Dallas Fort Worth Insurance Lawyer Blog

Life Insurance – To Void Policy, There Must Be Intent To Deceive

February 11, 2017 | Mark S. Humphreys

Mason life insurance lawyers must understand that for an insurance company to prevail on a defense of misrepresentation, the insurer must prove the intent to deceive. This is discussed in a 2013, Dallas Court of Appeals opinion styled, Medicus Insurance Company v. Frederick Todd, II, M.D.

Medicus provides medical malpractice insurance to physicians and health care providers. Dr. Todd submitted a two page application for insurance. The application asked if Todd had “ever been the subject of an investigation by any … licensing authority,” and he checked the “No” box. In fact, Dr. Todd had been twice investigated by the Texas Medical Board for having three or more medical malpractice claims in a five-year period. The credentialing application also asked if he had “ever had any malpractice actions within the past 5 years (pending, settled, arbitrated, mediated or litigated),” and Dr. Todd checked the “Yes” box and attached a description of four lawsuits filed against him between May 2000 and when he signed the application in May 2005. Dr. Todd omitted one lawsuit from the list of claims filed between May 2000 and May 2005. Dr. Todd also failed to disclose another lawsuit filed between his signing the credentialing application and his applying to Medicus.

The underwriter suggested to Medicus that the application be denied but Medicus decided to accept it.

Misrepresentations In Life Insurance Applications – Intent

February 9, 2017 | Mark S. Humphreys

Llano County life insurance lawyers need to know about this 1989, Corpus Christi Court of Appeals opinion. The case is styled, Maria C. Soto v. Southern Life & Health Insurance Company.

Maria C. brought suit against the Southern Life to collect $4,000.00 in benefits as the beneficiary of a life insurance policy which was issued to her now deceased husband, Jesus G. Soto. Southern Life denied liability based on misrepresentations made on the application for insurance regarding Mr. Soto’s condition of health and plead the affirmative defense of misrepresentation and fraud. A jury subsequently found that Mr. Soto had represented in the application for life insurance that (1) he was in good health and free from all disease; (2) he had not been under observation or treatment in a clinic or hospital between May 23, 1980 and May 23, 1985; (3) he had not been attended by a physician between May 23, 1982 and May 23, 1985; and (4) he had no physical defect or infirmity in the form of lung disease. The jury further found that both Jesus knew these representations were false and that they were intended to induce or deceive Southern Life into issuing Mr. Soto a life insurance policy. The jury also found that these representations were material to the risk and that Southern Life would not have issued the life insurance policy had it known the true state of Jesus’s health. Based on these findings, the trial court ordered that Soto take nothing by her suit. This court affirmed the judgment of the trial court.

Soto states that she testified at trial that she provided Mr. Nava the information for the application, that she informed the agent, Enrique Nava, of Mr. Soto’s hospitalization, illness, and physician name, but that she did not read the application before she signed it. Soto argues that Mr. Nava failed to write the correct information on the application.

Selling A Life Insurance Policy?

February 7, 2017 | Mark S. Humphreys

Life insurance lawyers will eventually see a situation where a client has bought or sold a life insurance policy to or from a third party. Insurancenewsnet.com published an article dealing with this subject that is worth reading. The title is, 5 Key Questions Asked About Selling A Life Insurance Policy For Cash.

Today’s seniors face many unforeseen challenges, particularly as costs continue to rise for everything from groceries to medications. Further, many retirees are just scraping by without any cushion to pay for emergency expenses.

This ongoing erosion of assets threatens an entire generation of seniors who currently are struggling to pay retirement costs. And unfortunately, it might be even worse for baby boomers and Generation X according to an Associated Press analysis of savings data from the Federal Reserve. The study found that 35 percent of households in their prime earning years have nothing saved in a retirement account and no access to a traditional pension. For seniors facing a financial crisis or for those just looking to bolster their emergency funds, a life settlement may be an answer.

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.

Failure Of Agent To Disclose Policy Exclusion

February 4, 2017 | Mark S. Humphreys

Mason County insurance lawyers learn pretty quick that an insurance agent does not have to tell a customer everything about the insurance policy they purchase. This is illustrated in a 2000 San Antonio Court of Appeals opinion styled, Nwaigwe v. Prudential Property & Casualty Insurance Company.

Moses Nwaigwe sued Prudential and its agent, William Eckert (collectively “Prudential”), for failing to disclose a policy exclusion that the company used to deny a claim. In response, Prudential moved for summary judgment on the grounds that it did not misrepresent the terms of the policy and that it had no duty to tell Nwaigwe about the vacancy clause. The trial court granted the motion. On appeal, Nwaigwe argues the summary judgment was improper because the motion failed to address his failure to disclose allegation.

In 1993, Nwaigwe purchased a fire insurance policy from Prudential to insure an occupied rental property. The policy was issued and renewed twice, but Nwaigwe says he never received a copy of the policy.

When Does Coverage Begin?

February 2, 2017 | Mark S. Humphreys

Kimble County, Junction Texas – Even a place that is rural and secluded has to deal with insurance issues. One of those issues at some point on a claim will be – when does coverage begin on the policy at issue. This is discussed in a 1996, Texarkana Court of Appeals opinion styled, McKillip v. Employers Fire Insurance Company.

In March 1992, Wife who was in the process of obtaining a divorce, was told by her husband that State Farm was cancelling her auto policy. Wife contacted an Allstate agent to obtain a new policy. On April 3, 1992, Wife met with agent and completed an auto insurance application. requesting coverage for uninsured/underinsured motorist coverage, bodily injury, and PIP. Wife testified that when she paid her down payment, Agent told her she was “now insured” and gave her temporary proof of insurance.

Agent submitted Wife’s application and premium to the Texas Auto Insurance Plan (TAIP). On April 9, 1992, TAIP assigned Wife’s application to Employers which issued a policy with an effective date of April 14, 1992.

Property Damage Claims

January 31, 2017 | Mark S. Humphreys

The Insurance Journal has published an article that insurance lawyers and anybody who has property insurance needs to pay attention to. The article is titled, Battle Over Property Claims And Litigation In Texas Set To Continue In 2017.

If a Dec. 1, 2016, hearing is any indication, Texas lawmakers will be encouraged in the coming legislative session to take up what the property/casualty insurance industry claims to be a problematic trend following sever weather-related events in the state: increased attorney and public adjuster involvement in residential property damage claims.

The Texas House of Representatives, Insurance Committee heard testimony from invited speakers about the preliminary results of a Texas Department of Insurance (TDI) study aimed at gathering information on residential property claims and any resulting litigation. The legislature had asked TDI to study whether the data showed a trend of increased public adjuster or increased attorney involvement and, if so, to identify what impact such a trend might have on the property insurance market in the state. This writer would argue that whether or not there is such a trend, it would be important to know what is the cause of the trend, i.e., impropriety on the part of the insurance companies or on the part of public adjusters or on the part of attorneys.

Insurance Brokers And Insurance Law

January 29, 2017 | Mark S. Humphreys

Many people get their insurance through a broker. Can a broker be liable the same as an agent. The short answer is “yes.” A 1995, Houston Court of Appeals [1st Dist.] discusses an issue with a broker. The opinion is styled, Seneca Resources Corp. v. Marsh & McLennan, Inc.

Marsh & McLennan (M&M) brokered insurance for Seneca, an oil and gas company. As part of its services, M&M provided summaries of insurance policies. Seneca suffered a loss when a hurricane toppled a submersible drilling rig in the Gulf of Mexico.

The insurance summaries provided by M&M to Seneca indicated that Seneca had purchased “operator’s extra expense” named peril coverage which would have covered the cost of re-drilling the well. However, the applicable policy did not, in fact, include named peril re-drill coverage as indicated by the summaries.

Who Is An Insurance Agent

January 28, 2017 | Mark S. Humphreys

For most lawyers practicing insurance law, the above question may be obvious. But there are situations where it is not so obvious and even though one may assert the act of agency, it is not. A Houston Court of Appeals [14th Dist.] opinion illustrates a situation where the alleged agent was held by the court, to not be an agent. The case is styled, Harrison V. Wells Fargo Bank Texas, N.A.

Harrison was the beneficiary of a Section 142 trust established after she sustained a brain injury in a car accident. Later, Harrison was the driver of the car in another accident in which her passenger was severely injured. The passenger settled his claims against Harrison for her $100,000 auto liability policy, which had been obtained by the bank, plus $300,000 from Harrison’s trust. Harrison sued the bank for Insurance Code violations, breach of fiduciary duty, negligence, and DTPA violations for alleged failure to obtain adequate limits of liability insurance for her. The bank was granted a summary judgment on the Insurance Code violations. The remaining claims were tried and the bank was found not liable. Harrison appealed the findings.

This Houston Court of Appeals affirmed the findings of the trial court. The evidence showed that after Harrison acquired automobile insurance, her mother sent the bill for the premium to the bank and the bank then forwarded the payment to the insurance company. Insurance Code Section 4001.051 lists various acts performed in the ordinary course of providing insurance and states that any person who performs these acts shall be the agent of the company for which the act is done. “Performing an act described in Section 4001.051, such as transmitting an insurance premium, subjects a party to liability as an agent there under only if the act is performed (a) in the course of providing insurance and (b) on an insurance company’s behalf.” The evidence established that the bank was not engaged in the business of providing insurance and that its payment of premium was made solely pursuant to its role as a Trustee of the Section 142 trust. The payment was not transmitted in the course of providing insurance or on any insurance company’s behalf. Therefore, the payment did not render the bank an agent of the insurance company under Section 4001.051.

When Is An Agent Liable?

January 26, 2017 | Mark S. Humphreys

An insurance lawyer wants to be able to know when an agent can be held liable for his actions in selling an insurance policy. A Houston Court of Appeals [1st Dist.] looked at this issue in 2003. The style of the case is, Vecellio Insurance Agency v. Underwriters Insurance Company.

A man and woman were kidnapped, taken to a vacant house where the woman was raped and the man was murdered. The property owner was sued and the insurer initially denied coverage because the agent failed to add the property to the homeowner’s policy as purportedly requested by the insured. The insurer subsequently provided a defense under a reservation of rights and ultimately settled the lawsuit. The insurer then brought a common law indemnification claim against the agent for the money spent defending and settling the underlying lawsuit. The jury found in favor of the insurer, awarding almost $560,000. The agent appealed asserting that the trial court erred by failing to require the jury to first find that the agent committed a tort for which the insurer could be liable for addressing the indemnification issue.

In a case of first impression for Texas jurisprudence, the Houston First Court of Appeals reversed the trial court’s ruling and remanded, agreeing with the agent that the insurer must first have the jury establish that the agent committed a tort for which the insurer could be held vicariously liable. The court noted that the availability of causes of action based on common law indemnity were very limited in Texas and “there is no right of indemnity against a defendant who is not liable to the plaintiff.” The jury charge submitted over the agent’s objection sought to have the jury determine whether the insurer had a duty to defend due to the “misconduct” of the agent, without defining what it meant by misconduct, or without first having the jury determine that the agent herself was liable to the insured, before addressing the insurer’s vicariously liability for the agent’s actions.