Dallas Fort Worth Insurance Lawyer Blog

How Relevant Is a Misrepresentation

February 16, 2017 | Mark S. Humphreys

As most Llano insurance lawyers can tell someone, the answer to the titled questions is: It Depends!

A 1976, Waco Court of Appeals opinion gives some guidance on an answer. The case is styled, Westchester Fire Insurance Company v. English.

Posing as husband and wife when in fact they were not married, Reaves Hickey and Carolyn Meadows purchased a frame house and two lots from Fannie English. English conveyed the property to Hickey and wife Carolyn. by warranty deed with a vendor’s lien note. These documents were executed in front of and notarized by Westchester agent, Kenneth Logan. At closing Logan issued a standard homeowners policy on the house and contents. The premiums were paid and accepted by Westchester. A few months later and contents were destroyed in a fire. Westchester failed to make cover the claim, a lawsuit was filed, and prior to trial Westchester learned for the first time that Hickey and Meadows were not married.

Insurance Application Misrepresentations And Their Importance

February 14, 2017 | Mark S. Humphreys

Mason Texas insurance attorneys need to know a few basics about insurance law when discussing potential cases and the surrounding facts with a client.

To begin with – When is a representation in an insurance application important? According to a line of cases, including (1) a 2014 federal case styled, Weidner v. Nationwide Property & Casualty Insurance Company, (2) a 1995 Houston Court of Appeals [1st Dist.] styled, Darby v. Jefferson Life Insurance Company, (3) a 1965 Austin Court of Appeals case styled, Manhatten Life Insurance Company v. Harkrider, a “representation is material if it actually induces the insurance company to assume the risk.”

According to a 1976 Waco Court of Appeals opinion styled, Westchester Fire Insurance Company v. English, the insurer must show that it was induced to assume the risk by the misrepresentation. According to the Texas Insurance Code, Section 705.004(c), this determination is a question of fact — the very language of the statute makes that “fact” clear. (It is a question of fact whether a misrepresentation made in the application for the policy or in the policy itself was material to the risk or contributed to the contingency or event on which the policy became due and payable.) This is backed up by case law in a 1985 Corpus Christi Court of Appeals opinion styled, Carter v. Service Life & Casualty Insurance Company, holding that the statute provides the materiality of any false representation is a question of fact.

Homeowners Insurance – Accident Or Intentional?

February 12, 2017 | Mark S. Humphreys

Lawyers in Mason Texas who handle insurance claims know that many accidents are covered by a persons’ homeowners insurance. But, intentional acts are not covered. The Claims Journal published an article discussing this issue in January 2017. The title of the article is, No Homeowner Liability Coverage For an Insured’s Negligent Assault, Even If Insured Was Intoxicated.

Nicholas Fiocchi sued Ronald Zatyco for assaulting him after a verbal argument between them at a bar earlier the same evening. Fiocchi’s complaint attempted by artful pleading to capture Zatyco’s parents’ homeowners coverage, alleging that the assault was made “negligently” and “without provocation,” but offering no other factual detail. In fact, the complaint was limited to just four paragraphs and, significantly, did not allege that Zatyco consumed any alcohol, was intoxicated or in any way cognitively impaired at the time of the assault.

Zatyco asked his parents’ homeowners insurer, Nationwide Property & Casualty, to defend and indemnify him against Fiocchi’s claim. Nationwide defended Zatyco under a reservation of rights but refused to agree to indemnify him. Instead, Nationwide brought its own lawsuit against Zatyco federal court to support a denial of all coverage for the claim.

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.