Dallas Fort Worth Insurance Lawyer Blog

Actionable Conduct Against An Insurance Company

September 5, 2020 | Mark S. Humphreys

Let’s list some of the conduct that is actionable against an insurance company.

The Texas Insurance Code, Chapter 541, defines and prohibits unfair and deceptive insurance practices. The Sections include Sections 541.001 to 541.061, 541.151 to 541.162, and 541.453. Prior to April 1, 2005, the statute appeared as Article 21.21, so most authorities cite that version of the statute.

Section 541.151 allows a private cause of action by any person who has sustained actual damages caused by another’s engaging in any act or practice that is defined as an unfair method of compensation or unfair or deceptive practice in the business of insurance, or defined as an unlawful deceptive trade practice. The definitions of unfair and deceptive practices are found in two places. Those two places are the Texas Insurance Code, Sections 541.051 to 541.061 and the Texas Business & Commerce Code, Section 17.46(b).

Statute Of Limitations And Being Aware

August 30, 2020 | Mark S. Humphreys

Insurance lawyers will often get a call from a potential new client and this potential new client describes a pretty good case against the insurance company. But as the discussion progresses the attorney learns the event the potential new client is describing or relating to the attorney happened many years ago. The problem is that there are statutes of limitations that apply to almost every wrong a person or business commits.

According to the Texas Civil Practices & Remedies Code, Section 16.051, the statute of limitations in insurance breach of contract lawsuits is four years, the same as other breach of contract suits. Even worse than that, insurance companies have begun to use endorsements intended to reduce the period in which an insured may bring suit against the insurance company. Some companies for example, have begun using a “Suit Against Us Endorsement,” which provides that “an action against us must be made within two years and one day after the cause of action accrues.” Sometimes the period is for three years. Insureds should be aware of these contractual limitations periods.

The reason for the two years and one day is that the laws of Texas do not allow a breach of contract claim to be less than two years. This law is found in the Texas Civil Practices & Remedies Code, Section 16.070. It clearly says that regarding contractual limitations periods, any period of time shorter than two years is made void. This includes stipulations, contracts, or agreements. When the period is made shorter than the two years and thus void, the normal four year limitations period will apply instead. This has been made clear in the 1984, 14th Court of Appeals opinion styled, Duster v. Aetna Insurance Company.

Insurance Cases – Burden Of Proof

August 29, 2020 | Mark S. Humphreys

So, who has the burden of proof in an insurance case, the insurance company or the insured. Like most issues in the law, it depends.

According to the 1994, San Antonio Court of Appeals opinion styled, Telepak v. United Service Automobile Association, the insured has the initial burden to prove damages are covered by the policy. According to the 1943, Texas Supreme Court opinion styled, Trevino v. American National Insurance Company, the insured may make a prima facie case by showing that the policy was in force when the loss occurred.

On the flip side, a 2003, opinion by the Fort Worth Court of Appeals styled, Venture Encoding Service, Inc. v. Atlantic Mutual Insurance Company, the insurance company bears the burden of proving the applicability of an exclusion that permits it to deny coverage.

Insurance And Examination Under Oath

August 26, 2020 | Mark S. Humphreys

There is a part of the claims handling process that insureds need to be wary about. That part is when an insurance company asks the person making a claim to submit to an Examination Under Oath (EUO).

If the insurance contract provides for it, the insurance company may require an EUO as a condition to a suit on the policy. The purpose of such EUO clauses has been described this way:

The insured agrees agrees, at reasonable ties and places, as often as required , to submit to examination by an agent of the insurance company, and to submit all relevant books of account, invoices, vouchers, etc. If is clear that the chief purpose of this privilege to the insurance company is the ascertainment and adjustment of the loss which has already occurred. The insurance company, in its policy, evidences in many ways its desire to avoid the necessity of litigation in the settlement of its losses. It reserves the right to have the benefit of the examination provided for before suit can be sustained.

Accelerated Death Benefits Rider

August 23, 2020 | Mark S. Humphreys

Most life insurance policies have a section / rider that allows for an acceleration of the life insurance benefits. It is also a source of litigation because the life insurance companies have a strong tendency to deny claims made for these benefits.

Insure.com published an article on this subject in September 2019. The article is titled, Accelerated Benefit Riders: How Your Life Insurance Can Help You While You’re Still Alive.

The article tells us , as life expectancy creeps to 80 years old, more Americans are turning to life insurance to help them while they’re still alive. One example is an accelerated benefits rider (ABR).

Appraisals And Insurance

August 22, 2020 | Mark S. Humphreys

Most property insurance policies contain appraisal clauses. These clauses define a process for appraising the value of the damaged property, if the parties cannot agree. Common provisions call for each party to choose an appraiser. Those appraisers then choose a neutral third appraiser, called the umpire. If the parties or their appraisers cannot agree on an umpire, either party may petition a court to appoint one. Once the appraisers and umpire are chosen, they value the loss. If all do not agree on the value, the decision of any two will control. A 1938, Waco Court of Appeals opinion describes the process saying the intent is to give the insurer and insured a simple, speedy, and fair means of deciding disputed value. This opinion is styled, Fire Association of Philadelphia v. Ballard.

The San Antonio Court of Appeals in a 1994 opinion styled, Providence Lloyds Insurance Company v. Crystal City, says that when the two appraisers do not agree, the umpire does not simply choose between them. It is the duty of the umpire to ascertain and determine, in the exercise of his own judgment and as the result of his own investigation, the values of the disputed items.

The 14th Court of Appeals tells us in a 1974 opinion styled, Standard Fire Insurance Co. v. Smith, that either party may seek specific enforcement of the appraisal clause, and the court will abate any pending lawsuit and compel the parties to submit to the appraisal process. In 1979, the same court said in, Standard Fire Insurance Co. v. Fraiman, that in addition, an insured may recover consequential damages sustained as a result of the insurer’s failure to comply with the appraisal clause.

Suing The Adjuster Properly In Federal Court Is Tough

August 19, 2020 | Mark S. Humphreys

Here is another one of those cases where an insured sues the insurance company and the adjuster in State Court for various violations of the Texas Insurance Code. The insurance company a adjuster then remove the case to Federal Court alleging that the adjuster has not been properly sued.

This case is from the Eastern District of Texas, Sherman Division, and is styled, Angelina’s Restaurant v. Allied Insurance Company Of America And Mary Keefer.

Angelina’s property sustained wind and hail damage. Allied insured the property and Keefer was assigned to adjust the claim. Angelina eventually sued Allied and Keefer for various violations of the Texas Insurance Code. The case was filed in State Court and then removed to Federal Court by the Defendants. Angelina then filed a motion to remand, which is the subject of this opinion.

Insurance And Proof Of Loss

August 16, 2020 | Mark S. Humphreys

Insurance policies require that the insured cooperate with the insurance company investigation of a claim. Part of that cooperation includes filing a written proof of loss. This filing of a proof of loss is a precedent to enforcement of the policy as explained in the 1926, Texas Supreme Court opinion styled, Commercial Union Assurance Co. v. Preston. The Fort Worth Court of Appeals restated the Texas Supreme Court opinion in the 1954, opinion styled, Whitehead v. National Casualty Company. A “proof of loss” is a statement to the company, stating, among other things, the cash value of each item of property lost or damaged by fire, and the amount of loss. The insurance company may require that the insured swear to the accuracy of the proof of loss.

Another Fort Worth Court of Appeals in 1960, told us that policy provisions requiring a proof of loss are for the insurer’s benefit and may be waived by the insurance company. That case is styled, International Service Insurance Co. v. Brodie. The Court said the requirement was waived where the insurer would only accept proof asking for an amount its adjusters agreed to, although the insurer wanted more.

Compliance with the proof of loss requirement may be excused, for example when the failure to file a proof of loss does not affect the insurer’s exposure, or when the lack of a proof of loss is due to the beneficiary’s non-negligent ignorance of the requirement. This was explained in the Whitehead opinion.

Interpreting An Insurance Policy – Mechanical Breakdown

August 15, 2020 | Mark S. Humphreys

The San Antonio Court of Appeals issued an opinion in a case wherein the facts were similar to what happens all across the State of Texas in auto cases. The opinion is styled, Infinity County Mutual Insurance Company v. Michael Tatsch.

This is a summary judgment opinion wherein the sole issue was whether the trial court erred in concluding the insurance policy exclusion for damage to a vehicle resulting from or caused by mechanical breakdown or failure did not apply to Tatsch’s claim.

The background facts should be read but in the essence is that Tatsch had a truck with a diesel engine that broke down immediately after he had refueled. There was some evidence of the break down being the result of water in the fuel and some evidence of a few other possible fuel issues.

Home Owners Insurance Policy And Collapse

August 12, 2020 | Mark S. Humphreys

Do homeowner insurance policies cover a collapse of the home? It sounds like a simple question but as is illustrated in a 2020, opinion from the Southern District of Texas, Houston Division, it is not as simple as it looks.

The opinion is styled, Beatrice Stewart v. Metropolitan Lloyds Insurance Company of Texas. The case needs to be read to get the facts of the case, however, the facts end up being discussed in the relevant parts of the opinion discussed here.

Metropolitan insured Stewarts home. Stewart experienced some structure problems with her home and turned in a claim to Metropolitan. Metropolitan ultimately denied the claim stating there was no coverage under the wording of the policy.