Texas insurance lawyers need to understand the significance of a “reservation of rights” letter received from an insurance company. The Claims Journal published an article in 2008 that is educational. It is titled “Reservation of Rights Letters.”
What is a Reservation of Rights Letter?
Effective reservation of rights letters can be the difference between preserving policy defenses or paying on damages.
Mineral Wells insurance attorneys can tell you that an insurance company would much prefer to fight a legal battle in Federal Court rather than State Court. In order to defeat them in this effort, it is vital to understand what Federal Judges look at when making a decision on whether a case gets to be maintained in Federal Court. The U.S. District Court for the Northern District of Texas, Dallas Division, provides guidance for what Federal Courts look for in a case. This is done in a 2015 case styled, Davis v. State Farm Lloyds and Leah McGee.
Plaintiffs Renee Davis and Reginald Davis filed this lawsuit against Defendants State Farm Lloyds and insurance agent Leah McGee for the improper handling of an insurance claim under a policy issued by State Farm. Plaintiffs alleged State Farm failed to pay the full proceeds of the policy and failed to settle the claim in an adequate and timely manner. They alleged that McGee constantly assured Plaintiffs that they were adequately insured and that McGee misrepresented to Plaintiffs that the insured person was covered by such peril although State Farm denied such coverage. The allegations were for violations of the Texas Insurance Code and The Texas Deceptive Trade Practices Act (DTPA).
This case was filed in State Court and timely removed by State Farm to Federal Court where State Farm alleged improper joinder of the agent McGee, to prevent diversity jurisdiction.
Area insurance law lawyers find stories like the following to be good for clients who have claims against insurance companies. It shows the wrongs that companies commit and these wrongs becoming public gives the public a sense of “no sympathy” for the insurance companies and thus helps attorneys and their clients prevail in lawsuits.
The story was issued in July of 2015. It says:
Losing a spouse is never easy, either emotionally or financially, and a new study finds that many major auto insurance companies are adding to the grief by raising rates for new widows by as much as 226 percent.
Tarrant county insurance attorneys need to read this opinion from the United States, Northern District Court, Amarillo Division. It is styled, Johnnie Shannon v. Underwriters at Lloyd’s London, et al. There are many reasons an insurance company would prefer to have a legal fight in Federal Court rather than State Court. This opinion helps insurance law attorneys keep those cases that qualify in State Court.
Shannon filed a lawsuit in State Court against Underwriters for violations of the Texas Insurance Code among other reasons. Underwriters timely filed a motion for removal to Federal Court. Shannon filed a motion to remand which was granted by the Court.
Title 28, U.S. Code, Section 1441 states that a civil action is not removable if any “of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” A case must be remanded if at any time before final judgment it appears that the district court lacks subject matter federal jurisdiction. A conclusion that the suit was improvidently removed requires remand.
Insurance attorneys need to be able to discuss the Texas Guaranty Fund with their clients and how this fund works.
Four large insurance companies were declared insolvent in 2013, and as a result lawyers will have situations where a client has their insurance company become insolvent. The Texas Property and Casualty Insurance Guaranty Association (TPCIGA), was established in Chapter 462 of the Texas Insurance Code. Insurance companies do not file bankruptcy, they become insolvent. When an insurance company becomes insolvent or impaired, TPCIGA assumes the handling of the claims of the defunct insurance company. TPCIGA is a non-profit, unincorporated association of all Texas licensed property and casualty insurance companies. The Texas Legislature created the TPCIGA to provide protections to Texas insurance policyholders and claimants when an insurance company fails.
Chapter 462 states the TPCIGA must only pay “covered claims.” In general, a covered claim is an unpaid claim that arises out of a policy issued by an insolvent insurance company. The claim must be made by a Texas resident at the time of the insured event or must be a first-party claim for damage or property that is permanently located in Texas.
Insurance lawyers get calls from companies that have an assignment of benefits (AOB). This AOB is discussed in an article published by Claims Journal. It does a good job of discussing it and even though it talks about events in Florida, Texas has essentially the same laws and these AOB’s are being seen in Texas.
The problem for property insurers? No one is willing to take a firm position against the surge of AOB lawsuits, which are proliferating to the point where they are in danger of strangling insurers. The Courts are deferring to the Legislature but the Legislature is seemingly uninterested in making change.
The problems are endemic to Florida’s private market. The “carrier of last resort,” Citizens Property Insurance Corporation, is in the midst of a legislatively mandated, large-scale depopulation program, in which it has slashed its number of policies by about a third in the last several years. Citizens’ loss is a gain for several upstart carriers, but the AOB crisis is showing no signs of abetting and costs to defend these frivolous claims are becoming exorbitant.
Dallas insurance attorneys can tell lots of stories where the insurance company is ripping off and taking advantage of it’s insureds. The Insurance Journal recently published a couple of stories where an insured was involved in ripping off the insurance company. The punishment for getting caught can be grim.
An ex-worker at a Houston home decor store has pleaded guilty in a $2 million insurance scam in which customers intentionally fell and then filed claims.
The case involved more than two dozen false claims approved by Johnson and settlements topping $2 million. Prosecutors say the money was shared by Johnson, the fake victims and others in the scheme.
Irving insurance lawyers will run into situations where a renters insurance policy is at issue. The Dallas Court of Appeals issued an opinion in 2015, that should be read. It is styled, Chambers v. American Hallmark Insurance. This case is a good illustration why an experienced insurance law attorney needs to be involved.
This is an appeal by Chambers wherein the trial court granted summary judgment in favor of Hallmark.
Chambers purchased a renter’s insurance policy (the Policy) from Hallmark that went into effect on February 1, 2010. The insurance policy covered the Chambers premises. Chambers paid $252.00 in premiums on the Policy. On or about March 13, 2010, Chambers reported a loss of personal property from the residence identified on the Policy. Chambers submitted his claim for coverage with Hallmark. Hallmark claimed that the alleged theft was not a covered loss under the Policy and denied the claim.
Benbrook insurance lawyers will find this case interesting. It is from the Western District, Austin Division. The style of the case is, State Farm Mutual Automobile Insurance Company v. Watkins.
State Farm filed this lawsuit to obtain a declaratory judgment that it has no duty to indemnify Defendants Ernest Lynden Watkins III (Mr. Watkins) and Kathy Watkins (Mrs. Watkins) for a separate lawsuit brought in Texas state court (Underlying Suit). In the Underlying Suit, police officer Doff Slade Fisher alleges Ernest Lynden Watkins IV (Watkins IV), the son of Mr. and Mrs. Watkins, negligently operated a vehicle causing bodily injury to Fisher. According to the petition, Officer Fisher was in pursuit of a car owned by Mr. and Mrs. Watkins that had evaded detention during a traffic stop. Fisher alleges Watkins IV was driving the vehicle, and in the processing of pursuing Watkins IV, Fisher crashed his motorcycle and sustained injuries.
According to State Farm, the express language and scope of coverage of the Policy have been implicated by the Underlying Suit. Indeed, State Farm is currently providing a defense in the Underlying Suit, and it does not seek an adjudication of its duty to defend through its declaratory judgment action. Instead, State Farm only requests a declaration the Policy bars any claim for indemnification arising from the Underlying Suit. In other words, State Farm contends the Policy does not provide coverage for the events at issue.
Springtown lawyers handling insurance cases would want to know about a ruling in the Florida Supreme Court in May 2015. This ruling was written about in the Claims Journal. The curious thing to try to figure from this case is whether or not the Texas Supreme Court would rule the same way.
The article says the Florida Supreme Court recently considered whether the original policyholder’s signed rejection form, rejecting higher limits of UM coverage, applied to the original insured’s daughter who later became the sole named insured under the policy. In this case the Florida Supreme Court held that the original policyholder’s original rejection of higher UM limits on the policy that named him as an insured, and listed his daughter as a driver, was not binding on the daughter, individually, nor in her capacity as personal representative of her father’s estate. The facts indicated that the original insured, Richard Chase, insured his vehicle in 2001 with a policy through Horace Mann, providing liability limits of $100,000/$300,000. The vehicle insured under the policy was a 1992 Chevrolet Geo. Richard Chase who was the only named insured at that time, and the titled owner of the Geo, signed a form in which he selected reduced UM limits of $25,000/$50,000. Allison Chase, his daughter, was listed as a driver on the policy but was not a named insured on the policy and, therefore, had no right to select UM limits.
In 2004, Horace Mann removed Richard Chase as the sole named insured on the policy and made his daughter, Allison Chase, the sole named insured. Horace Mann also changed the insured vehicle to a 1997 Ford Escort that had been acquired by Allison three days earlier which was titled in her own name. Horace Mann then issued a new policy with Richard Chase as the sole named insured, insuring a 2004 Jeep that was owned by Richard. When the new policy was sold to Richard Chase he was presented with another written rejection form to sign. Allison Chase, who had never previously had the opportunity to select lower UM limits, was not provided the opportunity to reject the coverage or select lower limits when she was designated as the named insured on the policy issued in 2001.
Dallas Fort Worth Insurance Lawyer Blog