Articles Posted in Interpreting An Insurance Policy

Knowing how to interpret an insurance policy is vital for insurance attorneys attempting to help clients with insurance disputes.  Knowing how to do this, is to know how courts interpret insurance policies.

One issue frequently faced by courts is the source of meaning to be given to words.  At least two different rules have evolved in order to identify the definitions to be given to words as used in insurance contracts.

The first rule is the “definition” rule.  Where the policy, by its own terms, defines a term, those definitions control.  This was made clear in the 2003, Texas Supreme Court opinion styled, Provident Life & Accident Ins. Co. v. Knott, and the 1997, opinion styled, Trinity Universal Ins. Co. v. Cowan.

Here is a 1974, opinion from the 14th Court of Appeals that is still good law today.  The opinion is styled, Janice Sue Milton v. Preferred Risk Insurance Company et al.

This is a lawsuit to recover benefits under the uninsured motorist provisions of an automobile policy.  The question for the Court is, at what point in time must the insured forward suit papers concerning a claim against an uninsured motorist, if the negligent party was insured at the time of the accident, but later became “uninsured” as that term is legally defined.

The Facts of this case are a little confusing and will not be discussed here.  The relevant Fact is that the insured, Milton, sued Preferred seeking benefits under her uninsured motorist provisions of her insurance policy with Preferred.

Insurance lawyers know that almost all insurance policies require that an insured provide to the insurance company, prompt notice of a claim.  The purpose of this prompt notice requirement is to allow the insurance company to investigate the claim while the facts of the claim are fresh.  However, if the insured fails to provide this prompt notice, the insurer is required to show that it was prejudiced or harmed by the insured’s failure to provide the prompt notice.  Here is a case discussing that issue.

The case is from the Fifth Circuit Court of Appeals and is styled, Blanco Properties, L.L.C. v. Arch Specialty Insurance Company.

Blanco owed commercial property insured by Arch.  Blanco’s owner did not discover April 2016, hail damage until October 2017 and did not file a claim until November 2017.  The claim was denied due to the policy containing a specific endorsement that explicitly required hail related claims to be brought within one year.  The District Court granted summary judgement in favor of Arch and this Court affirmed that judgment.

Interpreting the number of accidents or occurrences that are covered by a policy can be confusing.  The State Bar of Texas, Insurance Law Section, Insurance Journal, published an article titled, Texas Law And The Restatement Of The Law Of Liability Insurance: An Initial Comparison Of Blackletter Principles.  This article dedicates about a page discussing the issue.

The article tells us that for liability policies, the number of occurrences is determined by finding the number of events or incidents for which the insured is liable.  This is discussed in quite a number of Texas cases starting with the 1971, 5th Circuit opinion styled, Maurice Pincoffs Co. v. St. Paul Fire & Marine Ins. Co.

The Restatement of Law essentially mirrors Texas law in adopting a “cause” standard:

Insurance lawyers understand that an insured has an obligation to cooperate with the insurance company investigation of a claim.  This topic is briefly discussed in an article published by the State Bar of Texas, Insurance Section Journal.  The article is titled, Texas Law And The Restatement Of The Law Of Liability Insurance: An Initial Comparison Of Blackletter Principles.

In most situations when an insured has a claim, he calls the insurance company, the insurance comes out, takes a statement, and a few days later the claim is resolved.  But, that is not how it always occurs.

The law in Texas, is that an insured has a duty to cooperate with its insurance company in the defense of claims for which the insurer has a duty to defend.  This was made clear in the 1993, opinion from the Texas Supreme Court styled, State Farm Fire & Cas. Co. V. S.S.  These clauses, called cooperation clauses, are intended to guarantee to the insurance companies the right to prepare adequately their defense on questions of substantive liability.  This was stated in the 1971, 5th Circuit opinion styled, Martin v. Travelers Indem. Co.  The Restatement essentially recognizes this same duty and says:

The subject of anti-assignment clauses was discussed in an article published in the State Bar of Texas, Insurance Section, Journal.  The article is titled “Texas Law And The Restatement Of The Law Of Liability Insurance: An Initial Comparison Of Blackletter Principles.”

The article is lengthy and a good read for lawyers dealing with this area of the law.  One page of the article deals with anti-assignment clauses.  It tells us this.

A 1994, Fort Worth Court of Appeals opinion styled, Tex. Farmers Ins. Co. v. Gerdes, says that anti-assignment clauses have been consistently enforced by Texas courts.  Texas courts enforce anti-assignment clauses post-loss ad without requiring the insurer to show prejudice and this is reinforced by the 2010, U.S. 5th Circuit opinion styled, Keller Foundations, Inc. v. Wausau Underwriters Ins. Co.  Thus, Texas courts will uphold anti-assignment provisions so long as they do not interfere with the operation of a statute.

The issue of whether or not punitive damages are covered under a liability policy is very important in a case where punitive damages are being sought by an injured party.

The State Bar of Texas, Insurance Section, published an article discussing this issue.  The article is titled, Texas Law And The Restatement Of The Law Of Liability Insurance: An Initial Comparison Of Blackletter Principles.

Here is what it tells us.

Here is an opinion from the Fort Worth Division, Northern District of Texas, that discusses insurance policy interpretation.  The opinion is styled, Suzann Ross v. Hartford Lloyd Insurance Company.

Ross had homeowners insurance coverage with Hartford and suffered a windstorm loss.  Ross made a claim for benefits and Hartford adjusted the claim and paid the amounts it believed it owed under the policy.  The main dispute was whether the roof damage needed to be totally replaced or just a portion replaced.  Ross sued Hartford and Hartford filed this Motion For Summary Judgment on her claims.

The relevant policy language reads in pertinent part:

The title of this blog topic should be “Insurance Company Gone Wacko”.

The case at issue here is from the Fifth Circuit Court of Appeals.  It is styled, Frederking v. Cincinnati Insurance Company.

This case involves Frederking being injured by an insured of Cincinnati who was intoxicated at the time of the automobile wreck.  The insured caused a wreck between the vehicle he was driving and the vehicle being driven by Frederking, causing injury to Frederking.  A jury found in favor of Frederking and Cincinnati refused to pay based on their assertion that the wreck was not the result of an accident as that term is used in the policy.