Interpreting An Insurance Policy

Insurance Lawyers – Read The Policy

July 18, 2022 | Mark S. Humphreys

Here is a policy interpretation case from the United States Fifth Circuit. The opinion was issued on June 2, 2022, and is styled, Kiolbassa Provision Company, Incorporated v. Travelers Property Casualty Company of America.

Kiolbassa ran out of storage space in its warehouse and loaded 49,016 pounds of organic beef trim onto a “reefer trailer” (a trailer with an attached refrigeration unit) located on its premises. The refrigeration unit malfunctioned; the beef spoiled; and Kiolbassa lost about $167,000 worth of product. Kiolbassa then filed an insurance claim under the Equipment Breakdown Policy.

Travelers denied coverage under the Equipment Breakdown Policy because the refrigeration unit was mounted on the reefer trailer, which (Travelers argues) does not meet the definition of “Covered Equipment” in the Policy. Kiolbassa sued for its denial of coverage under only that policy, which insures damage to “Covered Property” caused by a “Breakdown” of “Covered Equipment” on “Covered Premises.”

Insurance Claim Denial And Wine?

May 28, 2022 | Mark S. Humphreys

Here is an interesting claim denial. The case is a 2022, from the Southern District of Texas, Houston Division. It is styled, Sergio and Maria Weitzman v. Allstate Vehicle and Property Insurance Company.

The Weitzman’s bottle wine in Argentina and sell it, for money, to and through their Texas company, Serca Wines, LLC. In 2019, a fire destroyed 7,727 bottles stored in Argentina awaiting shipment to, and sale from, the United States. The Weitzman’s made a claim through their homeowners policy for the loss. The policy covered personal property located away from the residence, but with a business property coverage limit of $200.00. Allstate paid $200.00. The Weitzman’s, representing themselves sued Allstate alleging the wine business is a hobby and that the bottles were personal property. They sued for the policy limits of $303,000.00.

The undisputed facts in the record, which includes the tax returns for the relevant period and a few invoices, as well as responses to written discovery, show that as a matter of law, the $200.00 policy coverage limit for business property located away from the insureds’ residence applies. Allstate’s motion for summary judgment was granted.

Read The Policy!

March 7, 2022 | Mark S. Humphreys

Reading the life insurance policy all the way through is vital to understanding the coverage therein. This is illustrated in a 2022 opinion from the U.S. 5th Circuit. The style of the opinion is Landmark American Insurance Company v. SCE Memorial Place II, L.L.C.

This case is about whether an insurance policy covered flood-related damages sustained by a building during Hurricane Harvey. The district court decided in favor of SEC on competing motions for summary judgment. This appeal followed and this appeals court ruled in favor of Landmark.

The “Insuring Clause” of the Landmark policy outlines the type of damage for which it would cover the deductible of the primary insurance policy. Specifically, Landmark agreed to indemnify the insured for damage “caused by any of such perils as are set forth in item 3 of the schedule, and which are also covered by . . . the ‘Primary Insurer(s).’” It is an “All Risks” policy.

Life Insurance Policy And Grounds For Rescission

July 3, 2021 | Mark S. Humphreys

Life Insurance claims attorneys need to understand the important distinction between statements by the insured that are considered to be representations and those considered to be conditions precedent. If the insured’s statement is considered a representation, a false statement alone will not let the insurer avoid coverage. Each of the elements required by the 1980, Texas Supreme Court opinion styled, Mayes v. Massachusetts Mutual Life Insurance Co., must be shown. In contrast, if the insured’s statement is considered a condition precedent, then falsity alone will allow the insurer to avoid coverage.

It may seem confusing but this representation versus warranty issue is well developed under Texas law. If the statements are considered representations, then to avoid liability under the policy the insurance company must plead and prove: 1) the making of the representation, 2) the falsity of the representation, 3) reliance thereon by the insurance company, 4) the intent to deceive by the insured in making the same, and 5) the materiality of the representation. This is discussed in the 2003, Tyler Court of Appeals opinion styled, Protective Life Insurance Co. v. Russell, the 1996, Austin Court of Appeals opinion styled, American National Insurance Co. v. Paul, and the 1983, 1st District Court of Appeals opinion styled, Cartusciello v. Allied Life Insurance Co.

The same cases recognize that if the language of the policy expressly provides that coverage does not take effect unless the applicant is in good health, the provision is enforceable as a condition precedent. When the language states that answers in the application are true and correct at the time of delivery of the policy, such a requirement is merely a representation. Also, when the language of an insurance policy is susceptible to more than one construction, the policy should be construed in favor of the insured to avoid exclusion of coverage. As was explained by the U. S. 5th Circuit in the 1997, opinion styled, Riner v. Allstate Life Insurance Co., “Short of inserting an unambiguous “good health” warranty demonstrating that the parties intended the contract to rise or fall on the literal truth of an insured’s general certification of good health, Texas has not allowed an insurer to change that result by contracting to make truthful application answers a condition precedent to coverage.” The same Riner court added that “a warranty is a statement made by the insured, which is susceptible to no construction other than that the parties mutually intended that the policy should not be binding unless such statement be literally true.”

Reading And Understanding An Insurance Policy

April 17, 2021 | Mark S. Humphreys

Life insurance lawyers, disability lawyers, auto policy lawyers, homeowners policy lawyers, and any other type of insurance lawyer needs to be able to read an insurance policy and know how the Courts interpret policies.

A principle that has particular impact is the rule that insurance policies are strictly construed in favor of the insured to avoid excluding coverage. This is stated in the 1984, Texas Supreme Court opinion styled, Puckett v. U.S. Fire Ins. Co. Exceptions or limitations on liability are strictly construed against the insurer and liberally in favor of the insured. This is illustrated in numerous cases from the Texas Supreme Court – 1) the 1991, opinion, National Union Fire Ins. Co. v. Hudson Energy Co., 2) the 1987, opinion, Barnett v. Aetna Life Ins. Co., 3) the 1982, opinion, Blaylock v. American Guar. Bank Liab. Ins. Co., 4) the 1977, opinion, Glover v. National Ins. Underwriters, and 5) the 1896, opinion, Brown v. Palatine Ins. Co.

Stated another way, “An intent to exclude coverage must be expressed in clear and unambiguous language” according to the 1993, opinion styled, State Farm Fire & Cas. Co. v. Reed.

How Are Insurance Contracts Interpreted

April 12, 2021 | Mark S. Humphreys

Insurance lawyers need to know how insurance contracts are interpreted by the Courts.

The 1984, Texas Supreme Court opinion styled, Puckett v. U.S. Fire Ins. Co., says that the rule for insurance policies is that they are strictly construed in favor of the insured to avoid excluding coverage. Exceptions or limitations on liability are strictly construed against the insurer and liberally in favor or the insured. This is made clear in the 1991, Texas Supreme Court opinion, National Union Fire Ins. Co. v. Hudson Energy Co., and in the 1987, Texas Supreme Court opinion styled, Barnett v. Aetna Life Ins. Co., and the 1987, Texas Supreme Court opinion styled, Blaylock v. American Guar. Bank Liab. Ins. Co., and the 1977, Texas Supreme Court opinion styled, Glover v. National Ins. Underwriters, and as far back as the 1896, Texas Supreme Court opinion styled, Brown v. Palatine Ins. Co.

Stated another way in the 1993, Texas Supreme Court opinion styled, State Farm Fire & Cas. Co. v. Reed, “an intent to exclude coverage must be expressed in clear and unambiguous language.”

Ambiguity In Insurance Contracts

April 10, 2021 | Mark S. Humphreys

Bad faith insurance lawyers always want to see the policy a potential client has when a claim is denied. The words in the policy compared with the facts of the case will often determine whether or not the attorney can be helpful.

When a policy has words or wording that is difficult to understand, then the rules of “ambiguity” apply.

These rules apply to ambiguities in insurance policies:

Insurance Claim Denial Lawyers – Mechanical Breakdown

February 8, 2021 | Mark S. Humphreys

Here is an interesting case from the San Antonio Court of Appeals. The opinion is styled, Infinity County Mutual Insurance Company v. Michael Tatsch.

Tatsch had auto insurance with Infinity. Tatsch made a claim for engine damage. Infinity denied the claim and sent Tatsch a letter explaining its decision. The letter read:

The vehicle damage occurred due to poor quality fuel being added to the vehicle which caused mechanical failure to your insured vehicle. There is an applicable exclusion in Your Texas Commercial Auto Policy that states we do not provide comprehensive coverage for damages resulting from mechanical failure.

Insurance Claim Denial Lawyer – Reading The Policy

February 6, 2021 | Mark S. Humphreys

Insurance Policy interpretation is something the Courts are often called upon to do. Here is a twist to that. A 2020, case from the Southern District of Texas, Houston Division, was asked to require appraisers to use a specific format for an appraisal. The Court refused this request.

The case is styled, Mt. Hawley Insurance Company, et al. v. Harrod’s Eastbelt, Ltd.

Harrod’s had invoked the appraisal provision in the policy issued by the insurer. Mt. Hawley, requested the Court to require the appraisers to use a specific format for the appraisal and to select an umpire.

Insurance Denial Attorneys – Cattle?

January 16, 2021 | Mark S. Humphreys

Here is a case that may apply to many of the rural areas of Texas. The case is a 2020, opinion from the Corpus Christi Court of Appeals and is styled, State Farm Mutual Insurance Company v. Rolando Lopez, Individually and Rolando Lopez D/B/A R&A Transport.

This is an appeal of a summary judgment in favor of Lopez and against State Farm. This Court reversed the trial court and rendered judgment in favor of State Farm.

The main point of this case is the interpretation of the words “in use” in the commercial policy at issue. The policy provides in part: