Interpreting An Insurance Policy

Llano County Property Owners – When Is A Fence Part Of Your Home

March 25, 2017 | Mark S. Humphreys

The Insurance Journal published an article on an opinion issued by the Texas Supreme Court that will have an impact on all property owners in the State of Texas. The title of the article is, Texas High Court Sides With Policyholder In Ike Damaged Property Case.

When is a fence a “dwelling” structure for insurance coverage purposes and when is it an “other structure?”

The Texas Supreme Court, relying on disputed language in a Liberty Mutual homeowners policy, found that a fence is a covered dwelling structure when it is attached to the home.

Homeowners Insurance Policy Coverage

March 7, 2017 | Mark S. Humphreys

Persons with homeowners insurance policies are in a better place today than they were before January 27, 2017. Insurance lawyers in Mason Texas, Menard, Junction, Grand Prairie, Arlington, Dallas, Fort Worth, and all over Texas need to celebrate a recent Texas Supreme Court opinion. The opinion is styled, Nassar v. Liberty Mutual Fire Insurance Company, et al.

The Nassars’ suffered losses after Hurricane Ike hit there home and damaged various parts of their property. Disputes arose over the value of various items damaged including the Nassars’ damaged fencing.

In addition to their residence, the Nassars’ property contains barns, outbuildings, and a system of fencing. The system of fencing spans over 4,000 linear feet, includes a white picket fence at the northeast corner of the dwelling, an ornamental iron fence … in front of the dwelling, numerous cross fences, garden fences and pens, and a large perimeter fence constructed of 2′ x 6′ lumber with wooden posts and eight foot intervals, on which welded wire mesh is attached.

Insurance Policies – Waiver And Estoppel

February 26, 2017 | Mark S. Humphreys

A problem for Kimble County insurance lawyers is knowing and being able to predict how a Judge will interpret an insurance policy. This topic is discussed in a State Bar of Texas, Insurance Section article. The article is titled, The Tentative Draft Of The Restatement (Third) Of Liability Insurance: How Could It Affect Texas Insurance Law?

Under Section 5 of the Restatement of Insurance (Third), a party may waive a right under the policy if, with actual or constructive knowledge of the right, the party (a) either expressly relinquishes the right or engages in conduct that would reasonably be regarded by the other party as relinquishing the right, and (b) that waiver is communicated to the other party.

Waiver permits the enforcement of terms different from the original contract or bars enforcement of such terms without creating a new contract. A party may waive only terms that benefit it; thus, the insured cannot waive policy conditions. The law of agency determines when the agent’s words or conduct binds the principle and waives its rights. Waiver necessarily requires extrinsic evidence.

Interpreting An Insurance Policy

February 18, 2017 | Mark S. Humphreys

One of the first things Dallas and Fort Worth insurance lawyers want to do in an insurance case is to read the policy. The next thing would be to know how the courts interpret policies. A recent article from the State Bar of Texas, Insurance Section, is a must read for insurance attorneys. The article discusses proposed changes to the Restatement (Third) of Insurance Liability. Here is a short exert from the 12 page article.

A. General principle — plain meaning is the preferred interpretation.

Under Section 2, policy interpretation is the process to determine the meaning of policy terms; enforcement is determined by other substantive law. Absent other law to the contrary, the ordinary rules of contract interpretation apply.

Sell Me A Policy That Covers My Property

February 5, 2017 | Mark S. Humphreys

Read The Policy! This is what all insurance agents tell their clients. The insurance company agent is not responsible for telling you what is in the policy. This is illustrated in a 1983, Texas Supreme Court opinion styled, Parkins v. Texas Farmers Insurance Company.

As a prerequisite to obtaining financing for a real estate purchase in 1976, Parkins, a licensed real estate broker, had to secure insurance for the building. Parkins testified that he contacted Dick Upham, Farmers’ authorized agent, and asked him for “the cheapest insurance I can get.” Following this conversation, Parkins received a payment plan agreement. In a column headed “Farmers Insurance Group Company” was the notation “Tex. Farmers Fire.” He soon thereafter received a Memorandum of Policy which referred to the policy as a standard “Homeowners Form B” and contained the following language as part of the printed form:

The above premises of the described dwelling are the only premises where the named insured or spouse maintains a residence, other than business property or farms.

Definition Of Residence Premises In Homeowners Policy

January 24, 2017 | Mark S. Humphreys

For lawyers handling homeowners claims, a 14th Court of Appeals opinion needs to be read. The case is styled, American Risk Insurance Company, Inc. v. Veronika Serpikova.

Veronika purchased a house in Houston (the Property). She purchased a policy to insure the house from American. At first, Veronika and her husband lived in the house but in May 2012, they moved to another location. They leased the Property to two tenants, and did not move back into the Property.

On September 6, 2012, a renewal homeowner’s insurance policy became effective. American issued the policy and Veronika was the named insured. In November 2012, a fire severely damaged the Property. Veronika made a claim and it was denied. The denial was based on the fact that Veronika did not reside at the Property at the time of the loss and thus, the Property did not fall within the Policy’s definition of “residence premises” as required for dwelling coverage under the Policy.

Policy’s That Exclude Drivers

December 29, 2016 | Mark S. Humphreys

One situation insurance lawyers see often is where a person is involved in an accident with another driver and the other driver is at fault. When it comes to making a claim against the insurance company for the other driver, you find out the other driver does not have coverage due to wording in the insurance policy. Or maybe that situation happens to you. So what is the law in the situations.

Named drive exclusions are common. That is where a policy specifically excludes a named person or driver. This is most common in households where there is a young driver such as a son or daughter who, because of the increased risk, the insurance company will charge a much higher premium, so the parent has the child excluded rather than pay the high premium. The problem arises when the child drives the car anyway and gets involved in a wreck. There will be no coverage.

However, an insurance driver may not exclude drivers by class, i.e., a “all unlicensed drivers.” Texas Transportation Code, Section 601.076 says:

Vacancy Clause

December 10, 2016 | Mark S. Humphreys

Insurance lawyers dealing with homeowners claims will eventually see a situation similar to the one in this San Antonio Court of Appeals opinion. The case style is Lynn v. USAA Casualty Insurance Company and the opinion was issued in 1997.

Mr. and Mrs. Lynn’s country home was insured by USAA. The house was completely destroyed by fire and USAA denied coverage based upon vacancy and arson. The Lynns brought suit against USAA for breach of contract and breach of duty of good faith and fair dealing. The trial court granted USAA’s Motion for Summary Judgment. This San Antonio Court of Appeals confirmed the judgment.

Although there were some contents in the house six months before the fire, the testimony established that the house was vacant when it burned. The Court of Appeals stated that the house was “without contents of substantial utility” due to lack of heating equipment, air conditioning, appliances, sleeping accommodations or efforts to preserve the contents for several months. Therefore, the “vacancy” clause precluded recovery. Furthermore, although the illegal acts (such as arson) of a co-insured do not bar recovery under an insurance policy, the “vacancy” clause, on the other hand, does not have a limitation for who “caused” or was aware of the “vacancy.” The clause excludes coverage regardless of the innocent spouse’s knowledge of the “vacancy.” Finally a bad faith claim is established by showing that the insurer had no reasonable basis for denying the claim or that the insurer failed to investigate. In this case, USAA was justified in denying the claim under the “vacancy” clause. Therefore, there was no bad faith.

Covered Claims

September 8, 2016 | Mark S. Humphreys

Here’s one for an insurance lawyer to answer – What if I sell my house to someone and in the disclosure documents I fail to list many of the problems with the house? What if the buyers of the house sue me for fraud and negligent misrepresentations? Does my homeowners policy protect me when I am sued and does the policy cover any judgment that may be taken against me?

This is exactly what happened in a 2005 Northern District case, the opinion is styled, Allstate Texas Lloyd’s v. Meyers.

The plaintiff’s purchased a home from the sellers who were covered under the insurer’s standard form homeowners’ policy. After the buyers moved into the home, they learned that the house, pool and deck had various defects and that the sellers had known of and intentionally concealed those defects from the buyers. The buyers sued the sellers asserting claims of fraud and negligent misrepresentations seeking mental anguish and economic damages associated with the cost of purchasing the defective home and for repairs to it. The insurer initiated this declaratory judgment action seeking a determination that it had no duty to defend or indemnify the sellers.

Insurance Claims And Emotional Distress

August 25, 2016 | Mark S. Humphreys

Damages and coverages available under an insurance policy will vary depending on the circumstances and policy language. As it relates to a claim for emotional distress, a 1994, 5th Circuit Court of Appeals case is a good read. The opinion is styled, Travelers Indemnity Co. v. Holloway.

In this declaratory judgment action, the insurance carrier, Travelers contended that it had no duty to defend its insured, Wanda Holloway, against a lawsuit for intentional infliction of emotional distress, since it was not covered under the policy. Holloway, the mother of a junior high school student competing for a cheerleader position, allegedly plotted to kill Heath, the mother of one of her daughter’s competitors. The mother of the competitor brought suit against Holloway alleging “outrageous conduct causing severe emotional distress” or “intentional infliction of emotional distress.” Holloway sought a defense from Travelers. Travelers argued that Holloway was not entitled to a defense and that there was no coverage, since (1) the conduct did not constitute an “occurrence” under the policy, (2) the conduct was excluded from coverage as intentional conduct, and (3) the conduct was not alleged to have caused “bodily injury” as defined by the policy.

The 5th Circuit affirmed the District Court’s opinion that there was no duty to defend or coverage since there was no allegation or evidence of a bodily injury.