Dallas Fort Worth Insurance Lawyer Blog

Life Insurance Application

January 12, 2017 | Mark S. Humphreys

Life insurance attorneys can tell you that the life insurance application is very important. This is illustrated in a 1997, United States 5th Circuit opinion. The case is styled, Riner v. Allstate Life Insurance Company.

Following his divorce in 1994, Mr. Marriott wanted to replace his life insurance policy, which named his ex-wife as beneficiary, with a new policy naming his daughters (Riner and Ms. Marriott) as beneficiaries. Mr. Marriott had endured five back surgeries and was in chronic pain at the time the Allstate agent took his application. In the application, Mr. Marriott disclosed that he had chronic back problems and certain other medical problems. The application, however, was marked “no” with respect to whether he had ever received treatment for the use of alcohol or depression within the last three years.

After completing the application, the agent accepted an initial premium check which was completed by the agent because Mr. Marriott was too affected by the pain killers to do so. The agent then issued a “Receipt and Temporary Insurance Agreement” which he left with Mr. Marriott. The agent did not leave a copy of Mr. Marriott’s application with Mr. Marriott. The Agreement provided that the temporary coverage would start when Mr. Marriott’s medical examination was completed. The medical examination was completed on July 26, 1994. Six days later, Mr. Marriott died of either an aneurysm or heart disease. Allstate refused to pay under the Agreement because Mr. Marriott failed to reveal his prior treatment for the use of alcohol and depression.

Suicide Or Accident – Life Insurance

January 10, 2017 | Mark S. Humphreys

Life insurance lawyers will see a situation where a client’s life insurance claim is denied due to a suicide exclusion in the policy. The 1998 Austin Court of Appeals issued an opinion that deals with this issue. The case is styled, Butler v. Group Life and Health Insurance Company.

During a social occasion, the decedent and a number of his friends picked up an unloaded gun, and began to point the gun into their mouths and pull the trigger. At some point, ammunition was placed in the gun. Decedent did not know this. After the gun was loaded, but while decedent still believed it was not loaded, decedent picked up the gun, pointed it in his mouth, pulled the trigger and killed himself. Decedent’s beneficiary made a claim for life insurance benefits, accidental death benefits and attorney’s fees and interest as provided by the Prompt Payment of Claims Act. The policy in question was issued by Group Life and Health Insurance Company under the terms of the Texas Employees Uniform Group Insurance Act. The Board administering the policy denied the claim because decedent died as a result of intentionally self-inflicted injuries and because his death was not accidental. The district court affirmed and Butler appealed.

The Court ruled accidental death and life insurance benefits are payable but because the Prompt Payment of Claims Act is inapplicable the trial court’s denial of attorney’s fees and statutory interest is affirmed.

Claim Denied Due To Misrepresentation

January 8, 2017 | Mark S. Humphreys

The reason someone is going to visit with an insurance lawyer is because a claim the person has made is being denied by their insurance company. One of the most common reasons for denial of insurance policy benefits in life insurance situations is that there has been a misrepresentation in the life insurance policy application.

So what is the law in Texas as it relates to misrepresentations in life insurance policies?

The Texas Insurance Code, Section 705.004 reads as follows:

Who Can Properly Sue An Insurance Company For Bad Faith

January 7, 2017 | Mark S. Humphreys

Dallas and Fort Wort insurance lawyers will commonly get calls from people who want to sue an insurance company because the insurance company was not treating them right in the claims process. Many times these people will be third party claimants. Third party claimants cannot sue the other guys insurance. First party claimants are those people who are dealing with their own insurance company. An insurance company does not owe any duty of good faith or fair dealing when dealing with a third party. This is illustrated in a 1994, Texas Supreme Court opinion styled, Allstate Insurance Company v. Watson.

Watson was injured in a car accident. Watson brought suit against the insured under an automobile liability policy issued by Allstate and also brought suit against Allstate alleging unfair claim settlement practices under Section 541.060 of the Texas Insurance Code and for failing to attempt in good faith to effectuate a prompt settlement where liability had become reasonably clear. Watson also brought suit under the Texas Deceptive Trade Practices Act, breach of contract, and the common law duty of good faith and fair dealing. The trial court granted Allstate’s Motion for Summary Judgment against Watson. The Court of Appeals reversed and remanded the trial court, holding that Watson, as a third-party beneficiary, could bring action under the Insurance Code without first proceeding directly against the named insured of the policy.

This Texas Supreme Court held that the Texas Insurance Code does not confer upon third-party claimants a direct cause of action against an insurer for unfair claim settlement practices. This section is an exclusive list of statutory unfair and deceptive acts or practices. However, the section does not define unfair claim settlement practices to be an unfair or deceptive act or practice. Section 541.151 provides a private cause of action for any practice defined by Section 17.46 of the DTPA as an unlawful deceptive trade practice. However, unfair claim settlement practices is not among the enumerated items defined by Section 17.46.

Bad Faith – How To Get There?

January 5, 2017 | Mark S. Humphreys

It’s easy to say “bad faith.” It’s not always easy to prove. Insurance lawyers have to look hard and rarely will be successful. A 1992, San Antonio Court of Appeals opinion helps explain why. The case is styled, State Farm Lloyds v. Polasek.

A fire destroyed the Polasek’s video rental business. State Farm denied insurance claim on ground of arson. The Polasek’s filed suit for breach of contract and bad faith. At trial, the jury found that the Polaseks had not committed arson and that State Farm had acted in bad faith because it did not have a reasonable basis for denying the claim. The jury awarded $40,000.00 property damages, $200,000.00 mental anguish, and $500,000.00 exemplary damages. State Farm appealed. On appeal, the San Antonio Court of Appeals reversed the bad faith judgment.

A bad faith cause of action is not satisfied by proof that State Farm should have paid the claim or that State Farm acted unreasonably in denying the claim. Instead, a bad faith cause of action requires proof of a negative: that no reasonable basis existed for denying or delaying payment of the insurance claim. Under a bad faith cause of action, carriers still maintain the right to deny invalid or questionable claims and will not be subject to liability for an erroneous denial of a claim. A bad faith cause of action requires a much different and more demanding proof than a suit for breach of the insurance policy.

Application And Life Insurance Policy

January 3, 2017 | Mark S. Humphreys

The application for a life insurance policy has to be attached to a life insurance policy. This is illustrated in a 1994, Texas Supreme Court case styled, Fredonia State Bank v. General Life Insurance Company.

The insured died as the result of a gunshot wound to the head. Prior to his death, he had purchased two life insurance policies, each in the amount of $250,000.00 issued by General. General denied the beneficiary’s claim for benefits. Fredonia State Bank, an assignee of one of the two policies and executor of the insured’s estate, sued to collect the proceeds of the policy.

General asserted as defenses that the insured had committed suicide and that the insured had made misrepresentations regarding his medical history, which were material to the risk assumed by General.

Intentional Acts?

January 1, 2017 | Mark S. Humphreys

Here is one for an insurance attorney to answer. A potential new client comes in the door. This person says they were drinking and got drunk, then they punched a friend in the face causing injury. The friend sues for the harm that was done and your potential new client asks his insurance company to defend him in the lawsuit. Is there coverage?

Guidance for the answer is found in a 1997, Dallas Court of Appeals opinion. The opinion is styled, Wessinger v. Fire Insurance Exchange.

This is a declaratory judgment action brought by Fire Insurance against its insured under a homeowner policy. Fire Insurance sought a declaration of no coverage for an incident in which the insured became intoxicated and assaulted a third-party friend. The insured and the third-party answered and counterclaimed asserting breach of insurance contract, violations of the Texas Deceptive Trade Practices Act and the Insurance Code. Fire Insurance moved for summary judgment stating that the insured’s actions were not accidental but were intentional conduct excluded from coverage. The trial court entered summary judgment in favor of the carrier.

Hurricanes And Flood Insurance

December 31, 2016 | Mark S. Humphreys

Palo Pinto residents may not think they will ever need flood insurance but those living around the Brazos River may think otherwise. In any event, knowing what is going on in the hurricane and flood insurance industry is helpful for insurance law attorneys. The Insurance Journal published an article in November 2016 dealing with this topic. The article is titled, Q&A: Deloitte Insurance Expert Discusses Hurricane Season And Flood Insurance.

Although Atlantic hurricane season ends in November, cleanup from any damage seen on the East Coast could last beyond the end of the season. Some coastal areas, such as Virginia Beach, were impacted this season, particularly by flooding.

Flooding is the nation’s number one natural disaster, with roughly 25 percent of all flood insurance claims filed in low to moderate risk areas, according to data from the Insurance Information Institute. Many standard homeowners’ policies don’t cover flood damage, making it an important consideration for insurers and their clients as Atlantic hurricane season comes to an end and the cleanup continues.

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:

Uninsured / Underinsured Cases

December 27, 2016 | Mark S. Humphreys

Lawyers who handle uninsured and underinsured motorist (UM) cases need to read this 2016, Corpus Christi Court of Appeals opinion. The case is styled, In re Luna.

In this UM case, the Court conditionally granted a petition for mandamus where the insured sought to obtain the deposition of State Farm’s corporate representative. In this case, Luna originally sued Armando Antunez, the intoxicated, uninsured motorist who caused Luna to sustain severe injuries. Luna also sued State Farm for UM benefits and for extra-contractual claims. The Court severed all three cases from each other and abated the UM and the extra-contractual case during the case against Antunez.

During the original case filed against Antunez, Luna requested the deposition of State Farm’s corporate representative. The trial court denied that request, and Luna did not challenge the Court’s decision in the case against Antunez. Eventually, Luna took a default judgment against Antunez and began prosecuting the UM case against State Farm.