Bad Faith Insurance

Delay In Paying Claim In Texas

November 16, 2010 | Mark S. Humphreys

Someone in Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, Mesquite, Garland, Plano, Weatherford, or anywhere else in Texas, may experience a delay in being paid when making a claim against their insurance company. Is that ok? The answer is no, according to the Texas Prompt Payment of Claims Act.

The Texas Supreme Court decided a case in 2004, wherein the topic had to do with how the Texas Prompt Payment of Claims Act impacted the decision in the case. The style of the case is, Republic Underwriters Insurance Company v. Mex-Tex, Inc. The court phrased the issue this way: We must decide whether the commercial property insurer in this case breached its policy obligation to replace a damaged roof with one of “like kind and quality”, and if so, whether the insurer’s tender of partial payment of the claim avoided, on that amount, the 18% per annum delay penalty imposed by the Prompt Payment of Claims Act of the Texas Insurance Code.

Following a May 25, 1999 hail storm in Amarillo declared by the Texas Department of Insurance to be a weather-related “catastrophe for the purposes of claims processing”, Mex-Tex, Inc. notified its property insurer, Republic Underwriters Insurance Co., of damage to the roof of Signature Mall, a retail shopping center that Mex-Tex owned. Mex-Tex claimed that the roof had been destroyed and should be replaced. Republic immediately investigated the claim but disputed the amount of damage attibutable to hail.

Cancellation Of Insurance Policy

September 28, 2010 | Mark S. Humphreys

Insured persons in Grand Prairie, Frisco, Arlington, Aledo, Fort Worth, Dallas, Mesquite, Garland, and other places in the state may be adversely affected when an insurance company cancels a policy. If no claim is being made, or in the process of being made, then it may be a case of “no harm, no foul.” But what if the cancellation is first brought up when a claim is made?

This is what happened in a 2001, case styled, Lois Jones v. Ray Insurance Gency a/k/a Azteca Insurance and / or Alamo Insurance, and Collision Clinic, Inc., State & County Mutual Fire Insurance Company and Harbor Insurance Managers. This is a Corpus Christi, Court of Appeals case that was affirmed in 2002 by the Texas Supreme Court.

Here are the facts:

Insurance Refusing To Pay In A Car Wreck

August 28, 2010 | Mark S. Humphreys

It will probably happen to most people at one time or another. Including residents of Dallas, Arlington, Grand Prairie, Mansfield, Burleson, Crowley, De Soto, Mesquite, Weatherford, and lots of other towns and cities in North Texas. An insurance company will refuse a reasonable offer from you or your attorney to settle a claim you have against the insured of an insurance company. If it happens – what can be done?

This article will focus on one aspect of the above. That aspect is when a third party claimant has his demand for a settlement refused by the other person’s insurance company. This happens in lots of scenarios but the most common is a car wreck. The most common situation is where the third party causes a wreck wherein the claimant has damages that exceed the insurance policy limits of the third party who caused the damages. Example – The third party has insurance coverage for the state’s required minimum as of this date, $25,000. The person injured has medical bills exceeding $40,000 plus another $10,000 in lost wages, plus he is entitled to compensation for his impairment, and pain and suffering.

Next, the injured person through his attorney demands that the insurance company for the person who caused the wreck to pay $120,000 to settle the claim or policy limits, which ever is less. The insurance company refuses to pay. The injured person sues the person who caused the wreck and gets a judgment for $120,000. The insurance pays only the $25,000 that they insured and now the injured person has a judgment against the responsible person for the balance. Of course, most of the time the only money this person has is the money he is insured for.

Homeowners And Settlements

July 25, 2010 | Mark S. Humphreys

Homeowners in the Dallas, Fort Worth, Grand Prairie, Arlington, and Metroplex areas are not as affected by what appears to be a mass settlement for homeowners in the Gulf Coast area of Texas. But it is still a victory, and a victory for one should be considered a victory for all when the insurance company finally does the right thing by accepting responsibility for the homeowners policies it issues.

The Beaumont Enterprise, a newspaper published in Beaumont, Texas, recently ran an article disussing the above topic. The article is written by Mike D. Smith and was published on July 13, 2010. The title of the article is, Mass settlement offered in Ike windstorm cases.

The article tells how the wait could be over for countless Bolivar Peninsula property owners locked in a group stalemate with the Texas Windstorm Insurance Association over Hurricane Ike damages.

Homeowners Insurance – Insurer At It Again

July 17, 2010 | Mark S. Humphreys

No matter where you live – Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, De Soto, Duncanville, or anywhere else in Texas, you have to keep your eye on insurance companies. If you don’t, they will cheat and try to get away with doing people wrong.

A few weeks ago on this blog there was an article talking about the Texas Windstorm Insurance Association. Well, they are back in the news.

One of our favorite reporters, Purva Patel, with the Houston Chronicle, did a follow up story on the Texas Windstorm Insurance Association. This article was published on July 7, 2010, and is titled, “State criticizes windstorm insurer.” Purva Patel has had a number of articles describing wrongs committed by insurance companies. In the article published on July 7, about the Texas Windstorm Insurance Association, he writes about poor record keeping procedures that Texas Winstorm evidently does not have. Of course, this is wrong. The Texas Insurance Code, Section 542.005(b), says:

Compaints Against Insurance Companies In Texas

June 23, 2010 | Mark S. Humphreys

What can someone in Grand Prairie, Arlington, Mansfield, Bedford, Hurst, Euless, De Soto, Duncanville, Fort Worth, or anywhere else in Texas do when they are being “jerked around” by an insurance company? Answer number one – Find an experienced Insurance Law Attorney to consult with. Answer number two – file a complaint.

Seeking the aid of an experienced Insurance Law Attorney is sometimes hard to do. There are a lot of attorneys that help victims of accidents. These attorneys are usually referred to as Personal Injury Attorneys. These types of claims are called third party claims. The other type of claim is called a first party claim. This is a claim against your own insurance company. There are not that many attorneys that have experience in handling these types of claims. These attorneys are usually referred to as Insurance Law Attorneys.

The majority of the time an attorney is going to be able to get you the money you are entitled to plus more depending on how wrong the conduct of the insurance company has been in handling the claim. Consultations are usually free and there is nothing to lose by having an attorney look at your situation.

Insurance Company Denying Or Refusing Claim

June 22, 2010 | Mark S. Humphreys

It would be fair to say that most residents of Grand Prairie, Arlington, Mansfield, Coppell, De Soto, Duncanville, Fort Worth, Weatherford, and all other places in Texas, are responsible and conduct themselves in fair and proper ways in their dealings with others. Unfortunately that is not the way insurance companies always conduct their affairs.

The Dallas Morning News recently ran an article showing misconduct by two insurance companies doing business in Texas. The article is titled, “2 Texas auto insurers top complaints list, face investigation.” This article ran on June 5, 2010, and was authored by Terrence Stutz. Almost any experienced Insurance Law Attorney could tell you the names of the insurance companies that treat people right most of the time and the ones that treat people wrong most of the time. Further, even the “good” companies will do people wrong too many times.

In the article, Terrence Stutz gives some examples that are typical problems with the two companies named. The insurance companies are Loya Insurance and Old American County Mutual. These two companies were at the top of the list after an analysis of the Texas Department of Insurance figures showed that 10 of the 25 largest auto insurers in the state had worse than average customer service records. The above companies were at the top of the list.

No Coverage? Bad Faith?

June 20, 2010 | Mark S. Humphreys

What if you live in Grand Prairie, Arlington, Mansfield, Weatherford, Fort Worth, or anywhere else in Texas and you do not have the insurance coverage you think you have? Can the insurance company still be liable for bad faith?

Different courts have said that because the absence of coverage provides a reasonable basis to deny the claim, the general rule is that the absence of coverage also negates liability for breach of the duty of good faith and fair dealing. This was stated by the Texas Supreme Court in 1995, in the case, Republic Insurance Company v. Stoker, and again in 1996, by the Texas Appeals Court in Houston [1st Dist.], in the case, North American Shipbuilding, Inc. v. Southern Marine & Aviation Underwriting, Inc.

But there are other important rulings where the courts have stated that the absence of coverage, does not necessarily excuse the insurance companies failure to investigate. This raises the possibility that an insurance company may be liable for breach of its duty of good faith and fair dealing, even though the claim is not covered. In the case, First Texas Savings Association v. Reliance Insurance Company, a 1992 case, decided by the Federal 5th Circuit Court of Appeals, the court remanded the case to the trial court to determine whether the duty had been breached, even though the court found no coverage. Later cases have continued to recognize the possibility of bad faith liability without coverage. One was another 5th Circuit case, Burditt v. West American Insurance Company, decided in 1996. Another was Jimenez v. State Farm Lloyds, a 1997 case decided by the Federal Court in the Western District of Texas.

Current Standard Of Good Faith And Fair Dealing In Texas

June 19, 2010 | Mark S. Humphreys

An earlier question on this blog was, How does someone in Grand Prairie, Dallas, Fort Worth, Arlington, Keller, Azle, Coppell, Sasche, Bedford, or anywhere else in Texas know if they are experiencing conduct of bad faith by their insurance company? Let’s look at the current standard for judging this issue.

In 1997, the Texas Supreme Court, issued an opinion in the case, The Universal Life Insurance Company, AIA Services Corporation, and AIA Insurance, Inc. v. Ida M. Giles. In this case the court adopted as the liability standard the statutory language in Article 21.21, Section 4(10) of the Texas Insurance Code. (The current version is Texas Insurance Code, Section 541.060(a)(2)(A)). Under that standard, an insurance company breaches its duty of good faith and fair dealing by “failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear.”

This statutory standard adopted in the Giles case takes the place of the common-law standard for unreasonable denying a claim or unreasonably delaying payment. The court’s analysis in the Giles case also supports adopting the statutory standard for failing to conduct a reasonable investigation. That standard is found in the Texas Insurance Code, Section 541.060(a)(7), which prohibits “refusing to pay a claim without conducting a reasonable investigation with respect to the claim.”

History Of Duty Of Good Faith And Fair Dealing In Texas

June 17, 2010 | Mark S. Humphreys

How does someone in Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, Keller, Azle, Coppell, Sasche, Bedford, or anywhere else in Texas know when the insurance company is acting in “bad faith”? The answer is not easy, but to understand, it helps to know the history a little.

When reviewing the theory of the duty of good faith and fair dealing, understanding the history aids in understanding its current form. But first, when in a situation where you suspect something “ain’t right”, you should consult an experienced Insurance Law Attorney. Even experienced attorneys will argue over this theory and how it applies to the facts of a particular situation.

The Texas Supreme Court, in 1983, in the case, English v. Fischer, is where the development of the common-law duty of good faith and fair dealing in Texas began. There, the plaintiff’s asked the court to recognize an implied covenant, or promise, of good faith and fair dealing that would require the insurance policy proceeds to be paid contrary to the terms of the contract. The court declined. But, the justices on the court pointed out that in other circumstances a duty of good faith and fair dealing arises from a special relationship between the parties. Insurance was one area where such a duty had been recognized.