Dallas Fort Worth Insurance Lawyer Blog

Claims Denial And Suing The Adjuster

July 19, 2021 | Mark S. Humphreys

Insurance lawyers keeping up with the relatively new Insurance Code Section, 542A.006 election need to read this well reasoned case from the Northern District of Texas, Fort Worth Division. The opinion is styled, Leonard D. Morgan, et al. v. Chubb Lloyds Insurance Company of Texas.

In this a homeowner’s claim for damage due to a storm. Plaintiff’s sued their insurance company, Chubb, and the adjuster handling the claim. The lawsuit was filed in State Court wherein a claim was made against the insurer and the adjuster. At the time the lawsuit was filed in State Court, Chubb had not exercised the 542A.006 election, to take responsibility for it’s adjuster.

After the lawsuit was filed, Chubb moved to accept responsibility for the adjuster and have the adjuster dismissed from the lawsuit. The State Court allowed the election and once this was complete, Chubb removed the case to Federal Court and this motion to remand was filed by Plaintiffs.

Claims Denial And Experts

July 17, 2021 | Mark S. Humphreys

Fortunately, most insurance claims do not require expert testimony to prove a claim. However, in those situations where an expert is required, a 2021 opinion from the Southern District of Texas, Houston Division, is a good case for guidance on experts. The opinion is styled, Roy P. Labourdette Jr. v. State Farm Lloyds.

In this case, State Farm insured Roy’s home. Roy had made a claim for hail storm damage to State Farm and State Farm denied the claim and asserted the damage to Roy’s roof was the result of wear, tear, and deterioration, rather than a covered cause of loss. Roy filed a lawsuit in State Court and State Farm had the case removed to Federal Court.

Roy had hired an expert roofer to testify about the roof damage. State Farm in response filed papers with the Court to have the testimony of the expert excluded. After considering the motion and response from Roy, this Court denied State Farms motion. The Court then explained it’s ruling.

Penalty For Slow Payment Of A Claim

July 12, 2021 | Mark S. Humphreys

Insurance Companies are supposed to promptly make payment of claims made by an insured. A May 2021, case from the Fifth Circuit Court of Appeals confirms this. The style of the opinion is Hyewon Shin v. Allstate Texas Lloyd’s.

In this case, the insured, Hyewon Shin asserted a claim for penalties under the Texas Prompt Payment of Claims Act. The relevant statutes are Sections 542.058 and 542.060. The lower level court granted summary judgment in favor of Allstate, concluding that Allstate’s pre-appraisal payment to Shin was both timely and reasonable as a matter of law notwithstanding that the final appraisal amount, $25,944.94 was 5.6 times greater than the pre-appraisal payment of $4,616.63.

This opinion is based on the Texas Supreme Court ruling in Hinojos v. State Farm Lloyds, et al. The Texas Supreme Court said in relevant part:

Insurance Lawsuits And Counter-Claims

July 10, 2021 | Mark S. Humphreys

Insurance Lawsuits, like many other claims, result in other persons or entity’s being added to the lawsuit. The relevance here is that often times an adjuster or the agent who sold the policy may need to be part of the lawsuit.

A 2021, opinion from the Northern District of Texas, Dallas Division, analysis how this is done. The opinion is styled, Nova Casualty Company v. Jose E. Guzman and Rito Sosa.

For the facts that occurred in this case, the opinion should be read. Here is the legal aspect of the case.

Life Insurance Attorney For Claims Denial

July 5, 2021 | Mark S. Humphreys

There are a few statutes in the Texas Insurance Code that are specific to life insurance policies. These statutes are found in Sections 705.001 through 705.105.

For an insurance company to deny coverage on a life insurance policy based on a misrepresentation in an application, the insurance company has traditionally been required to establish misrepresentation by the insured that will support a defense in coverage by pleading and proving five elements. These elements are:

the making of a misrepresentation;

Life Insurance Policy And Grounds For Rescission

July 3, 2021 | Mark S. Humphreys

Life Insurance claims attorneys need to understand the important distinction between statements by the insured that are considered to be representations and those considered to be conditions precedent. If the insured’s statement is considered a representation, a false statement alone will not let the insurer avoid coverage. Each of the elements required by the 1980, Texas Supreme Court opinion styled, Mayes v. Massachusetts Mutual Life Insurance Co., must be shown. In contrast, if the insured’s statement is considered a condition precedent, then falsity alone will allow the insurer to avoid coverage.

It may seem confusing but this representation versus warranty issue is well developed under Texas law. If the statements are considered representations, then to avoid liability under the policy the insurance company must plead and prove: 1) the making of the representation, 2) the falsity of the representation, 3) reliance thereon by the insurance company, 4) the intent to deceive by the insured in making the same, and 5) the materiality of the representation. This is discussed in the 2003, Tyler Court of Appeals opinion styled, Protective Life Insurance Co. v. Russell, the 1996, Austin Court of Appeals opinion styled, American National Insurance Co. v. Paul, and the 1983, 1st District Court of Appeals opinion styled, Cartusciello v. Allied Life Insurance Co.

The same cases recognize that if the language of the policy expressly provides that coverage does not take effect unless the applicant is in good health, the provision is enforceable as a condition precedent. When the language states that answers in the application are true and correct at the time of delivery of the policy, such a requirement is merely a representation. Also, when the language of an insurance policy is susceptible to more than one construction, the policy should be construed in favor of the insured to avoid exclusion of coverage. As was explained by the U. S. 5th Circuit in the 1997, opinion styled, Riner v. Allstate Life Insurance Co., “Short of inserting an unambiguous “good health” warranty demonstrating that the parties intended the contract to rise or fall on the literal truth of an insured’s general certification of good health, Texas has not allowed an insurer to change that result by contracting to make truthful application answers a condition precedent to coverage.” The same Riner court added that “a warranty is a statement made by the insured, which is susceptible to no construction other than that the parties mutually intended that the policy should not be binding unless such statement be literally true.”

Life Insurance Attorney And Insurance Company Attempts To Rescind a Policy

June 28, 2021 | Mark S. Humphreys

Life insurance lawyers deal with many situations and reasons that life insurance companies use for denying a claim for benefits. A twist to not paying is where the insurance company does not technically deny the claim, rather the company rescinds the policy.

As a general legal principle, prior to a loss an insurance company has the right to rescind the policy procured through mutual mistake or fraud. This was stated in a 1931, Amarillo Court of Appeals opinion styled, Forrester v. Southland Life Insurance Company.

The benchmark case on this issue was issued by the Texas Supreme Court in 1980, in an opinion styled, Mayes v. Massachusetts Mutual Life Insurance Co. In Mayes, the court stated that an insurance company may rescind a policy based on the insured’s misrepresentation, if the insurer pleads and proves the following elements:

Claim Denial Attorneys – The Insurance Agent Lied To Me

June 26, 2021 | Mark S. Humphreys

Insurance lawyers often see situations where the agent selling the insurance policy made false representations regarding the policy at issue. Here is how the Courts look at these situations.

According to the 1990, Texas Supreme Court opinion styled, DeSantis v. Wackenhut Corp., a false representation must involve an existing or past material fact, rather than a statement of opinion, judgment, probability, or expectation in order to constitute actionable fraud. Statements concerning future contingent events, sales talk, “puffing,” and other similar statements are not considered actionable misrepresentations. This was stated in a 1978, Tyler Court of Appeals opinion styled, Hicks v. Wright and other cases. And according to a 1976, Dallas Court of Appeals opinion styled, Stone v. Enstam, representations concerning future events are not actionable unless at the time the statement or promise was made, the person making it did not intend to perform.

As to suing the insurance agent, a 1960, Fort Worth Court of Appeals stated in a case styled R. O. McDonnell Dev. Co. v. Schlueter, that all persons who commit fraud are liable for the consequences of such fraud. All parties to a fraudulent transaction are responsible for the acts or representations of the other participants undertaken based upon a mutual understanding or in furtherance of common plan, design or scheme.

Insurance Agents – Fraud

June 21, 2021 | Mark S. Humphreys

Claims denial attorneys know that many claims arise because an insurance agent committed a fraud when selling the policy. A fraud cause of action requires proof of the following elements:

1. a material representation was made;

2. the representation was false;

Insurance Company Liability For The Acts Of An Agent

June 19, 2021 | Mark S. Humphreys

The vast majority of insurance policies are sold by insurance agents. So, are the insurance companies responsible for the acts of these agents?

The first step to determine whether an insurance company is vicariously liable is to determine whether the agent who engaged in the conduct was acting as the insurance company agent.

The question — “Who are agents?” was answered, until recent years, by one statute. Formerly, article 21.02 broadly defined “agents” to include any person who performed certain actions on behalf of an insurance company. As part of the ongoing codification of Texas statutes, the old article 21.02 is now found in Texas Insurance Code, Sections 4001.003 and 4001.051.