What all insurance lawyers know:  Insurance policies are contracts, and as such are subject to rules applicable to contracts generally.  This was stated in the 1994, Texas Supreme Court case, Hernandez v. Gulf Group Lloyds, and is still good law.

A party seeking to recover on an insurance contract must prove that the contract was in force at the time of the loss.  Also, a party who claims under a policy is required to produce the insurance contract upon which he sues or to prove its terms.  This was stated in the 1975, Tyler Court of Appeals opinion, Hartford Accident & Indemnity Co. v. Spain.  This also, is still good law.  To prove a breach off contract, the insured has to establish:

  1.  the existence of the contract sued upon;

Insurance lawyers want to pursue the best theories of recovery when a client has a claim wrongfully denied.  Some people just want to file a complaint with the Texas Department of Insurance.  But, there are better ways to improve the situation.

Recovery based on theories of misrepresentation were discussed in the last posting.

Another way of recovery is based on “non-disclosures.”  Closely related to misrepresentation is the theory that the insurance company, agent, or insured failed to disclose information.  For example, if an exclusion is not adequately disclosed, the insurance company may be liable for breach of contract by relying on the exclusion to deny a claim.  Failing to adequately disclose limitations or exception to coverage may also make the insurance company or agent liable for unfair insurance practices or deceptive trade practices.

Insurance transactions tend to resemble one another, so disputes arising from them tend to resemble one another.  There are only so many ways that an insurance company and an insured can get crossways.  Most cases present recurring problems that can be grouped into several categories.  Insurance law is even more precedent driven than other areas, as courts try to construe similar policy language consistently.  It is not surprising that cases start to look alike.

The key is find good authorities that match your facts, or to emphasize the facts that match good authorities.

Of course, the starting point is the contract itself.  The initial inquiry almost always begins with the language of the contract to determine what is covered and what is not.  Other tort and statutory theories may logically depend on the existence of coverage, or may exist independent of coverage.  The interplay between recovery for breach of contract and recovery under other theories is discussed in numerous areas in this blog.  Beyond suit for breach of contract, most insurance cases can be grouped into these categories – misrepresentations – non-disclosures – unfair settlement practices  – and other misconduct.

Abilene Texas lawyers who handle accidental death and dismemberment policy claims that are governed by ERISA, need to read this 2017, 5th Circuit Court of Appeals opinion.  It is styled, Robert Ramirez v. United Of Omaha Life Insurance Company.

Ramirez traveled to West Texas and contracted a fungal infection that resulted in the removal of one of his eyes.  He made a claim through the accidental death and dismemberment plan he had through his employer.  The plan is governed as an ERISA plan.  United of Omaha denied the claim, stating the infection that caused the removal of Ramirez’s eye was not the result of an “Accident” as that term is defined in the policy.  United of Omaha was granted summary judgment by the District Court and this appeal followed.

The facts are undisputed.  Following a trip to West Texas, Ramirez came in contact  with a fungus and eventually was diagnosed with a condition known as coccidioidomycosis.

Here is some very basic information that every insurance lawyer should be aware of.  It is also information that every insurance consumer should know.

To understand the different ways disputes can arise, it is helpful to consider the sequence of events that is likely to occur involving an insurance issue.  At its very simplest, the insurance transaction can be divided into the initial sale of the policy, and subsequent handling of claims.  These can be broken down further to include:

(1)  The sale of the policy:  Initially, the consumer and insurance company  or insurance company’s agent must communicate to establish a contractual relationship.  Disputes may arise over what was asked for by the applicant, what was represented by the insurance company or agent, or the timeliness of the insurance company or agent in providing coverage.  Issues may also arise about the truthfulness of the applicant or agent in disclosing information requested by the insurer;

Lawyers who handle disability insurance claims know that the policy has to be read.

In a definition of “total disability” in an individual accident and sickness policy or hospital, medical, and dental service corporation subscriber contract, the inability to perform duties may not be based solely on an individual’s inability to perform “any occupational duty,” but the insurer may specify the requirement of the inability of the insured to perform all of the substantial and material duties pertaining to his or her regular occupation, or words of similar import, according to the Texas Administrative Code, Section 3.3012(b)

The policy may further provide coverage for “partial disability,” which is typically defined as the insured’s inability to perform one or more but not all of the essential duties of his or her employment or occupation.

Fort Worth lawyers who end up in Federal Court need to read this opinion from the Northern District, Fort Worth Division, Judge McBride.  The opinion is styled, Antonio Perez v. Allstate Vehicle and Property Insurance Company, et al.

Perez initiated this action by filing a lawsuit in State District Court.  Allstate removed the action to Federal Court, alleging diversity of citizenship and the required amount in controversy.  This Court Ordered Perez to replead so that his pleadings complied  Federal Court pleading standards found in Rule 8(a) and 9(b) of the Federal Rules of Civil Procedure, and directed Perez to file an amended complaint that complied with those requirements.

Perez filed his amended complaint.  Despite the warning provided in the order for repleading, Perez’s complaint as amended was, with few exceptions, basically a repeat of his state court pleadings, alleging, in a conclusory way, violations of sections of the Texas Insurance Code, fraud, and conspiracy to commit fraud, breach of contract, and breach of the duty of good faith and fair dealing.

Lawyers in the Dallas and Fort worth areas who handle underinsured motorist (UIM) cases need to read this 2017 opinion from the Texas Supreme Court.  It is styled, Okelberry v. Farmers Texas County Mutual Insurance Co.

Steven Okelberry and his wife, Patricia, had an auto policy with Farmers that provided $500,000.00 in UIM coverage.

Steven and his two sons were injured in an 18-wheeler accident insured by Home State.  Steven suffered a neck injury requiring surgery and the possibility of additional surgeries.

Lawyers handling car wreck cases would be especially interested in this 2017 opinion from the Texas Supreme Court.  It is styled, Farmers Texas County Mutual Insurance Company v. Jennifer L. Zuniga et al.

This is an appeal from the granting of a summary judgment in favor of Zuniga wherein Farmers had asked the court to rule that there is no coverage under the policy at issue for punitive damages.  This Court reversed that summary judgment.

Determining whether exemplary damages for gross negligence are insurable requires a two-step analysis.  First, the Court decides whether the plain language of the policy covers exemplary damages sought in the underlying suit against the insured.  Second, if the Court concludes that the policy provides coverage, it determines whether the public policy of Texas allows or prohibits coverage in the circumstances of the underlying suit.

The San Antonio Division, Western District, issued an opinion dealing with rebuild costs under a homeowners policy that insurance attorneys need to read.  It is styled, Kirk McClelland and Tamre McClelland v. Chubb Lloyd’s Insurance Company of Texas, and Robert Lynn Pritchard.

This is a dispute over coverage and the conduct of Chubb in its payments totaling $145,290.72 to the McClellands.  The McClellands assert they are entitled to greater amounts and sued Chubb and its adjuster for breach of contract and various violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act.  The Court granted summary judgment in favor of Chubb and the McClellands seek to alter that judgment.  The course refused to alter the judgment.

The background facts are summarized as follows.  The McClellands garage apartment was destroyed by fire.  Chubb insured the property under a “Texas Standard Homeowners Endorsement” as well as a “Texas Platinum Homeowner’s Endorsement.”  Their extended policy limits allowed for “reconstruction cost even if this amount exceeds the limit of liability for your dwelling or other structures as shown on the declarations page.”  The Platinum Endorsement defined “reconstruction cost”:

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