Dallas Fort Worth Insurance Lawyer Blog

Agent Does Not Have To Inform About Terms Of Coverage

July 17, 2016 | Mark S. Humphreys

Grand Prairie insurance lawyers will often run into situations where a person says, “My agent didn’t tell me about that.” A Houston Court of Appeals [1st Dist.] opinion discusses some of what an agent is responsible for telling a customer. The case is styled, North American Shipbuilding v. Southern Marine & Aviation Underwriting.

This case involves a builder’s risk insurance policy to insure the hull of a ship during construction. North American purchased the builder’s risk policy through the insurance brokerage firm of Adams & Porter. Adams & Porter purchased the policy through a wholesale broker, Southern Marine, from the Underwriters. The policy insured against “all risks of physical loss of or damage to the vessel occurring during the currency of this policy except: … in the event that faulty design of any part or parts should cause physical loss or damage to the vessel.”

North American tested the welds on the hull. Certain welds failed the test. The cause was improperly mixed welding gas that North American had received from Swisco. North American replaced all the welds. North American then demanded $1,056,795.00 from Underwriters. The Underwriters denied coverage. North American sued the Underwriters for breach of insurance contract, breach of duty of good faith and fair dealing, fraud, violations of the Texas Insurance Code, and punitive damages. North American sued Southern Marine for breach of duty of good faith and fair dealing, fraud and intentional misrepresentation, negligent misrepresentation, common law negligence, violations of the insurance code and punitive damages. Both the Underwriters and Southern Marine filed motions for summary judgment. The trial Court granted summary judgments for the Underwriters and Southern Marine on all claims. North American appealed.

Does An Agent Have To Tell The Customer About Exclusions?

July 16, 2016 | Mark S. Humphreys

Texas insurance lawyers need to know when an insurance agent is liable for what he says or does not say and when he is not liable. This is partially illustrated in a 2000, San Antonio Court of Appeals case styled, Nwaigwe v. Prudential Property & Casualty Insurance Company.

Moses Nwaigwe was a landlord who purchased a fire insurance policy issued by Prudential. A fire destroyed the property (which was empty at the time) and Prudentail denied Nwaigwe’s claim for property damage based on the policy’s vacancy clause which excluded fire coverage for a building vacant for sixty consecutive days immediately before the loss. Nwaigwe sued Prudential and his insurance agent for violations of the Insurance Code and Deceptive Trade Practices Act (DTPA), breach of common law duty of good faith and fair dealing, fraudulent misrepresentation, negligence, and gross negligence. Prudential and the agent were granted summary judgment and Nwaigwe appealed.

The trial Court’s grant of summary judgment was affirmed by the San Antonio Court of Appeals. Nwaigwe claimed that the failure by the carrier and the agent to advise him of the vacancy clause constituted deceptive conduct which constituted violations of the DTPA and the Insurance Code. The San Antonio Court observed that “no specific misrepresentations were made concerning coverage, and no material information was withheld from Nwaigwe with the intent to induce him to enter into the transaction.” Having decided that there were no mispresentations, the Appellate Court dismissed all of Nwaigwe’s claims and upheld the trial Court’s verdict.

Reservation Of Rights Letter

July 14, 2016 | Mark S. Humphreys

Dallas insurance attorneys need to be able to understand “reservation of rights” letters. A 1999, Dallas Court of Appeals opinion discusses an issue with these letters. The opinion is styled, Aetna Casualty & Surety Co. v. Naran.

On July 28, 1986, Naran’s home, garage and two cars were destroyed in a fire. The fire was caused by a catalytic converter installed on Naran’s 1984 Mercedes. It was installed by a franchisee of Village Imports. Naran sued Village Imports alleging negligent installation, breach of warranty, and DTPA violations. Village forwarded the lawsuit with a notice of loss to Aetna, their insurer. Aetna issued four different policies to Village, but all policies expired prior to the date of the fire. However, when the notice of loss was sent to Aetna, it mistakenly indicated that the date of loss was July 28, 1985 instead of 1986. Aetna hired an attorney to defend Village. Subsequently, Aetna learned of the actual date of the fire, and Village agreed to allow the withdrawal of the attorney hired by Aetna. A judgment was entered against Village, and Naran sued Aetna directly as a judgment creditor. The trial court granted Naran’s motion for summary judgment, and denied Aetna’s motion for summary judgment and this appeal was filed.

This Dallas Court of Appeals reversed the trial court. Naran had the burden of proving that the damages occurred during the Aetna policy period. Naran contended that the damage to Naran’s car commenced in March of 1985 when Naran began to drive the car with the defectively installed catalytic converter. Naran introduced expert testimony that the heat of the converter caused the moisture to be removed from the carpet in the car thereby lowering the ignition temperature of the carpet. The carpet was then eventually ignited from the heat. Naran argued that the continued heating was a continuous process of damage to the car, and he took the position that the court should apply the exposure theory or the continuous exposure theory to determine if property damage occurred during the policy period.

Yes, Insurance Companies Cheat

July 12, 2016 | Mark S. Humphreys

Insurance Companies Cheat. Yes,it’s true. Insurance law attorneys see this all the time. While the majority of claims are handled in a competent manner and the policy holder is at least partially satisfied with the outcome, insurance lawyers are constantly confronted with the situations where the insurance company is doing wrong. The Insurance Journal published an article on May 31, 2016, titled, Supreme Court to Hear State Farm’s Appeal of Katrina False Claims Ruling. It is worth reading.

The U.S. Supreme Court on Tuesday agreed to hear an appeal by State Farm contesting a jury finding that the insurance company defrauded the federal government when assessing damage caused by Hurricane Katrina in 2005 along the Gulf of Mexico coast.

The court will review a 2015 ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals upholding the verdict in a suit brought under the federal False Claims Act, which lets people sue over allegations that the government has been defrauded.

Life Insurance And Illegal Drug Use Exclusions

July 10, 2016 | Mark S. Humphreys

Life insurance lawyers will have clients approach after a claim for life insurance benefits has been denied because of a denial based on an exclusion for use of illegal drugs. A 2016, 5th Circuit opinion is a good read for how the courts look at these situations. The style of the opinion is, Eleanor Crose v. Humana Insurance Company.

The facts in the case show Ronald Crose died after ingesting ecstasy. Humana denied the claim for life insurance benefits by Eleanor citing the following exclusion in the policy:

“Causation Exclusions . . . Loss due to being intoxicated or under the influence of any narcotic unless administered on the advice of a health care practitioner.”

Allegations In A Lawsuit

July 9, 2016 | Mark S. Humphreys

Weatherford insurance lawyers need to understand how to properly make allegations when filing a lawsuit. The Fort Worth Division, Northern District of Texas issued an opinion wherein it is pointed out allegations were not properly made. The opinion is styled, Mark Buettner, et al., v. USA Gymnastics, et al.

Bailey was a competitor at an event run by Gymnastics when she landed wrong upon a dismount from uneven parallel bars and suffered a torn ACL, which required surgical repair. Bailey was insured under a policy of insurance issued by Mutual to Gymnastics as policyholder. Specialty administered claims made under the policy and corresponded with plaintiff regarding Bailey’s injury and his claim for payment under the policy.

Bailey sued Mutual and Gymnastics for breach of contract, Insurance Code violations, and DTPA violations. Suit was filed in State Court and removed to Federal Court by Mutual and Gymnastics.

Disability Policies And Lawsuits

July 7, 2016 | Mark S. Humphreys

Attorneys who litigate disability claims need to read this case from the Southern District of Texas, Houston Division. It is styled, Larry Frederick v. American Heritage Life Insurance Company. This case will help an attorney understand some of the burdens put on the insurance company.

In October 2012, Frederick was severely injured in a vehicular accident. One month later, he submitted a claim for benefits under an accident insurance policy he purchased from AHLIC several months earlier. AHLIC initially denied payment under the policy, but later paid the claim after reversal on administrative appeal. Frederick now sues claiming that AHLIC violated the Texas Insurance Code by unreasonably delaying payment of the benefits.

In its answer to Frederick’s first amended complaint, AHLIC raises several affirmative defenses, including a pre-existing condition exclusion in the policy, ratification by Frederick, nonpayment of the policy premium, and failure to prove loss.

Is Your Child Covered Under Your Policy?

July 5, 2016 | Mark S. Humphreys

Insurance attorneys in Dallas and Fort Worth need to be able to give advise on the above question. An Austin Division, Western District case is a good read for attorneys. The style of the case is, State Farm Fire and Casualty Company v. Clayton J. Neuman.

Clayton Neuman was the driver of a car that crashed on November 11, 2011. A passenger in the car, Ellis McClane was killed. Neuman sought coverage under the umbrella policy that Neuman’s parents had with State Farm. State Farm filed this Declaratory Judgment action to determine whether or not they had any responsibility under the policy.

The policy had been issued to Grover and Laura Neuman in September of 2009. The policy provides coverage for to “insureds” and defines “insureds” as “you or your relatives whose primary residence is your household.”

Insurance Companies Push For Arbitration

July 3, 2016 | Mark S. Humphreys

Insurance law lawyers can tell you to be aware of arbitration clauses in your insurance contract. These usually favor the insurance company. The Austin-American Statesman published an article titled, Consumer Groups Oppose Insurance Company’s Push For Arbitration.

Government and private sector consumer advocates are calling on a state regulator to reject a proposal by Texas Farm Bureau’s insurance division to allow the company to require customers to go to arbitration over policy disputes.

Deeia Beck, head of the state’s Office of Public Insurance Counsel, wrote this week to David Mattax, the state commissioner of insurance, to tell him that arbitration endorsements on homeowner insurance policies can be harmful to Texans, and the Texas Department of Insurance should not approve a proposal by Texas Farm Bureau Insurance Companies.

Hail Claim And A Jury Trial

July 2, 2016 | Mark S. Humphreys

The Insurance Journal published a good article in 2014 that gives a perspective on a jury trial. It is worthwhile reading for hail claims lawyers. The article is titled, Juror Witnesses Firsthand What the Hail Is Going on in Texas.

Alejandro Stolarski is a United States citizen who emigrated from Mexico. Stolarski resides in Dallas County. Like hundreds of other Dallas County residents each week, Stolarski received a notice in the mail for jury duty. But unlike most Dallas County residents, he was excited about being called to jury duty. Even better, Stolarksi was thrilled when he was selected to actually serve on a jury and, in his words, be an integral part of his adopted country’s legal system. Unfortunately, Stolarski was selected to serve as a juror in a Texas hail damage lawsuit.

The trial was representative of thousands of hail damage lawsuits presently pending in courts across Texas. The homeowner alleged that her roof was damaged in an April 2011 hail storm. Three months later, on June 23, 2011, she submitted a claim to State Farm. One week later, on June 29, 2011, State Farm inspected the reported damage. Shortly thereafter, State Farm issued payment for the cost to repair minor damage to the roof and other building components. The homeowner accepted the payment. It appeared to State Farm that the claim had been amicably resolved.