Insurance Payments And Coverage

Parker County attorneys probably know the law about this case even if they have not read the case. The case is an opinion from the Houston Court of Appeals, First District. The style of the case is, Texas Farm Bureau Underwriters and Texas Farm Bureau Insurance v. Douglas Rasmussen and Kathy Rasmussen.
The Rasmussens owned a rental house located in Texas. Beginning in 2006, the Rasmussens insured the house with Texas Farm Bureau. To encourage a shift in their insurance provider, the insurance agent, Bolton, told the Rasmussens that he would take care of the Rasmussens’ insurance needs, provide more personalized service, and notify them of any changes to their policies.
The Rasmussens renewed the policy that covered the rental home in June 2007. They paid the premium for the term of June 1, 2007 to June 1, 2008. They did not pay the premium when it was again due in June 2008. In January 2009, the fire occurred. The Rasmussens submitted an insurance claim, but the Texas Farm Bureau denied it.
At trial, Texas Farm Bureau proffered evidence and testimony that it had mailed a renewal notice for the policy and a demand for the premium, to cover the term June 1, 2008 to June 1, 2009. It adduced further evidence that it had sent a final notice stating that the premium was past due, and that if the Texas Farm Bureau did not receive the amount due by June 18, “all coverage afforded by this policy expired 12:01 A.M., 06-01-08.”
The Rasmussens testified that they had never received either of these notices, and they were unaware that a premium was due. Bolton never notified the Rasmussens about the expiration of the policy. The Rasmussens conceded at trial that they had never paid a premium for the June 2008 to June 2009 term.
An insurance policy constitutes a contract for a period of time covered by the contract. To renew a contract, the offer by the insurer to renew must be accepted by the insured completely and unequivocally. Thus, the payment of the insurance premium in accordance with the provisions of the insurance policy is generally a condition precedent to establish liability against the insurer. If the insured fails to meet this condition, then the policy expires. The Rasmussens’ insurance policy for the rental home applies to losses that occur during the policy period. Coverage under the policy is conditioned on the receipt of the premium. The Rasmussens admittedly did not pay the premium for the June 2008 to June 2009 term. Accordingly, the Rasmussens’ insurance policy expired by its own terms in June 2008, six months before the fire.
The Rasmussens respond that their policy automatically renewed upon its expiration, because Texas Farm Bureau failed to give them thirty days’ notice of non-renewal. They rely on Section 551.105 of the Texas Insurance Code, which provides:
Unless the insurer has mailed written notice of nonrenewal or renewal with written notice of change in coverage as provided by Section 2002.001 to the insured not later than the 30th day before the date on which the insurance policy expires, an insurer must renew an insurance policy, at the request of the insured, on the expiration of the policy.
Such a renewal must be at the request of the insured: “an insurer must renew an insurance policy, at the request of the insured, on the expiration of the policy.” This provision does extend the policy, however, if the insured does not accept the offer of renewal by payment of the premium due.
Even though a jury found in favor of the Rasmussens, the trial court took away the judgment and ruled in favor of the insurance company. The appeals court affirmed the trial court.