Dallas Fort Worth Insurance Lawyer Blog

What Happens When My Texas Insurance Company Goes Into Receivership

October 25, 2009 | Mark S. Humphreys

The Texas Department of Insurance has a web site that provides some useful information when an insurance company goes into receivership. An earlier blog at this site discusses the financial situation that will result in an insurance company being placed in receivership.

Other than the claims handling process, there are two main questions most people will have concerning their insurance policies when their insurance company is taken over by a receiver. The first is, “What happens to my unearned premium?”, and the second is “What happens to my coverage and benefits?”.

Unearned premium is the amount you paid to the company in advance that did not actually buy coverage. For instance, if you bought a six-month policy and paid all the premiums in advance, but the company failed two months later, you would be due a refund for four months of premiums.

Claims Handling Process For Failed Companies In Texas

October 24, 2009 | Mark S. Humphreys

Let’s say you buy an insurance policy in Dallas or Grand Prairie. You drive over to Fort Worth or Arlington. You actually live in Weatherford or somewhere else in Parker County. Next, you incur a loss that you believe is suppose to be covered under the insurance policy you bought. Okay so far, but you call the insurance company to file a claim and you get told that the company has been having financial problems and is possibly going out of business. What happens now? The result will be the same no mattter where you are in Texas.

Most businesses that need protection because of financial problems they are experiencing file for some form of bankruptcy protection. When an insurance company has severe financial problems they are placed in receivorship.

There are two main classifications for a financially troubled insurance company in Texas. The first is called, “impaired”, meaning that the insurer does not have admitted assets at least equal to all its liabilities together with the minimum surplus required to be maintained under the insurance code. The second is, “insolvency” or “insolvent”, which means an insurer: (A) is unable to pay its obligations when they are due; (B) does not have admitted assets at least equal to all its liabilities; or (C) has total adjusted capital that is less than that required under various chapters of the insurance code.

Significant Under Insured Motorist Case In Texas

October 23, 2009 | Mark S. Humphreys

One of the most significant Texas cases discussing Texas Insurance Law as it relates to underinsured auto coverage was decided in 2006. This Texas Supreme Court case was Lilith Brainard, et al., v. Trinity Universal Insurance Company.

This case involved a head-on collision with a rig owned by a company called Premier. The ultimate decision in the case would have been the same regardless whether the accident occured in Dallas, Fort Worth, Arlington, Weatherford or anywhere else in Texas. Brainard was killed in the wreck. He had an underinsured policy with Trinity. Brainards’ widow and children made a claim for benefits from Trinity and also filed a lawsuit against Premier.

Trinity paid the $5,000 Personal Injury Protection benefits under the policy immediately but nothing on the underinsured portion of the policy. Brainard settled the claim against Premier for the policy limits of $1,000,000. Brainard then requested that Trinity pay its underinsured policy limts of $1,000,000. Trinity refused but did offer $50,000. Brainard proceeded to trial and got a judgment wherein the jury awarded damages of $1,010,000 in actual damages.

General Information About Insurance In Texas

October 22, 2009 | Mark S. Humphreys

All of the states in the United States have some State agency or board that oversees and regulates insurance activity in that State. In Texas, that agency is the Texas Department of Insurance.

Whenever a person has problems or concerns about the way they are being treated or the behavior of an insurance company or an insurance agent the best advice for that person is to talk with an Insurance Law Attorney. The web site for the Texas Department of Insurance is a good resource and a place to visit in order to learn a little bit of general information. Just keep in mind that visiting the web site is not a replacement for good legal advice.

The web site information is available in Spanish. So, if you have a Spanish speaking friend or relative who wants to seek information on their own they can still go to the Texas Department of Insurance web site. But then, speak with an Insurance Law Attorney who has personel who speak Spanish.

Texas Insurance Policy Interpretation

October 20, 2009 | Mark S. Humphreys

The Fort Worth Court of Appeals recently decided a case wherein the Court had to apply Texas Insurance Laws and Texas Labor Code Laws in interpreting an insurance policy. The case was, Paul Robertson v. Home State County Mutual Insurance Company.

In this case, Robertson was an employee of a company called Redi-Mix. Robertson was injured while on the job for Redi-Mix. Redi-Mix had a policy of insurance with Home State. The policy in relevant part said that it provided coverage for “all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies”. The policy contained the following relevant exclusion to which coverage did not apply:

3. WORKERS COMPENSATION Any obligation for which the insured or the insured’s insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.

Insurance Policies In Texas Are Contracts

October 19, 2009 | Mark S. Humphreys

The Texas Supreme Court stated in 2008 that insurance policies are contracts. This was stated in the case Ulico Casualty Company v. Allied Pilots Association. This is not new in Texas. In the Ulico case the court cited earlier Texas case law. The earlier case law was a Texas Supreme Court case styled Barnett v. Aetna Life Insurance Company and was decided in 1987.

What this means is that rights and obligations arising from an insurance policy, and the rules used to construe them, are those rules generally pertaining to contracts. One relevant concept here is that when a court construes or tries to interpret a contract and that contract can be read to mean more than one thing, then the interpretation is suppose to be in favor of the party who did not draft the contract. The burden is on the party drafting the contract to make it clear. Since an insurance company is always the party who drafts the insurance policy, the result is that if the reading of the policy can be interpreted in more than one way, the court is supppose to interpret it in such a way as to find coverage under the policy.

When an insurance contract covers certain risks, such as liability, but the policy contains exclusions or limitations of coverage, then when the insured customer makes a claim for coverage benefits, the insurance company must assert any applicable exclusion or limitation to avoid liability. This would be called an avoidance or in the Texas Rules of Civil Procedure it is called an affirmative defense. The burden of proof here then falls on the insurance company. This law is found in the Texas Insurance Code, Section 554.002.

A Recent Case Interpreting A Texas Insurance Policy

October 17, 2009 | Mark S. Humphreys

The Court of Appeals of Texas, Houston (1st Dist), recently handed down a decision that dealth with interpreting an insurance policy here in Texas. The case was, National Fire Insurance Company of Hartford, as Assignee of Kelvin Ray Gatlin v. State and County Mutual Fire Insurance Company. This case should have had the same result whether it was decided in Dallas, Fort Worth, or anywhere else in Texas.

This case arose out of an auto accident on December 23, 2000. A 1994 Ford Ranger driven by Gatlin ran a red light and damaged a truck owned by Rainbow Play Systems and insured by National Fire Insurance.

State and County denied coverage on the accident and National Fire filed a subrogation suit against Gatlin to recover the monies paid to Rainbow for damage to their truck. National took in excess of a $42,000 judgment against Gatlin. National then got Gatlin to assign to National the claim Gatlin had against State and County for State and County denying the claim. This assignment included claims for breach of contract, a Stowers action, and violations of the Insurance Code.

How To Make A Texas Insurance Company Pay More Than The Policy Limits

October 16, 2009 | Mark S. Humphreys

Texas insurance laws often times require that the insurance company issueing a policy, sell certain types of insurance with at least a minimal amount of coverage. The situation most people are familiar with is that related to automobile insurance coverage. In Texas, according to Texas Transportation Code, Section 601.072, a person cannot legally drive a car unless they have at least $25,000 worth of liabilty coverage. Texas Transportation Code, Section 643.101 requires a minimum amount for tow trucks, Section 643.1015 requires a minimum for school buses, and throughout the Texas Insurance Code and the Texas Transportation Code minimal required limits are spelled out depending on the vehicle driven.

Other types of insurance may have minimums or caps that are required. In other situations, there may not be a minimum that is required by law, rather there is a minimum that is purchased by the person seeking the insurance. These other types of insurance could be homeowners policies, commercial policies, medical malpractice policies, and many others.

What happens if a person’s losses exceed the minimum the insurance company is required to pay? There are three main options here. The first is to accept the amount the insurance company actually has to pay and walk away. The second is to accept what the insurance company actually has to pay and then pursue the individual or company who is insured for the differerence still owing. This is usually (not always) futile in that the individual or company does not have any assets worth seizing to satisfy a judgment beyond what the insurance company pays. The third is one where you would be required to have an experienced Insurance Law Attorney.

Texas Laws On Health Insurance And Billing By Health Care Provider

October 15, 2009 | Mark S. Humphreys

Did you know that there is a law in Texas which requires a health care service provider to bill the patient or other responsible person for services, not later than the first day of the 11th month after the date the services are provided. This law is found in the Texas Civil Practices & Remedies Code, Section 146.002.

Whether a patient receives care at a hospital or clinic in Dallas, Texas, or in Arlington, Grand Prairie, Weatherford, or anywhere else in Texas, the health care service provider is required to bill the patient or the issuer of health benefits plan for services within the time frame set out above. An exception would be the unlikely event that the contract between the health care provider service provider and the health care insurer provide a longer time to submit the bill for services. It is an unlikely for this exception to exist because from a practicle standpoint, no health care service provider is going to sign a contract requiring them to wait longer than 11 months before getting paid.

If the health care service provider is required to directly bill the third party payor who is operating under State or Federal law, including Medicare and Medicaid, the requirement is the same as stated above.

Subrogation Issues In Texas Insurance Law

October 14, 2009 | Mark S. Humphreys

Whether you live in Dallas, Fort Worth, Arlington, Grand Prairie, or any other metroplex city, or in a smaller town such as Weatherford, Granbury, Cleburne, or Azle here is something that happens just about every day. An accident occurs because of someone elses negligent actions. Someone is injured and gets medical treatment. The medical treatment is paid for by the injured persons’ health insurance, such as Blue Cross Blue Shield, Humana, Prudential, or any number of other health insurance companies. Maybe the medical care is paid for by the injured persons’ own auto insurance company through the personal injury protection (PIP) benefits or med-pay benefits. Most property insurance like homeowners policys and commercial policys have some sort of med-pay that pays for injuries.

In most these cases, someone else, or someone else’s insurance company is ultimately responsible for the injury that was incurred. The medical benefit that was used to pay bills is seldom going to pay all the bills. The injured person still has co-pays and deductibles to meet and sometimes there are caps on what is paid. Also, these medical benefits do not pay lost wages or anything for pain and suffering or anything for impairment or disfigurement or scarring that may have resulted from the injury. As a result of these other losses, even the person who does not want to “sue” anybody has to make a claim against the responsible people and their insurance company to recover all their losses.

When the injured persons’ insurance pays for a loss that was ultimately the resposibility of the other person or the other persons’ insurance, the injured persons’ insurance has a subrogation right to the monies received from others. In other words, the injured persons’ insurance has to be paid back and there is no legal, double recovery.