Dallas Fort Worth Insurance Lawyer Blog

Texas insurance lawyers need to know what an insured’s duties are after a loss.  One of the most common homeowners policies for Texas home owners is an HOB policy.  The HOB policy requires that the insured cooperate with the insurer’s investigation of the claim by promptly submitting notice of the claim, completing an inventory of the damaged property, providing access to the damaged property and records, and signing a sworn proof of loss form.  These requirements on the insured constitute a condition precedent to coverage under the policy according to our 5th Circuit in the 1999 opinion styled, Griggs v. State Farm Lloyds.

In Griggs, the court stated that absent the insured’s compliance with the conditions precedent to coverage, the insurance company has no duty to provide benefits under the contract.

HOB Policy language is this:

When two elements combine to cause damage, one being covered and the other not covered, issues arise regarding whether the loss is covered, and who bears the burden of proof to allocate causation between the covered cause and the excluded cause.

Courts have held that the insurance company will only be liable for that portion of the damage that was caused by a covered event.  In the 1999, San Antonio Court of Appeals opinion, Wallis v. United Services Automobile Association, the court noted that a “straight Balandran analysis” would not apply in a situation involving multiple causes.  Thus, as a practical matter, the practitioner must evaluate the claim underlying any lawsuit to determine if it involves allegations of damage allegedly attributable to multiple causes or simply one peril deemed to have caused the entire loss.

When covered and excluded perils combine to cause an injury, the Texas Supreme Court has held that the insured must present some evidence affording the jury a reasonable basis on which to allocate the damage.  This is seen in the 1993 opinion, Lyons v. Millers Casualty Insurance opinion and in the 1965 opinion, Paulson v. Fire Insurance Exchange opinion.

News from Law 360.  While some Texas lawyers are encouraging property owners to quickly lodge claims for Hurricane Harvey damage before a new state property insurance law takes effect on Friday, the reality is that the potential downsides of the legislation — including a lower interest rate on successful lawsuits against insurers — don’t warrant such swift filings, several attorneys told Law360.

Starting at the beginning of the week, a slew of law firms began to issue alerts on social media platforms recommending that homeowners and business owners file claims for Harvey losses with their insurers prior to the Friday effective date of House Bill 1774, which Gov. Greg Abbott signed into law in May.  Among other things, the law reduces from 18 percent to about 10 percent the amount of prejudgment interest an insurer must pay if it is found to have delayed payment on or wrongfully denied a meritorious claim.

Opponents of HB 1774 say the law scales back important deterrents for insurers to comply with statutory deadlines for responding to and paying claims for losses tied to natural disasters.  As such, some attorneys say, property owners would be well-served to file Harvey claims before the new law takes effect, so that if those claims wind up in litigation down the road, they will still be subject to current law.