Articles Posted in Interpreting An Insurance Policy

An additional insured is a party protected under an insurance policy, but who is not named within the policy.  A common example of an additional insured is a person who, although not specifically named, is covered under a liability policy by a definition of “insured” that extends protection to interests, strictly according to a status, such as employees or common members of a household.  This is most commonly seen in personal automobile polices such as when a friend drives a car with the owners permission.  A party typically becomes an additional named insured pursuant to an agreement obligating the named insured to add the additional named insured to the named insured’s pre-existing insurance policy.  This is discussed in the 1997, Austin Court of Appeals opinion styled, Western Indem. Ins. Co. v. American Physicians Ins. Exch.

The Western Indemnity case is a summary judgment ruling.  In the case, the wording of the policy was discussed at length.  In making it’s ruling the court noted that both the terms “additional insured” and “additional named insured” have clear technical meanings.  An additional insured is a party protected under an insurance policy, but who is not named within the policy.  A common example of an additional insured is a person who, although not specifically named, is covered under a liability policy by a definition of “insured” that extends protection to interests, strictly according to a status, such as employees or common members of a household.  On the other hand, an additional named insured is a person or entity specifically named in the policy as an insured subsequent to the issuance of the original policy.  A party typically becomes an additional named insured pursuant to an agreement obligating the named insured to add the additional named insured to the named insured’s pre-existing insurance policy.

As in all situations where an insurance company is not promptly paying a claim for coverage, a person should seek the help of an Experienced Insurance Law Attorney.

Insurance attorneys always have to answer the above question when looking at an insurance policy case.  This issue is discussed in the 1972 case from the Texarkana Court of Appeals styled, Doss v. Roberts.

This suit involves the division of monies received from the sale of land found not to be subject to partition in kind.  Roberts brought suit to partition 22 acres of land jointly owned with James B. Doss.  The jury found that the land was not subject to partition in kind, and the court ordered the land sold and monies divided.  The parties each owned an undivided one-half interest in the property.  The land was subject to a V.A. loan and lien.  Doss purchased insurance on his interest in the dwelling located on the land in the amount of $10,000.00 and named the V.A. as loss payee.  The improvements were destroyed.  Doss paid the remaining balance due the V.A. in the sum of $8,964.87, and thereafter collected the insurance proceeds of $10,000.00.  Roberts contended she was entitled to one-half of the insurance monies because the house was not rebuilt.

The main issue in this case is whether Roberts was entitled to one half of the proceeds from the insurance.

Insurance lawyers will tell their clients to read the insurance policy and then the attorney can discuss with the client how courts interpret the language in the policy.  A 2018, opinion from the Southern District of Texas, Corpus Christi Division, styled, Mark Eller V. United Property & Casualty Insurance Company, is a good read for seeing how at least this particular court interprets the policy at issue in this case.

United filed a “Motion to Abate Proceedings to Complete Appraisal Process” and Eller responded.

Eller owns property damaged in Hurricane Harvey on or about August 25, 2017.  United was the insurer and provided an estimate of the loss that was far less than what Eller says.  A pre-suit demand was made under Texas Insurance Code, Chapter 542A on February 1, 2018.

Dallas insurance attorneys will want to read this 2018, opinion from the San Antonio Court of Appeals.  It is styled, Avalos v. Loya Insurance Company.

The case discusses in depth the “eight corners rule” and how courts look at this rule in determining whether or not an insurer has a duty to defend a lawsuit.  The rule takes its name from the fact that only two documents – the insurance policy and pleading – are relevant to the determination of the duty to defend.  Under the eight-corners rule, an insurer’s duty to defend is determined by the third-party plaintiff’s pleadings, considered in light of the policy provisions, without regard to the truth or falsity of those allegations.

When applying the eight-corners rule, the court is tasked with resolving all doubts regarding the duty to defend in favor of the existence of a duty and liberally construe the allegations in the petition in favor of the insured.  Even if the allegations in the petition are groundless, false, or fraudulent, an insurer is obligated to defend.  The duty to defend is not affected by facts that may be ascertained before suit or developed during the course of the litigation.  Thus, according to the 2009, Texas Supreme Court opinion styled, Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., facts outside the pleadings are not material to the determination of the duty to defend even if those facts directly contradict the allegations in the underlying petition.

Coverage for punitive damages are not always covered in an insurance policy.  This issue came up in the 2018, case styled, Richard Brett Frederking v. The Cincinnati Insurance Company, Inc.  The case is from the U.S. District Court, Western District of Texas, San Antonio Division.

This is a summary judgment case if favor of Cincinnati.  The Court held that the insurance policy at issued does not afford coverage for the punitive damages award attributed to the negligence of Carlos Sanchez.

Frederking was injured when his vehicle was struck by an intoxicated driver, Carlos Sanchez.  A trial was held in State Court and the jury found Sanchez was grossly negligent and awarded Frederking $207,550.00 in punitive damages plus interest.  The issue is whether the policy held by Sanchez’s employer covers this punitive damages award.

What is the difference between replacement cost and actual cash value.  Knows the difference can mean many thousands of dollars on a claim.

Pursuant to the 1998, Austin Court of Appeals opinion styled, Great Texas County Mutual Insurance Co. v. Lewis, “replacement cost” is when the insurer pays the insured the “amount necessary to repair or replace” the damaged property with another “of like kind and quality.”  The insurer is agreeing to restore the property to a condition substantially the same as that existing before the damage was sustained.

In Great Texas, the court said that replacement cost is a measure of loss that does not allow for depreciation.  As an example, the Great Texas case involved damage to a car engine.  The insurer calculated the cost of repair to be $3,608.27.  From this amount the insurer subtracted a deductible of $527.00 and $2,031.72 for betterment or depreciation, leaving $1,049.55, which the insurer offered the insured to discharge its obligation under the property damage section of the policy.  The court stated that, because the car was a functioning or operating automobile before the damage, the insurer was required to pay an amount necessary for the repair or replacement of an automobile of that character.  If the insurer were allowed to to discharge its obligation by paying the insured $1,049.55, the insured would not have a sum sufficient to restore his engine and automobile to a functioning or operating state.  Therefore, the insurer was required to pay the cost of a remanufactured engine without deducting for betterment or depreciation.

Insurance lawyers may know the difference between the two above types of policies but most people do not know the difference.

Property insurance may be issued on either:

An “all risk” basis, meaning that all risks of physical loss are covered except for excluded perils.