasonable investigation of the claim.

The Texas Supreme Court has held that liability under the language of Section 541.060(a)(2)(A) requires the insured the show “that (1) the policy covers the claim, (2) the insured’s liability is reasonably clear, (3) the claimant has made a proper settlement demand within policy limits, and (4) the demand’s terms are such that an ordinary prudent insurer would accept it.” Unlike a Stowers claim, the statute requires a bad-faith component. The statute defines the foregoing failure to act in good faith as an unfair or deceptive act. That means in the context of resisting a “no evidence” motion for summary judgment, the plaintiff must show some evidence that the insurer had no reasonable basis for denying or delaying payment or settlement of a claim.

Insurable Interest Issues In Life Insurance

August 5, 2018 | Mark S. Humphreys

Who has an insurable interest in a life insurance policy?

The Texas Supreme Court, in 1979, in the case styled, Empire Life Insurance Co. v. Moody, held that a tenant holding property or an estate during the life of another has an insurable interest in the latter’s life.

Is an insurable interest essential to the validity of the life insurance contract?

Life Insurance And Corporate Beneficiaries

August 4, 2018 | Mark S. Humphreys

Life insurance lawyers can tell you that sometimes a corporation can be a beneficiary to a life insurance policy. The key word here is “sometimes” because it does not mean a corporation can always be a beneficiary of a life insurance policy.

Corporations may name themselves beneficiaries of policies they buy on the lives of their important officers, directors, and stockholders, but that insurable interest does not survive the relationship that created it, and if the relationship has been terminated or the business entity no longer exists, the proceeds go to the insured’s estate. This is discussed in a 1942, Texas Supreme Court opinion styled, McBride v. Clayton and the 1998, Tyler Court of Appeals opinion styled, Stillwater v. Travelers Insurance Company. Historically, this type of insurance has been called “key man” coverage, because the business has an economic interest in those officers, directors, and shareholders that are “key” to the operation of the business.

A corporation does not have an insurable interest in all its officers and employees, as stated in the McBride and Stillwagoner opinions, only those of “extensive experience and skill on whom the corporation depended for its continued success.”

What IS An Example Of An Insurable Interest?

August 2, 2018 | Mark S. Humphreys

A 1938, opinion from the Amarillo Court of Appeals helps answer the above question. The case is styled, Smith v. Metropolitan Life Ins. Co. et al.

This lawsuit is a contest over the proceeds of a life insurance policy in the sum of $500 issued upon the life of John Wesley Smith by Metropolitan. At the time the policy was issued the insured was an employee of Southern Pacific Railway Company, but prior to his death, he had been retired by the railway company and collecting a $40 a month pension.

The record reveals that in June, 1927, the insured was married to Jessie Smith, who was plaintiff in the trial court. Long prior to the issuance of the policy the insured had ceased to live with the Smith, although they were never divorced. The policy was originally payable to Emaline Bell and Ella White, who were shown by the record to be the nieces of the insured. In March, 1936, the insured designated his niece, Ella White, as the sole beneficiary in the policy, such designation having been authorized by the terms of the policy. The contest over the proceeds of the policy was therefore between the Smith, and Ella White joined by her husband, Rolly White. The insurance company acknowledged its liability upon the policy, paid the $500 into the registry of the court and was therefore discharged with $50 attorney’s fee allowed it as a stakeholder in the controversy. The trial court rendered judgment for the White, from which judgment Jessie Smith appealed.

Life Insurance Where the Beneficiary No Longer Has Insurable Interest

July 31, 2018 | Mark S. Humphreys

What happens when a beneficiary has an insurable interest when the life insurance policy is obtained but later on, that insurable interest no longer exists? That question is answered in an 1894, opinion from the Texas Supreme Court styled, Cheeves v. Anders.

Anders was the Administrator of the Estate of the deceased, L.B. Chilton. Chilton and Cheeves were business partners and Chilton took out the life insurance policy for the benefit of Cheeves due to this partnership interest. Later the partnership was dissolved whereby Chilton sold his interest in the partnership to Cheeves. The partnership had paid for the life insurance policy.

This Court started its opinion by stating the law in this State. “It is against the public policy of this state to allow any one who has no insurable interest to be the owner of a policy of insurance upon the life of a human being.”

Insurable Interest And Employer

July 29, 2018 | Mark S. Humphreys

When an employer takes out life insurance on an employee and names itself (the employer) as the beneficiary, it there an insurable interest. Each case needs to be looked at on its on merits.

A 1998, Tyler Court of Appeals is good case to read. It is styled, Stillwagoner v. Travelers Insurance Company.

The decedent’s employer procured a policy upon the lives of its employees without their knowledge, and named itself the beneficiary. The case presents the question of whether the employer had an insurable interest in the life of the decedent, and who is entitled to raise the issue of lack of insurable interest. Decedents surviving spouse and children contend that Travelers should have paid the $200,000 death benefit to the decedent’s estate, because her employer, Advantage Medical Services, Inc., had no insurable interest in the decedent’s life. Travelers insists that the beneficiary’s lack of an insurable interest is an issue that can only be raised by the insurance company, and that, in any event, the proceeds were properly paid to the employer because the employer had an insurable interest in the life of its employee.