Claims Refusal

Insurance Law And Technicalities

October 18, 2014 | Mark S. Humphreys

Grand Prairie insurance attorneys need to know about technicalities and insurance policies. The Texas Supreme Court just issued an opinion in a case styled, Greene v. Farmers Insurance Exchange. This case deals with the Texas Anti-Technicality Statute found in the Texas Insurance Code, Section 862.054. Here is some of the information relevant to the lawsuit.

In this case a house that had been vacant for several months was damaged when fire spread to it from a neighboring property. The house was insured under a Texas homeowner’s policy containing a clause suspending dwelling coverage if the house was vacant for over sixty days. The homeowner had not purchased an available endorsement providing coverage for extended vacancies, and the insurer denied the homeowner’s claim, even though the vacancy was not related to the loss. On cross-motions for summary judgment, the trial court granted judgment for the homeowner. This was reversed by the Court of Appeals and upheld by the Texas Supreme Court.

Greene owned and lived in a house in Irving that she insured with Farmers Insurance Exchange. The policy Farmers issued to Greene was a Texas Homeowners-A Policy prescribed by the Texas Department of Insurance. The policy was effective from February 10, 2007 to February 10, 2008. On June 30, 2007, Greene moved into a retirement community. On July 5, 2007, she notified Farmers that she was going to sell her house and provided Farmers with change of address information. On November 14, 2007, fire from a neighboring house spread to Greene’s house and damaged it. Farmers denied Greene’s fire damage claim on the basis that the house had been vacant for more than sixty days. The denial prompted a lawsuit on Greene’s behalf.

Insurance Companies Can Be Forced To Pay Denied Claims

August 12, 2014 | Mark S. Humphreys

Weatherford insurance attorneys already know what lots of people are learning – that is an insurance company can be forced to pay claims they have denied when the denial is wrong. KXAN did an investigation into this issue in July 2014. Here is what their report tells us.

Most of us have to pay for some kind of insurance whether it is coverage for a car, home, or health. But sometimes the company you trust to be there when you need it most doesn’t pay on a claim.

Last year Jason Brockdorf was hit by a driver who ran a red light. His car was damaged but that was not the only thing that took a hit.

Additional Insured Unable To Make First Party Claim

June 28, 2014 | Mark S. Humphreys

Arlington insurance lawyers need to know the cases where an insured can sue under an insurance policy and where they cannot. It is not always easy to do. A 1996, Beaumont Court of Appeals opinion is a good case to read. The style of the case is, Rumley v. Allstate. Here is some of the relevant information.

Joyce Rumlet, (Wife) sustained personal injuries in a one car vehicle accident in which her husband, Wilburn Rumley, was the driver. Mrs. Rumley filed a claim for benefits under their policy with Allstate. Allstate paid Personal Injury Protection benefits but refused to pay liability because the policy contained a family member exclusion. At the time, the Texas Supreme Court was reviewing a case on this issue but had not yet issued an opinion. In that decision, the Texas Supreme Court invalidated the family member exclusion. Wife sued Allstate and Ted Pate, a senior staff claims representative for Allstate, for breach of duty of good faith and fair dealing, violations of the Texas Insurance Code, Section 541.060 and violations of the Texas Deceptive Trade Practices Act, Section 17.46.

Allstate filed a Motion for Summary Judgment on the grounds that Wife’s claim was a third party claim for which Allstate owed no duty of good faith and fair dealing; there was a reasonable basis for denying the claim in that the family member exclusion was an unsettled issue of law; and there was no special or contractual privity between Pate and Rumley. The trial court granted summary judgment. Wife appealed.

Life Insurance – Missed Payments

April 24, 2014 | Mark S. Humphreys

Aledo life insurance attorneys need to know the effect of payments missed on a life insurance policy. To begin with, each policy is different and thus the policy language needs to be read and then applied to the facts of the situation.

A February 2014, opinion from the Houston Court of Appeals, 1st District dealt with this issue to the detriment of the beneficiary. The style of the case is Lambana v. AIG. Here is some of the relevant information.

Pamela Lombana (“Lombana”), acting as the trustee of the Lombana Investment Trust challenged the trial court’s rendition of summary judgment in favor of AIG on her claims against AIG for breach of contract, breach of an oral or implied contract to reinstate, promissory estoppel, negligence, violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act (“DTPA”), breach of the duty of good faith and fair dealing, fraud, and fraud by nondisclosure. This appeals court affirmed the trial court decision.

Failure To Pay Claim And Bad Faith

April 10, 2014 | Mark S. Humphreys

Most insurance lawyers can tell a new client that the fact an insurance company refuses to pay a claim it should have paid does not make the insurance company liable for a bad faith insurance claim. The 1998, Texas Supreme Court case, Provident American Inc. v. Castanden, helps explain this.

Denise Castaneda sought damages from Provident for alleged violations of the Insurance Code and the Deceptive Trade Practices Act arising out of the denial of her claim for benefits under a health insurance policy and the manner in which her claim was handled. Because the evidence was legally insufficient to support the jury’s verdict, this court reversed and rendered judgment that Castaneda take nothing.

Denise Castaneda’s father, Guillermo Castaneda, Sr., applied for medical insurance with Provident in May 1991. He sought a policy that would cover the entire family including his daughter Denise, who was twenty-one years old at the time, her sister, and their brother Guillermo, Jr. During the application process, Guillermo Castaneda, Sr. failed to disclose that just two days before he applied for the policy, Guillermo, Jr. had received medical attention from a physician for jaundice, anemia, and suspected hepatitis. Denise had received medical treatment for jaundice and hepatitis several years prior to the date her father applied for health insurance.

What Happens When Insurance Company Will Not Settle Liability Claim

March 13, 2014 | Mark S. Humphreys

Insurance lawyers will tell you that insurance companies can expose themselves to risk by not settling liability claims that they should settle. This relates to what is called the “Stowers Doctrine.” But exposing themselves to risk and and suffering the risk are two different things. The 1960, Amarillo Court of Appeals case, Chancey v. New Amsterdam Casualty Company, is an example where the insurance company did not get in any trouble. Here is some information about the case.

The present case followed Amsterdam’s refusal to compromise and settle the claim of one Walter Van Luit against Chancey which resulted in a jury verdict and judgment against Chancey in the amount of $58,422.83. The policy limits under the liability policy issued to Chancey was $50,000. The record reflects Amsterdam paid Van Luit the amount of the policy limit of $50,000 plus interest and court costs. Chancey has paid the balance of $8,422.83 to Van Luit, and it is this amount Chancey is seeking over and against Amsterdam. The case was submitted to a jury and upon the finding of the jury the trial court entered a judgment that Chancey take nothing. From this judgment Chancey duly perfected this appeal.

Chancey complained of the trial court’s action in sustaining an exception to Chancey’s petition which alleged the failure of Amsterdam to ‘negotiate’ for a settlement of the case, and refusal of the trial court to submit issues based on the above allegation. It is Chancey’s contention that in as much as the policy gives the insurance coompany the right to ‘investigate, negotiate and settle’ any claim arising under the policy, this right is equally accompanied by the duty to negotiate as well as to settle. The landmark case in Texas on this question is the case of Stowers Furniture Co. v. American Indemnity Co., in which is found the following language:

Read The Policy

January 23, 2014 | Mark S. Humphreys

Saginaw insurance attorneys and their clients need to read and understand the insurance policies they are presented with by the insurance company. The United States 5th Circuit issued an opinion in November 2013, that illustrates why. The style of the case is Willoughby v. Metropolitan Lloyds. Here is the relevant information.

This appeal involves the timeliness of a homeowner’s lawsuit against her insurer. The district court determined the lawsuit was untimely and granted summary judgment. This appeals court affirmed.

Willoughby contracted with Metropolitan Lloyds for a homeowner’s insurance policy. The policy included a shortened limitations period, stating that “[a]ction brought against [Metropolitan] must be started within two years and one day after the cause of action accrues.” In November 2007, Willoughby reported to Metropolitan that a fire had damaged her home in Blooming Grove, Texas. Metropolitan subsequently investigated Willoughby’s insurance claim and examined her under oath regarding the circumstances of the fire. During the course of this examination, Willoughby provided her mailing address and stated that her and her husband’s attorney was Paul Lewallen. Nine months later, in a letter dated September 25, 2008, Metropolitan denied Willoughby’s claim, explaining that it believed “the fire was set by or at the direction of one or more of the named insureds.” The letter further explained that Willoughby had not complied with her insurance policy’s reporting obligations, one of which required her to provide a signed “proof of loss” statement. Metropolitan sent this letter to the mailing address provided by Willoughby. Willoughby denies ever receiving it.

What Can Happen When Insurance Company Refuses To Pay

July 13, 2013 | Mark S. Humphreys

Fort Worth Insurance lawyers will like telling clients about a case that went to trial in Jefferson County, Texas, in May 2013.

This blog tells one story after another about situations involving insurance and claims. The Southeast Texas Record, a Legal Journal ran a story titled, “Hurrican Ike Trial: Jurors Hit National Lloyds With $915K Verdict.” Here is what the article tells us:

A Jefferson County jury recently found National Lloyds Insurance committed deceptive trade practices in the handling of a policy claim following Hurricane Ike, awarding the plaintiff nearly a million dollars in damages.

Insurance Claims As Breach Of Contract Claims

June 22, 2013 | Mark S. Humphreys

Fort Worth insurance attorneys will tell you that an insurance policy is a contract. A 1992, Dallas Court of Appeals case gives a good example of how the Courts deal with this concept. The style of the case is, St Paul Insurance Company v. Rakkar.

This case deals with many insurance issues but here are the issues as it relates to contracts:

Rakkar owned a house in Jewett, Texas. On August 27, 1988, after the tenants who had been living in the house vacated the property, Rakkar travelled the four hours from his home in Whitesboro, Texas, to Jewett to inspect the property with the real estate agent who helped him manage the property. Rakkar planned to grill some hot dogs for his dinner, spend the night in the house, and return to Whitesboro the next day. With this plan in mind, Rakkar bought hot dogs, a small hibachi-type grill, lighter fluid, and obtained some charcoal. He also bought a bottle of drinking water because the water at the house had been shut off. When he got to the house, he opened the windows to air out the house and started the air conditioner. Because the grass around the house was tall and dry, he decided to light the grill in the kitchen and then carry it onto the patio after clearing a space for the grill on the patio. Rakkar set the grill on the kitchen floor. After lighting the grill, he had begun to work on the ceiling fan when his real estate agent arrived. She told Rakkar that she smelled something “hot,” and Rakkar showed her the hibachi grill sitting on the kitchen floor. She told him that he should move it outside because the heat from the grill could burn the linoleum flooring. After declining Rakkar’s invitation to join him for a hot dog, the real estate agent left. Rakkar decided to take the grill onto the patio. When he bent over the coals, he passed out. When he awoke five or six minutes later, the grill was overturned near the base of the cabinets, the coals were scattered over the kitchen floor, and the cabinets were on fire. Rakkar ran to the sink, but no water came out. Rakkar then ran to his neighbors to get assistance, but they were not at home. He then drove the half mile to the marina and called the fire department, which was fifteen to twenty miles away. By the time the fire truck arrived, the house was completely engulfed in flames. T he house burned to the ground.

What Happens When The Insured Does Not Submit To An Examination Under Oath?

June 15, 2013 | Mark S. Humphreys

Fort Worth insurance lawyers should know about insurance policy provisions that require an examination under oath (EUO). The Houston Court of Appeals [14th Dist.] issued an opinion in May 2013, that helps to understand the process. The style of the case is, Arman A. Shafighi v. Texas Farmers Insurance Company.

Here is some of the relevant information:

Shafighi sued Farmers when it denied his claim for fire damage to his house. The trial court granted summary judgment to Farmers, concluding that Shafighi could not recover because he failed to participate in a sworn examination as part of Farmers’ investigation. Because the insurance policy at issue permits Farmers to abate the case until Shafighi complies with the relevant policy provisions, but does not entitle it to summary judgment under these circumstances, this appeals Court reversed and remanded.