Bad Faith Insurance

Texas Underinsured Motorist Case

March 18, 2010 | Mark S. Humphreys

Grand Prairie policy holders, Arlington, Fort Worth, Weatherford, or anybody else in Texas who has a policy with underinsured motorist coverage (UIM) should be aware of a recent case decided in Texas.

The case is Mid-Century Insurance Company of Texas v. Synthia McClain. This case was an appeal from the 42nd District Court in Taylor County, Texas. The appeal was heard by the Eleventh Court of Appeals and an opinion was issued on March 11, 2010.

The facts are pretty simple. Synthia was injured in a wreck caused by Becky Morey. Becky had insurance which paid to Synthia the policy limits of $20,100. Synthia, then made a claim against her own insurance company, Mid-Century Insurance Company of Texas (Mid-Century), for UIM benefits. Synthia’s policy with Mid-Century provided UIM benefits of $20,000. Mid-Century had already paid the personal injury payments limits of $2,500 and Mid-Century made an offer of $1,500 additional money. Synthia then filed this lawsuit to recover the full measure of her damages.

Texas Case With Lots Of Insurance Law

March 11, 2010 | Mark S. Humphreys

Grand Prairie residents beware; Weatherford residents beware; Arlington, Mansfield, Dallas, Fort Worth residents beware. Here is a case that makes you angry at the insurance company when you get into the details of how this person was treated by her insurance company and those associated with them.

The case is kinda old, decided in 2001. The style of the case is long, Lois Jones v. Ray Insurance Agency a/k/a Azteca Insurance and / or Alamo Insurance, and Collision Clinic, Inc., State & County Mutual Fire Insurance Company and Harbor Insurance Managers. It was decided by the Court of Appeals of Texas, Corpus Christi.

The facts of the case are long, but not really complicated. Lois Jones purchased a new 1998 Pontiac and purchased a State & County Mutual Fire Insurance Company insurance policy (State & County). This policy was purchased from the agent, Ray Insurance Agency a/k/a Azteca Insurance and / or Alamo Insurance (Ray). The policy administrator was Harbor Insurance Managers (Harbor). When purchasing the policy, Jones informed the agent that her sister lived with her, and was advised by the agent, that would not be a problem, and that as long as she paid her premiums on time she would have insurance. The policy with State & County excludes coverage for anyone residing with Jones age fourteen or over unless listed. Ms. Jones paid the November and December premium payments. The policy was to be effective from November 7, 1997 (the date of purchase) thru May 7, 1998.

Texas Bad Faith Insurance

December 19, 2009 | Mark S. Humphreys

Most people do not understand that there are two main kinds of law. The first, most people are familiar with, and we will call statutory law. This is the law that is written down by the legislative branch of government. For purposes of Insurance Law, it is the Sections, Chapters, and Subchapters of the Insurance Code.

The other kind of law, which most people are not aware of, is called the “common law”. The common law is the law that applies to situations even though the law is not specifically written down in a book somewhere.

Under Texas law, there is a “common law” duty for an insurance company to deal with one of its insureds in certain ways. This is called the the duty of good faith and fair dealing. When an insurance company does not honor its common law duty of dealing with one of its insureds in good faith, it is called “bad faith”. This concept was discussed by the Texas Supreme Court in 1987, in the case Arnold v. Nat. County Mut. Fire Ins. Co.

Insurance Fraud Laws In Texas

December 5, 2009 | Mark S. Humphreys

A resident of Grand Prairie recently caught his insurance agent in Dallas committing fraud. The agent was taking the cash payments for the premiums from the resident and hand writing a receipt. Sounds okay so far. Next, the agent was pocketing the money rather than forwarding the payment to the insurance company. This could have happened in Arlington, Fort Worth, Weatherford, or anywhere else in Texas.

The agent would have continued to have got away with this except that the resident had an accident and got sued and when he turned the lawsuit papers over to the insurance company and was denied coverage the resident went to an experienced Insurance Law Attorney. A subsequent investigation revealed what was happening and a lawsuit is currently going forward against the agent.

Most of the time when people think of insurance fraud, they think in terms of someone staging a theft, an accident, or committing arson to recover monies from an insurance policy. This type of insurance fraud is defined and talked about in the Texas Penal Code, Chapter 35. Section 35.02, describes some of what constitutes an offense and also describes the penalty. The range of punishment is from a Class C misdemeanor, which is a ticket offense, all the way to a Felony of the First Degree, which is punishable by up to life in prison. The monetary cost includes fines up to $10,000, court costs, and restitution.

Texas Deceptive Trade Practices Act And The Insurance Code

November 28, 2009 | Mark S. Humphreys

A resident of Grand Prairie, Arlington, Fort Worth, Weatherford, or any other area in Texas can sue an insurance company for violations of the Texas Insurance Code under the Texas Deceptive Trade Practices Act. This is important because both of these areas of the law allow for favorable theories of recovery to the consumer who is wronged when dealing with an insurance company.

Texas Insurance Code, Section 541.151, specifically says that a person who sustains actual damages may bring an action against another for damages caused by the other person engaging in an act or practice, “specificaly enumerated in Section 17.46(b), Business & Commerce Code, as an unlawful deceptive trade practice …” The Business & Commerce Code is where the Texas Deceptive Trade Practices Act is located. The whole purpose of the DTPA is to prevent companies from doing wrongs to consumers.

In business and legal circles, Section 17.46(b) is referred to as the “laundry list” of things companies are prohibited from doing. Violations of this laundry list can result in actions by the States Attorney General plus numerous private causes of action by the consumer.

Does My Texas Insurance Company Have To Defend Me If I Get Sued?

November 25, 2009 | Mark S. Humphreys

An Appeals Court in San Antonio, Texas, has recently handed down a decison that discusses the above question. The case is, Lancer Insurance Company v. Oscar Perez, et al, and was decided on November 4, 2009.

The Lancer case involved members of a high school band going on an overnight field trip. The driver of a bus transporting the band was infected with active turberculosis. This disease was discovered by the passengers and subsequent tests proved positive for some of the band members. The bus driver and bus company were sued for negligently exposing the band members to the disease.

Upon being sued, the bus company made a written demand to Lancer to defend the lawsuit pursuant to the business automobile insurance policy Lancer had issued covering the bus. Lancer refused to defend and the case went to trial wherein the passengers were awarded $5.25 million in total damages.

Jury Says No To Punitive Damages

November 21, 2009 | Mark S. Humphreys

The previous post to this blog talked about penalties Texas insurance companies face when they do not properly handle a claim that is presented to them by one of their insureds. Recently an insurance case was tried in Federal Court in Mississippi. The case arose out of a lose suffered by Reginald Bossier for damages resulting from Hurricane Katrina. In the case, the jury declined to award any amount of monies for punitive damages.

The insurance company being sued was State Farm. Notice also, that this case was in Federal Court. Earlier posts on this blog have pointed out that the insurance company would always prefer to be in Federal Court, rather than State Court. In this case, the jury compensated Bossier $52,300 for damages to an outbuilding destroyed by Hurricane Katrina. However, the jury refused to punish State Farm for any amount of punitive damages. State Farm had paid for some home damage resulting from the high winds but was refusing to pay for damages caused by water.

The attorney for Bossier had asked the jury to award Bossier $2 million to punish State Farm. That anything less than $2 million would not get State Farm’s attention. The attorney also pointed out that “State Farm would rather pay its lawyers than its insureds.” She also told the jury that if State Farm were not punished then they would continue to deny claims.

Penalties For Insurance Companies In Texas

November 18, 2009 | Mark S. Humphreys

Let’s say your house in Dallas burns down and the insurance company wrongfully denies your claim. Or your boat in Weatherford sinks in the lake and your insurance company tries to tell you they are not going to pay because of a late payment on your insurance policy. How about you are driving your car in Fort Worth and are involved in a wreck and your insurance company denies coverage due to the car not being properly listed on the policy. Another example, your neighbors wife, in Grand Prairie, dies of an illness she has had and when the husband makes a claim for life insurance benefits he is denied because the insurance company says they committed a fraud in the application for coverage.

Okay, now lets say you can prove the insurance company was wrong in each of the above situations. What next? Do they just pay the benefits and go away? What about the extra heart ache you went through? What about the ten month delay in paying you the benefits you were entitled to? What about legal expenses? Can the insurance company just intentionally do you wrong and get away with it, by just paying what they should have paid in the first place?

Here are some answers. First, get to an experienced Insurance Law Attorney to help you. Then if you are so inclined, go to the Texas Department of Insurance web-site and read a few of the rules the insurance companies have to follow.

Under-Payment Of Texas Insurance Claims

November 14, 2009 | Mark S. Humphreys

Can it be a surprise? Insurance companies appear to be getting caught in under paying on claims. The Texas Windstorm Insurance Association (TWIA) seems to be caught in some controversy regarding its claims handling along the Texas Gulf Coast. Keep in mind the problems being experienced could just as easily be happening in Fort Worth, Dallas, Grand Prairie, Arlington, or even a small town like Weatherford out in Parker County.

This problem is written about in an article in the Houston Chronicle titled “Lawsuit Says Windstorm Insurer Rigged Process”. The article discusses TWIA using prices lower than market rates to estimate materials and repair costs. TWIA is said to also be unfairly limiting costs on roof repairs and discouraging the reopening of closed claims.

In a lawsuit resulting from some of the abuses by TWIA, documents and software is said to have been discovered that supports the claims that the abuses are being committed. One example of the abuse was discovered when one adjusting firm reported the market rate for roof repairs to be $230 to $255 per 100 square feet, but TWIA’s price was $182. In another situation it is said that they suggested using shingles off one house that were not in too bad shape, to put on another house. This does not sound right to most people but may actually be allowed depending on the language in the insurance policy.

Private Causes Of Action Against Texas Insurance Companies

November 4, 2009 | Mark S. Humphreys

Yesterdays blog discussed actions that can be taken by the Texas Department of Insurance when a person commits a deceptive act or practice under Chapter 541 of the Texas Insurance Code or Section 17.46, Business & Commerce Code. Here the discussion will be about a persons’ “private causes of action”.

Texas Insurance Code, Section 541.151, says that a person who sustains actual damages may sue the other person (insurance company or agent) who caused the damages. If the other persons’ actions are defined by Subchapter B to be an unfair or deceptive act or practice in the business of insurance or an unlawful deceptive trade practice in Section 17.46(b), Business & Commerce Code, then an action may be brought against that person.

A person who prevails is entitled to the amount of the actual damages suffered, plus court costs and reasonable and necessary attorney’s fees, according to Section 541.152. Plus, if the person committing the acts did so knowingly, then there may be an award in an amount up to three times the amount of actual damages.