Competing Insurance Policies In Texas

Let’s pretend your sister in Dallas, is driving her brothers car, who lives in Fort Worth. The car is insured on hthe parents Safeco auto policy that was bought in Grand Prairie. Your sister has a wreck in Weatherford, Texas. Your sister also had insurance with Allstate on her own car she had purchased in Arlington. Your sister is at fault and the other driver suffers personal injury and property damage. Both Allstate and Safeco refuse to settle the claim being asserted against you and your sister because they believe the other company should be paying the claim or paying the claim on a pro-rata basis.
This can be a very frustrating position for someone to find themselves involved and is referred to as an “other insurance” issue. The above is roughly what happened in the case, Safeco Lloyds Insurance Company v. Allstate Insurance Company. This case was tried and then appealed to the Court of Appeals of Texas, San Antonio.
The general rule in the past has been that auto insurance coverage goes with the vehicle. If the coverage on the vehicle is not sufficient to pay all the lose incurred then, the driver of the vehicle who has separate coverage has this separate coverage kick in as secondary coverage. However, the laws have changed and each insurance policy has to be looked at and compared with the other policy that may provide coverage to see what the result may be in any particular situation.
There are three types of “other insurance” clauses in an auto insurance contract. (1) a pro-rata clause, which restricts liability upon concurring insurers to an apportionment basis, (2) an excess clause, which restricts liability upon an insurer to excess coverage after another insurer has paid its policy limits, and (3) an escape clause, which avoids all liability if other insurance exists. The court went into detail in the opinion of this case explaining the different “other insurance” clauses and how they worked with each other, depending on the facts of each situation.
When it was argued by Allstate that the law in Texas is the insurer of a car provides primary insurance and the insurer of the driver provides excess insurance, it was argued by Safeco that nowhere in Texas law does a court espouse a black-letter rule that insurance follows the vehicle.
In this case it was decided by the court that the costs of the wreck should be shared on a pro-rata basis. The bigger lesson is that these situations can be complicated and when a person finds themselves in a situation where the insurance companies are argueing among themselves about who should be paying the claim, then its time to find an experienced Insurance Law Attorney.