Claims Refusal

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.

What To Do In Texas When The Insurance Company Says There Is No Coverage Under The Policy

November 8, 2009 | Mark S. Humphreys

An incident happens. Maybe your house in Dallas has someone inside who falls down the stairs. Maybe your car in Arlington is involved in a wreck. Maybe your business in Grand Prairie suffers a loss due to someone falling on the steps. Maybe the life insurance policy you purchased on your Mom in Weatherford is now denying coverage, after the funeral. What if the disability policy you had on your wife’s job in Fort Worth is denied, after she becomes disabled?

If any of the above happens you actually have two main things you can do. The first and most common is to just sue the insurance company for various violations of the Texas Insurance Code and violations of the Texas Deceptive Trade Practices Act. You can sue for breach of contract and fraud and misrepresentation and a few other things that are variations of the Insurance Code and DTPA causes of action.

The second thing that can be done is called a Declaratory Judgement cause of action. Attorneys refer to this as a “dec action”. This is where an attorney files papers with a Court saying, “Judge, declare this thing we have before you as (fill in the blank)”. A dec action is used quite often in insurance disputes. It is used both by attorneys for individuals requesting benefits under a policy and by insurance company attorneys asking the Court to declare that certain benefits do not exist within a policy.

“Claims Made” v. “Occurrence” Policies In Texas

October 30, 2009 | Mark S. Humphreys

The Supreme Court of Texas decided a case this year wherein the distinction between “claims made” policies and “occurrence” policies was discussed. This case is, Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance Company.

As discussed in an earlier case on this blog, the PAJ case, the main issue was whether or not the inusrance company was still responsible under the terms of the insurance policy even though the insured person or entity did not timely notify the insurance company of the claim. As in PAJ, the court ruled that because the insurance company could not show it was harmed by the delay in being informed of the claim, the court ruled that the insurance company must provide coverage.

The difference in this case, Prodigy, as compared with PAJ, was the different types of policies at issue. When dealing with insurance policies it is important to understand the distinctions between these two types of policies.

Limitations Periods In Texas Insurance Cases

October 28, 2009 | Mark S. Humphreys

An opinion issued by the Texas Court of Appeals in Houston on October 15, 2009 is noteworthy. Atleast one part of this decision addresses a law in Texas that most attorneys do not know.

The case is Anthony Sheppard v. Travelers Lloyds of Texas Insurance Company. This case discusses limitations periods. Limitiations periods are the timelines within which a lawsuit must be filed or otherwise it is barred. These limitations periods are in Chapter 16 of the Texas Civil Practice & Remedies Code. There are 44 sections in Chapter 16 addressing different causes of actions and the limitations applicable to them. Plus there is a ten page chart that breaks down these sections and tries to make them easier to understand.

A carefull reading of Sheppard goes a long way in making these limitations periods as they relate to insurance contracts understandable. And it is important to understand that breaches of an insurance contract usually go hand in hand with other violations of the Texas Insurance Code. Most Insurance Code violations, which are also violations under the Texas Deceptive Trade Practices Act have a 2 year statute of limitations. Texas Insurance Code, Section 541.162 sets out the limitations period for insurance code violations at two years with some variations to the two year period.

Your Duties After An Accident Or Loss In Texas

October 27, 2009 | Mark S. Humphreys

An appeal from a Dallas, Texas Court decision was decided by the Texas Supreme Court, in the case PAJ, Inc., d/b/a/ Prime Art & Jewel, v. The Hanover Insurance Company. This case was decided in January, 2008. It discussed the responsibilities of holders of an insurance policy as it relates to their duties after an accident or loss and how the failure of fulfilling those duties affects coverage under an insurance policy.

As a general rule almost all insurance policies require the policy holder to do the following: 1) promptly notify the insurance company of any loss or claim, 2) cooperate with the insurance company investigation of the claim or loss, 3) take reasonable actions to protect against further loss.

When a claim is denied due to a policy holder not promptly notifying the company of the claim or loss the insurance company has the burden of proving that this failure to promptly notify caused harm to the insurance company. This was the issue in PAJ.

Cancellation And Nonrenewal Of Certain Liability Policies In Texas

October 26, 2009 | Mark S. Humphreys

In Texas, there are rules regulating the conditions for an insurance company to cancel certain liability policies or to opt to nonrenew the policies. These rules are found primarily in Section 551 of the Texas Insurance Code.

To begin with, one rule found in Section 551.052 says that an insurance company cannot cancel a liability policy that is a renewal or continuation policy. This makes sense, otherwise, why would anybody buy this type of policy.

Another rule in this section says that an insurance company may not cancel a liability policy during the initial policy term after the 60th following the date the policy was issued. So if you buy a one year policy on September 15, it cannot be cancelled after November 15.

Notifying Your Texas Insurance Company Of A Claim

October 9, 2009 | Mark S. Humphreys

Whether you purchase your insurance policy in Dallas, Texas, or in Fort Worth, Arlington, Grand Prairie, Weatherford, or anywhere else in Texas, there is one thing you can count on. The policy of insurance that you purchase is going to require that you notify the insurance company “immediately” or “as soon as practicable” whenever there is an occurrence or an offense that may result in a claim. If you fail to do so, the one thing you can almost always count on is that the insurance company is going to deny your claim for benefits.

What if your failure to timely notify your insurance company of the claim or occurrence results in no harm to the insurance company? You still violated a policy provision by not notifying the company in the time frame in which the policy requires you to notify them. Do you lose? Is your claim for benefits lost?

This issue was addressed in the case PAJ, Inc. v. Hanover Ins. Co. This was a Texas Supreme Court decision. The issue for the court to decide was whether a policy holder who failed to timely notify its insurance company of a claim defeats coverage under the policy if the insurance company was not prejudiced by the delay. Prejudiced meaning, the insurance company suffered no real harm or loss due to the delay in being notified of the claim.

What If A Texas Insurance Company Does You Wrong

October 5, 2009 | Mark S. Humphreys

The recourse that a Texas insurance policy holder has against their insurance company depends on exactly what it is that the insurance company does that is wrong or illegal. The types of wrong that can be committed by insurance companies are too numerous to mention all of them here. However, there are a few wrongs committed by insurance companies that policy holders should be aware of when dealing with their insurance agent or the insurance company.

Again, keep in mind that there are many wrongs that can be committed by an insurance company. The most wrongs that can be found without reading all the laws related to insurance can be found in the Texas Insurance Code Section 541.051, Section 541.060 and Section 542.003.

These Sections are appropriately found in Subtitle C of the Texas Insurance Code which is titled “Deceptive, Unfair, And Prohibited Practices”. Section 541.051 is in Chapter 541 and titled “Unfair Methods Of Competition And Unfair Or Deceptive Acts or Practices”.

Texas Bad Faith Insurance Law / Duty Of Good Faith And Fair Dealing

October 4, 2009 | Mark S. Humphreys

An insurance company in Texas has a duty or responsibility to people who purchase insurance. When dealing with one its customers / insureds it has a duty to that person. This is referred to as the “duty of good faith and fair dealing”. When an insurance company violates its duty of good faith and fair dealing it is call “bad faith”.

There are laws in the Texas Insurance Code that set out acts that insurance companies cannot legally do. In addition to setting out prohibited acts and practices there are punishments the insurance companies face for violations of their duties to their insureds. The punishments will vary depending on the degree of culpability or wrong that is committed.

A 2008 case discussing some of the above is Texas Mutual Ins. Co. v. Ruttiger. This is a case that occurred in Galveston, Texas and was decided by a Houston Court of Appeals. The same law would apply whether it happened there, or in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or anywhere else in Texas.

How Do I Know When My Texas Insurance Company Is Not Doing Its Job

September 30, 2009 | Mark S. Humphreys

It is easy to say “you know when you know”. Most people will sense something isn’t right. Often times the insurance company sends you a letter saying your claim for benefits is being denied and state as a reason, something you absolutely know is wrong.

Let’s look at what the Texas Insurance Code says. Section 542.055 is titled “Receipt of Notice of Claim”. This section gives guidance to the first actions an insurance company is suppose to take when a claim is filed. It says that not later than the 15th day after the date they receive notice of a claim that they shall, (1) acknowledge receipt of the claim, (2) begin their investigation of the claim, and (3) request from the person making the claim all statements, and forms that the insurance company believes it will need to evaluate the claim. It then says that the insurance company may make additional requests for information if during the investigation of the claim the additional requests are necessary. Also, they are suppose to acknowledge the claim in writing or make a written record of how the acknowledgement was made.

Section 542.056 is titled “Notice of Acceptance or Rejection of Claim”. This section is a little complicated and varies depending on the type of claim made, but does have deadlines for when the insurance company is suppose to make their determination. Also it is in these actions required of the insurance that they are most likely to be making mistakes. If the claim is one they should be paying, a letter from an Insurance Law Attorney at this point usually gets them acting properly in a hurry. If they are not sure whether they should be paying the claim or not, the requirements of this section and a letter from an Insurance Law Attorney makes the insurance company take a stand or be in further violations of these sections or others in the Insurance Code. The Insurance Law Attorney wants the insurance company to make that stand rather than continuing to string out the matter.