Dallas Fort Worth Insurance Lawyer Blog

Incontestability Periods In A Life Insurance Policy

July 23, 2022 | Mark S. Humphreys

The incontestability period of an insurance policy is one of the most important parts of a life insurance contract.

Life insurance policies must contain an incontestability clause — a provision that the policy will be incontestable after it has been in force during the lifetime of the insured for two years from its date, except for nonpayment of premiums. This requirement is found in Texas Insurance Code, Section 1131.104. It is also found it sections 705.101 thru 705.105. The effect of these clauses is to limit the misrepresentation defenses so they can apply only during the first and second years.

As stated in the 1972, Texas Supreme Court opinion styled, Minnesota Mutual Life Insurance Company v. Morse, the purpose of the incontestability clause is to protect the insured from a contest as to the validity of the policy after the set period has expired.

Insurance Lawyers – Read The Policy

July 18, 2022 | Mark S. Humphreys

Here is a policy interpretation case from the United States Fifth Circuit. The opinion was issued on June 2, 2022, and is styled, Kiolbassa Provision Company, Incorporated v. Travelers Property Casualty Company of America.

Kiolbassa ran out of storage space in its warehouse and loaded 49,016 pounds of organic beef trim onto a “reefer trailer” (a trailer with an attached refrigeration unit) located on its premises. The refrigeration unit malfunctioned; the beef spoiled; and Kiolbassa lost about $167,000 worth of product. Kiolbassa then filed an insurance claim under the Equipment Breakdown Policy.

Travelers denied coverage under the Equipment Breakdown Policy because the refrigeration unit was mounted on the reefer trailer, which (Travelers argues) does not meet the definition of “Covered Equipment” in the Policy. Kiolbassa sued for its denial of coverage under only that policy, which insures damage to “Covered Property” caused by a “Breakdown” of “Covered Equipment” on “Covered Premises.”

Life Insurance And Discovery Of A Misrepresentation

July 16, 2022 | Mark S. Humphreys

Life Insurance Lawyers need to be aware of Texas Insurance Code, Section 705.005.

This statute says in relevant part that an insurance company may use as a defense a misrepresentation made in the application for or in obtaining an insurance policy only if the insurance company shows at trial that before the 91st day after the date the insurance company discovered the falsity of the representation, the insurance company gave notice that the insurance company refused to be bound by the policy to the owners or beneficiaries of the insurance policy, if the insured is deceased.

The above statute is discussed in a 1969, San Antonio Court of Appeals opinion styled, Prudential Insurance Company of America v. Torres.

Life Insurance Attorney – Suicide

July 11, 2022 | Mark S. Humphreys

What if a life insurance company denies a claim for life insurance benefits based on their contention that the insured committed suicide?

A 1982, opinion from the 14th District Court of Appeals styled, Parchman v. United Liberty Life Insurance Company, correctly states that life insurance policies typically exclude suicide as an assumed risk.

In the Parchman case, the policy excluded suicide as an assumed risk for two years from the policy date and provided a reduced benefit of the return of all premiums paid if death resulted from suicide within that period.

Life Insurance Claims Attorneys – Paying Wrong Person

July 9, 2022 | Mark S. Humphreys

Life insurance claims attorneys have information about how life insurance claims should be handled that is valuable to someone who believes they have been wronged by an insurance company.

It will occasionally happen that the life insurance company pays the wrong person as the beneficiary of the policy.

Texas Supreme Court law going back to 1894 says that if insurance benefits are paid to a beneficiary who does not have an insurable interest, that beneficiary holds the proceeds for the benefit of those entitled by law to the proceeds. The 1894, case is Cheeves v. Anders. This position is supported as late as a 1998, opinion from the Tyler Court of Appeals styled, Stillwagoner v. Travelers Insurance Company.

Life Insurance Attorney And Insurable Interest

July 5, 2022 | Mark S. Humphreys

To be able to recover from a life insurance policy a person has to be named as a beneficiary, the majority of the time. However, even if a person is named as a beneficiary they still have to have an insurable interest in the deceased to be able to recover.

As stated in the 1942, Texas Supreme Court opinion, Drane v. Jefferson Standard Life Ins. Co., “A person that has a reasonable expectation of pecuniary benefit or advantage from the insured’s continued life has an insurable interest.”

In the Drane case, although not related by blood or marriage to Harry Ezell, Jr., not indebted to him in any way, his godmother Dorothy Drane named him as beneficiary in two policies. Upon her death, the executor of her estate, her brother, asserted that Ezell had no insurable interest. The facts showed that Miss Drane had bought clothes for the boy for fifteen years, had paid for his medical care, had cared for him while his mother was ill, had taken him on vacations, and sadly was killed in a wreck as she drove to visit him his freshman year in college, “taking him a radio, a cap and an apple pie.” The court concluded that Ezell did have an insurable interest based on a reasonable expectation of pecuniary benefit and advantage from Miss Drane’s continued life. “We think that when Dorothy Drane was killed ‘his temporal affairs, his just hopes and well grounded expectations of support, of patronage, and advantage in life’ were impaired …. It is inconceivable, under the facts of this record, that he would ever have been tempted to destroy her life in order to collect the proceeds of the two policies in suit.”

Insurance Claim – Concurrent Causes – Court Asks What To Do

July 2, 2022 | Mark S. Humphreys

A frequent insurance problem in Texas is damage alleged to have been caused by a hail or wind storm. This issue is even confusing for the Courts. Here is a case discussing this issue and in the opinion, the United States Fifth Circuit is asking the Texas Supreme Court on guidance for resolving the Texas “concurrent causation doctrine.” The style of the case is, Harold Franklin Overstreet v. Allstate Vehicle and Property Insurance Company.

This case is about a leaky roof. Overstreet says the leak was caused by a strong hailstorm that hit his neighborhood shortly after he purchased the policy. Allstate argues that almost all the roof damage was due to uncovered causes, namely a combination of wear and tear and earlier hailstorms that hit the roof before Overstreet purchased the policy. The district court granted summary judgment to Allstate because Overstreet did not prove what damages were solely attributable to the covered storm.

Overstreet bought a home insurance policy from Allstate that covered damage from wind and hail. Overstreet’s roof was about three years old when he purchased the policy. On June 6, 2018 a wind and hail storm hit the area where he lived, allegedly damaging his roof. Overstreet reported a loss to Allstate, whose adjuster estimated the value of the loss at only $1,263.23. Because this amount was less than the deductible, Allstate paid Overstreet nothing.

Insurance Claim Denial – Policy Language

June 27, 2022 | Mark S. Humphreys

I know, I know. Nobody reads the policy. But, not reading the policy and understanding it can be a killer. This is illustrated in a May 2022, opinion from the United States 5th Circuit Court of Appeals. The opinion is styled, Bradford Realty Services, Incorporated v. Hartford Fire Insurance Company.

The Policy at issue in this case is a commercial building policy. It provides coverage for losses “caused by or resulting from water that backs up from a sewer or drain.” It also excludes coverage for damage caused by rain unless the Property “first sustains damage by a covered Cause of Loss to its roof or walls through which the rain . . . enters.”

In September 2018, heavy rains swept over the insured property. Drains on the building were clogged. The clog and a subsequent leak caused extensive damage to the inside of the property. Bradford filed a claim that was subsequently denied by Hartford with Hartford saying the damage was caused by rain that did not enter the building through damage caused by the storm and thus fell into the Policy’s exclusion for damage caused by the rain.

Insurance Company And Breach Of Contract

June 25, 2022 | Mark S. Humphreys

When an insurance company denies a claim, 99% of the time the claim the insured has against the insurance company is a claim for breach of contract. Issues related to “bad faith” and statutory violations of the Texas Insurance Code are relevant and important but usually those do not matter unless or until it is shown that the insurance contract was breached by failure to pay the claim.

A 2022, opinion from the Northern District of Texas, Amarillo Division, discusses the breach of contract part of an insurance claim. The opinion is styled, Valleyview Church of the Nazarene v. Church Mutual Insurance Company.

The full facts of the case can be read in the opinion. Church Mutual filed a motion for summary judgment.

Bad Faith Insurance Claims And Trial

June 20, 2022 | Mark S. Humphreys

A claim against an insurance company generally speaking, will involve at least two distinct claims. One for a breach of the insurance contract and a second claim for the insurance company acting in “bad faith” in their handling of the claim. This issue was discussed in a 2022 opinion from the Northern District of Texas, Dallas Division. The case is styled, Claire Garcia v. Allstate Vehicle and Property Insurance Company.

Allstate had filed a Motion to Sever and Abate the contract claim from the bad faith claims alleged to be violations of the Texas Insurance Code, Sections 541.060 and 542.060, plus violations of the Texas Deceptive Trade Practices Act and fraud.

Garcia experienced hail damage to her home and filed a claim for coverage through her home insurer, Allstate. Allstate sent an adjuster to Garcia’s home who calculated an estimate of $843.68. Later, another agent calculated an estimate of $1,166.84. After applying deductibles, Garcia was not receiving any monies for the claim.