Policy Cancellation And Bad Faith

Weatherford attorneys who do insurance cases have to be able to draw the distinction between a case where an insurance company has treated one of its insureds wrong and when it has not, in order to be able to discuss the case appropriately with the client.
Here are two examples for consideration.
The El Paso Court of Appeals issued an opinion in a 1996, that is helpful. The case is styled, Columbia Universal Life Insurance Company v. Miles.
In this case, Universal Life attempted to cancel a health policy after learning that the insured failed to disclose IGA immune deficiency and agammaglobulinemia on his application for coverage. Universal Life did not act in bad faith because:
(1) it had sufficient evidence to satisfy the elements of the misrepresentation defense, in that medical records revealed that for years before applying for the insurance at issue, the insured had suffered from the conditions and had received extensive treatment;
(2) its decision was based on a great deal of data obtained after extensive investigation; and
(3) if Universal Life had contacted the insured or the agent, it would have discovered nothing that called into question the evidence upon which it ultimately relied.
The next example also comes from the El Paso Court of Appeals. It is a 1992, case styled, Hopkins v. Highlands Insurance Company. At the trial level, summary judgment had been granted in favor of Highlands. Hopkins appealed and this appeals court ruled against Highlands.
Highlands had cancelled a truck driver’s liability insurance covering losses resulting from accidents involving trucks owed and operated by his employer. In support of its decision, Highlands cited the insured’s driving record. With regard to the first element of the test applicable to this case, the court noted that the insured only had three traffic tickets in the preceding three years and that each was issued before the policy was issued. Thus, Highlands did not establish as a matter of law that there was a reasonable, objective basis for canceling the coverage based on the application of its own internal guidelines. Regarding the second element, the court found that Highlands should have known that the insured’s exclusion from policy coverage was contrary to its own guidelines.
There are many situations and cases in Texas legal jurisprudence that helps an experienced Insurance Law Attorney to examine whether or not any given situation is one wherein he can help a prospective client.

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