Dallas Fort Worth Insurance Lawyer Blog

For Experienced Insurance Lawyers, the question of who has the burden of proof is made clear by Texas case law.  (Not)

Pursuant to the 1994, San Antonio Court of Appeals opinion, Telepak v. United Serv. Auto. Ass’n., the insured has the initial burden of proof as to damages covered by their policy.  However, as pointed out in the 1943, Texas Supreme Court opinion, Trevino v. American Nat. Ins. Co., the burden makes a prima facie case by showing that the policy was in force on the date the loss occurred.

The insurance company has the burden of proving the applicability of an exclusion that permits it to deny coverage.  This is pointed out in the 2003, Fort Worth Court Appeals opinion, Venture Encoding Service, Inc. v. Atlantic Mut. Ins. Co.

Insurance lawyers will often get calls wherein the person on the other end of the line is explaining to the lawyer that his insurance company wants to perform an examination under oath (EUO) of them before going any further with the claim.  And the question is, “Do I have to do that?”  Nine times out of ten, the answer is yes.

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

The insured agree, at reasonable times and places, as often as required, to submit to examination by agent of insurer, and to submit all relevant books of account, bills, invoices, vouchers, etc.  It is clear that the chief purpose of this privilege to the insurer 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 losses.  It reserves the right to have the benefit of the examination provided for before suit can be sustained.

Many 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 chose a neutral third appraiser, called an 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 nay two will control.  The intent is to give the insurer and insured a simple, speedy, and fair means of deciding disputed values.  This was set out in the 1938, Waco Court of Appeals opinion, Fire Ass’n of Philadelphia v. Ballard.

The 1994, San Antonio Court of Appeals case, Provincial Lloyds Ins. Co. v. Crystal City I.S.D., says that when the two appraisers do not agree, the umpire does not simply choose between them, rather, 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.

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 addition, an insured may recover consequential damages sustained as a result of the insurer’s failure to comply with the appraisal clause.  This was made clear in the 1979, 14th Court of Appeals opinion, Standard Fire Ins. Co. v. Fraiman.

Many times a person comes to an Experienced Insurance Law Attorney complaining that their insurance company has not paid anything on their claim.  While most insurance companies take the claims call then go out and evaluate / adjust the claim and then make payment, they are not required to do so.

Almost all policies make it clear that the insured has to file a sworn proof of loss as a condition precedent to enforcement of the policy.  This was recognized in the 1926, Texas Supreme Court opinion, Commercial Union Assur. Co. v. Preston.  It was was restated in the 1954, Fort Worth Court of Appeals opinion, Whitehead v. National Cas. Co.  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.

The 1960, Fort Worth Court of Appeals opinion, International Service Insurance Co. v. Brodie, says policy provisions requiring a proof of loss are for the insurance company’s benefit and may be waived by the company.  A requirement was waived where the insurance company would only accept proof asking for amount its adjusters agreed to, although the insured wanted more.

When making a claim against an insurance policy, knowing what the policy says is important to an insurance attorney.  Virtually all policies have as a condition to payment, the requirement that you cooperate with their investigation of the claim.

The 1994, Texas Supreme Court opinion styled, Hernandez v. Gulf Group Lloyds, makes clear that an insurance contract may impose conditions on the insured.  Most policies require that notice of the claim be given to the insurance company and that the insured cooperate with the investigation.  Sometimes, just calling and reporting the claim is not enough.  An insured may be required to file a formal proof of loss.  When a party to the insurance contract commits a material breach or the contract, the other party is discharged or excused from any obligation to perform under the contract.  The Court in the Gulf Group opinion explained this way:

In determining the materiality of a breach, courts will consider, among other things, the extent to which the nonbreaching party will be deprived of the benefit that it could have reasonably anticipated from full performance …  The less the noon-breaching party is deprived of the expected benefit, the less material the breach ….