Insurance transactions tend to resemble one another, so disputes arising from them tend to resemble one another. There are only so many ways that an insurance company and an insured can get crossways. Most cases present recurring problems that can be grouped into several categories. Insurance law is even more precedent driven than other areas, as courts try to construe similar policy language consistently. It is not surprising that cases start to look alike.
The key is find good authorities that match your facts, or to emphasize the facts that match good authorities.
Of course, the starting point is the contract itself. The initial inquiry almost always begins with the language of the contract to determine what is covered and what is not. Other tort and statutory theories may logically depend on the existence of coverage, or may exist independent of coverage. The interplay between recovery for breach of contract and recovery under other theories is discussed in numerous areas in this blog. Beyond suit for breach of contract, most insurance cases can be grouped into these categories – misrepresentations – non-disclosures – unfair settlement practices – and other misconduct.
One of the most common basis for an insurance dispute is the complaint that someone misrepresented something. After a claim arises, the insured may feel that the coverage accepted by the insurer is less that the coverage promised at the time of sale. Depending on the facts of the case, a representation by the insurance company or its agent may lead to liability for breach of contract, unfair insurance practices, deceptive trade practices, negligence, or fraud.
Here is an example – An insurance company has an indemnity cause of action against one of its own agents if the agent’s conduct results in vicarious liability for the insurance company, which was the ruling in the 2003, 14th District opinion, Vecellio Insurance Agency, Inc. v. Vanguard Underwriters Insurance Co. Further, an agent may be held liable for misrepresentation in the case of a bailee liability policy even where the insured failed to read the coverage, where the jury could find the insurer and the agent misrepresented the extent of coverage under the policy, as was the case in the 2002, 14th District opinion, Omni Metals, Inc. v. Poe & Brown of Texas, Inc.
It should be noted that when insurance benefits are received under an employee benefit plan, common law claims for misrepresentation are exempted by the federal statute known as ERISA. This is found in 29 U.S.C., Section 1144(a) and the 2002, Northern District opinion, Erwin v. Texas Health Choice, L.C. Pursuant to Section 1132(a), remedies under ERISA are limited to recovery of benefits, clarification of future rights to benefits as well as attorney’s fees, costs and, on rare occasion, equitable relief. Additional common law remedies such as punitive damages or statutory relief such as the provision for treble damages for certain types of violations found in the Texas DTPA are unavailable.