Saginaw insurance lawyers need to be able to discuss with their clients the duties the clients have to the insurance company regarding the Prompt Payment of Claims Act.
It boils down to this, a claimant has two duties to the insurance company.
(1) to give the insurer notice of the claim; and (2) to give the insurance company all the items the insurance company reasonable needs to secure proof of final loss.
Everman insurance attorneys need to know the insurance laws regarding payment of claims the same as any other insurance lawyer. Here is one nuance to the Prompt Pay Statutes that a lot of attorneys are not familiar with. It regards prompt pay and third-party claims.
In looking at the Prompt Pay Statute, on its face, the statute applies only to “first-party” claims. The statute defines “claim” to mean a “first-party claim that: (A) is made by an insured or a policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract; and (B) must be paid by the insurer directly to the insured or beneficiary.” That is the clear language in Section 542.051. This would exclude liability insurance claims for coverage that must be paid to an injured third party.
In spite of the reading of this statute, the Texas Supreme Court ruled in a 1996, opinion that the statute does apply to third-party liability insurance. The style of the opinion is, State Farm Fire and Casualty Company v. Gandy. The court was discussing the liability insurer’s ability to seek a declaratory judgement when issues of coverage and the duty to defend arise. The court stated that if the insured were successful, the insured should be entitled to recover attorney’s fees and penalties under the statute.
Insurance lawyers in Kennedale need to know these basics regarding insurance claims and claimants when looking at the Prompt Payment of Claims Statutes.
The Texas statutes regarding Prompt Pay are found in the Texas Insurance Code. It is there we find that the protections of the insurance statutes apply to a “claimant” who is defined as “a person making a claim.” This is found specifically in Section 542.051(3).
The statute provides:
Dallas insurance attorneys know the statutes dealing with the requirements of time within which an insurance company must pay a claim. A 2000, Corpus Christi Court of Appeals case addresses this issue. The style of the case is, Colonial County Mutual Insurance Company v. Hector Valdez.
Hector Valdez bought a 1992 Plymouth Acclaim and arranged insurance for the car with Colonial through the Diego Luna Insurance Agency. An employee of the insurance agency told Hector that the car was insured “against theft, against accidents, against medical expenses, everything concerning the insurance.” A few months after obtaining this insurance, Hector sold the car to his son, Rene Valdez, for $7,000. Rene obtained a loan from Mercantile Bank in order to make the purchase. Hector called the Diego Luna Insurance Agency and told them Mercantile Bank would be calling them to make “changes” and “arrangements” on the insurance. Diego Luna testified that an employee of Mercantile Bank did call, and asked to verify insurance on the car for “a Mr. Valdez.” The bank was told that “Mr. Valdez” had insurance. Hector continued to pay insurance premiums on the car while Rene owned it. It is undisputed that Hector never told Colonial or Diego Luna Insurance Agency that he had sold the car to Rene. It is also undisputed that Hector was never informed, orally or in writing, that he could only insure the car if he owned it.
In November 1995 Hector’s policy was automatically renewed. On January 14, 1996 the car was stolen. Hector reported the theft and Colonial proceeded to investigate. During this investigation, Colonial discovered that Rene was the owner of the car. On March 19, 1996 Colonial sent Hector a letter informing him that “the handling of this claim is being conducted under a Reservation of Rights” because Colonial was investigating whether Hector had an “insurable interest” in the car.
Fort Worth insurance lawyers handling hail damage claims as well as any other insurance claims need to read this 2004, Texas Supreme Court opinion. It is styled, Republic Underwriters Insurance Co. v. Mex-Tex, Inc.
This is a first part claim. Following a hail storm Mex-Tex, Inc. notified its property insurer, Republic, 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 attributable to hail. The roof had leaked for a long time, and months before the storm Mex-Tex had obtained estimates to replace it. While Republic was still investigating the claim, it learned that Mex-Tex had retained a contractor to go ahead, without waiting on Republic, and replace the roof at a cost of $179,000 with one of the same kind, but which would be fixed to the building mechanically rather than by ballast (that is, rocks) as the old roof had been. Republic’s first response was to offer what it believed was the cost to repair the minimal hail damage, $22,000, as what it termed “partial payment” of Mex-Tex’s claim, but when Mex-Tex rejected that offer, Republic sent Mex-Tex a check on August 20, 1999, including $145,460, an amount representing what Republic’s engineer had determined was the cost of replacing the mall’s roof with an identical one, attached by ballast.
Mex-Tex returned the check. Republic re-sent it. Mex-Tex re-returned it. Republic then replied that it would hold the money until Mex-Tex accepted it, which Mex-Tex did on October 12, 2000, as partial payment of its claim. Meanwhile, Mex-Tex had sued Republic for breach of the policy and delay penalties under the Prompt Pay Statute. After trial the court found that Republic’s failure to pay Mex-Tex the $179,000 was a breach of Republic’s policy obligation to replace the roof with one of “like kind and quality”-despite the fact that Mex-Tex’s cost exceeded the replacement cost of an identical roof by $33,540-and awarded Mex-Tex that difference in damages. The court also awarded Mex-Tex 18% per annum on $179,000 from November 4, 1999, the date the court determined that Republic should have tendered that amount, which was 75 days after it tendered $145,460, to the date Mex-Tex accepted that partial payment almost a year later, and thereafter on the $33,540 difference until judgment.
Life insurance attorneys in Dallas will run across situations where there are competing claims for policy benefits. Sometimes those claims are legitimate concerns and sometimes not. A 2014, opinion from the US Court of Appeals, 7th Circuit needs to be read. The style of the case is, State Farm Life Insurance Company v. Troy Jonas, et al. Here is relevant information from that case.
Troy Jonas and his wife Jennifer purchased reciprocal policies of life insurance: she owned the policy on her life, with him as beneficiary; he owned the policy on his life, with her as beneficiary. When they divorced in 2011, the court reassigned the policies’ ownership: after the divorce, Troy owned the policy on Jennifer’s life. Each policy provided that “a change of Owner or Successor Owner does not change the Beneficiary Desig-nation.” Troy therefore thought it unnecessary to redesignate himself as the beneficiary of the policy insuring Jennifer’s life.
Jennifer died on August 30, 2012. Troy promptly submitted a claim for the proceeds. State Farm did not pay. It expressed concern that the proceeds might belong to the couple’s children who had been named as secondary beneficiaries or to Jennifer’s estate as a result of Texas Family Code, Section 9.301, which provides that if a divorce occurs after one spouse has designated the other spouse as a beneficiary of an insurance policy, the designation lapses with some exceptions and, unless a new designation is made, the proceeds belong to any alternative beneficiary or the decedent’s estate. Jennifer was domiciled in Texas when she died, and the policy had been issued there; the parties agreed that Texas law applied to this litigation. Troy replied that this provision did not apply when the divorce decree reassigns the policy’s ownership to the named beneficiary.
Lake Worth insurance lawyers handling Personal Injury Protection (PIP) coverage may find this Texas Supreme Court case interesting. The opinion was issued in 2001, and the style of the case is, Allstate Insurance Company v. Bonner. Here is some of the relevant information from the case.
Rhonda Bonner was covered by an auto insurance policy issued by Allstate. Bonner was injured in an accident caused by an uninsured motorist. This policy included a non-duplication-of-benefits provision. Bonner reported a claim for medical costs resulting from her injury to Allstate, and received $1,619 in personal injury protection benefits. After receiving this, Bonner filed an uninsured motorist claim, which Allstate received on December 15, 1997. Allstate did not acknowledge receipt of the claim until, January 16, 1998, and eventually rejected the claim.
Bonner filed suit against Allstate seeking payment of uninsured motorist benefits. Bonner also sought attorneys’ fees and costs, relying to the Prompt Payment of Claims statute, which requires insurance companies to acknowledge receipt of claims within 15 days. The jury awarded compensatory damages to Bonner of $1,000 and fees and costs totaling $7,500. The trial judge however, rendered a take-nothing judgment after trial. The court of appeals upheld the take-nothing judgment with respect to compensatory damages, as Bonner had already been compensated under the personal injury benefit, but assessed costs and fees against Allstate. The court of appeals held that an insurance company must comply with the Prompt Payment of Claims Act every time the insured presents a claim. Allstate sought review from the Supreme Court of Texas, asserting that Bonner did not present a claim for which it was liable (because of the no-nduplication of benefits provision). Allstate distinguished this case from earlier cases in which insureds had valid claims above and beyond what they had already been paid by Allstate.
Insurance attorneys in Dallas County need to be aware of the penalties that can be imposed on an insurance company for being late in paying a claim. Part of how this works is illustrated in a 2000, San Antonio Court of Appeals opinion. The style of the case is, Cater v. United Services Automobile Association. Here is the relevant information from this case.
Cater appeals the trial court’s denial of her claim for statutory damages and attorneys’ fees under Section 542.060 of the Texas Insurance Code. She asserts that United Services failed to pay her foundation claim inside the statutorily mandated time period, rendering it liable for the damages and fees.
In 1993, Cater filed a claim with United Services Automobile Association (“USAA”) for damage to her foundation, which she believed was caused by a plumbing leak. USAA denied her claim based on its conclusion that the damage to her foundation was not caused by a plumbing leak. Cater subsequently sued USAA for violation of Texas Insurance Code, Section 542.051. In January, 1999, the parties mediated the claim and reached a settlement. The settlement agreement required USAA to pay Cater $40,000 in contract damages and required Cater to dismiss all other claims and demands she had against USAA. The agreement, however, explicitly excluded Cater’s claim for additional damages and attorney fees from the dismissal requirement. Instead, the parties agreed to submit to a bench trial for a determination on her remaining issue.
Arlington insurance lawyers will usually know the penalties for insurance companies that do not promptly pay a claim. A 1997, United States 5th Circuit Court of Appeals case illustrates the penalties. The style of the case is, Higginbotham v. State Farm Automobile Insurance Company. Here is what the case tells us.
Higginbotham’s Porsche was stolen on June 8, 1993, from an unsecured parking lot next to his residence. The car was recovered later that day but had been stripped of its top, seats, interior and exterior trim but was not damaged or destroyed with regard to mechanical connections, wiring harnesses or the engine. Higginbotham reported the theft to State Farm on June 9, 1993. State Farm denied his claim five months later on November 19, 1993.
Higginbotham filed suit for breach of contract, violations of the DTPA, violations of the Texas Insurance Code, negligence, breach of duty of good faith and fair dealing, and violation of the Prompt Payment of Claims Act which imposes an 18% penalty on the carrier under certain circumstances. At trial, the jury returned a verdict in favor of Higginbotham for $30,000.00, the amount of his coverage, but the Court directed a verdict in favor of State FArm on the bad faith and extracontractual claims under the DTPA and Insurance Code. Higginbotham appealed.
Attorneys handling insurance cases will run into situations dealing with “loss of use” claims. The Waco Court of Appeals issued an opinion in June of 2014, that is worth reading. The style of the case is, American Alternative Insurance Corporation v. Robert Davis and J & D Towing, LLC. Here is relevant information from that case.
The crux of this case involves whether a chattel owner should be compensated for measurable loss-of-use damages suffered when the owner’s chattel is totally destroyed and the owner is unable to replace the chattel or obtain a substitute immediately. The dispute arises from an automobile accident between Robert Davis and Cassandra Brueland that occurred in Huntsville, Texas on December 29, 2011. At the time of the accident, Davis was driving a wrecker owned by his business, J & D. It is undisputed that Brueland was at fault for the accident and that the wrecker was rendered a total loss and unusable as a result of the accident. The only issue submitted to the jury pertained to J & D’s damages for the loss of use of its wrecker.
At trial, Davis testified that the wrecker in question was a 2002 Dodge 3500 with an 806 Vulcan wheel-lift unit on the rear. Davis stated that this was J & D’s only wrecker. Davis did not replace the wrecker until the second week of March 2012 because he claimed that he was financially unable to purchase a replacement wrecker.
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