One of the most significant Texas cases discussing Texas Insurance Law as it relates to underinsured auto coverage was decided in 2006. This Texas Supreme Court case was Lilith Brainard, et al., v. Trinity Universal Insurance Company.
This case involved a head-on collision with a rig owned by a company called Premier. The ultimate decision in the case would have been the same regardless whether the accident occured in Dallas, Fort Worth, Arlington, Weatherford or anywhere else in Texas. Brainard was killed in the wreck. He had an underinsured policy with Trinity. Brainards’ widow and children made a claim for benefits from Trinity and also filed a lawsuit against Premier.
Trinity paid the $5,000 Personal Injury Protection benefits under the policy immediately but nothing on the underinsured portion of the policy. Brainard settled the claim against Premier for the policy limits of $1,000,000. Brainard then requested that Trinity pay its underinsured policy limts of $1,000,000. Trinity refused but did offer $50,000. Brainard proceeded to trial and got a judgment wherein the jury awarded damages of $1,010,000 in actual damages.
Since Trinity had not paid the money under the insurance contract, Brainard demanded that Trinity pay the remaining $5,000 in actual damages (they got a credit for the $5,000 of PIP previously paid and the $1,000,000 settlement from Premier), plus $100,000 in attorneys fees and interest on the entire $1,010,000.
The significance of this case is that the Supreme Court ruled that Trinity had not broken its insurance contract with Brainard and thus there was not a claim for attorneys fees. In explaining this the Court said that there was no obligation under the insurance contract to pay underinsured benefits until Brainard had won in Court. And that as long as Trinity paid the amounts awarded in court within thirty days of the judgment, there was not a breach of contract.
This case essentially took away, Breach of Contract claims for situations wherein an insured makes a claim against their insurance company for benefits and the benefits are denied. A lawsuit can be filed and the monies eventually recovered in the lawsuit but as long as the insurance company quickly pays, the amount they have to pay is limited.
There are other lessons to be learned from this case that are significant for an attorney when advising a client how to proceed against their insurance company. Only an experienced Insurance Law Attorney is going to understand these distinctions and be able to properly advise a client.