Dallas Fort Worth Insurance Lawyer Blog

What Life Insurance Policies Cannot Do

September 14, 2017 | Mark S. Humphreys

The Texas Insurance Code spells out in law a few things that life insurance companies cannot do in their life insurance policies. Between the Texas Department of Insurance and the Texas Legislature here are a few things that are written into law.

A policy of life insurance cannot limit the time to sue to a period of time of less than two years. This is found in the Texas Insurance Code, Section 1101.053. A person needs to be aware that there are situations where the insurance company limits the time to sue to two years and one day. While this is not common, it does happen, so be aware and don’t delay in talking to an attorney if your claim gets denied. Procrastination could result in being out of court on a claim you may be able to prevail on.

Section 1101.054, states that a policy cannot purport to take effect more than six months before the original application date, if that would qualify the insured for a rate based on a younger age group. For purposes of this section, the age of the insured on the date of the application is the age of the insured on the birthday of the insured that is nearest to the date of the application. The benefit to the insurance company is that they get a higher premium from the owner of the policy.

Life Insurance Areas Of Dispute

September 12, 2017 | Mark S. Humphreys

Life insurance coverage is fairly straightforward. If the insured dies during the policy term, the insurer pays the benefits. The following reasons are some ways that disputes may arise:

An agent may misrepresent the benefits of his insurer’s policy to induce the insured to switch from another company.
An agent may fail to disclose that health conditions may cause the insured’s application to be rejected. If the insured was induced to let a rival policy lapse based on the expectations of replacement coverage, the insured may have no insurance.

Types Of Life Insurance

September 10, 2017 | Mark S. Humphreys

Common life insurance types are term, whole life, and universal life.

“Term” policies simply provide a death benefit in return for a premium payment. At the end of the policy year, or “term,” the insurance ends, and the policy has no value. Term policies do not accrue cash value. Because the insured is only paying for the death benefit, term policies are cheaper in the early years. As the insured gets older, the risk of death increases and so does the premium, so term may become more expensive than the other types. Insurers typically sell term policies that promise a fixed premium for a set number of years. For example, an insurer may sell a 10 year term policy that the insured may purchase and renew for the same annual premium during those years, without having to re-qualify.

“Whole life” policies typically charge more in premiums than term policies, so that the premium pays for the death benefit and provides an excess that allows the policy to accrue a “cash value.” This cash value is an investment, in addition to the benefits if the insured dies. The policies derive their name from the fact that the insurer offers to insure the insured for her “whole life” — based on a certain stream of premiums. An insurer may offer illustrations at the time the policy is sold showing how much cash value will accrue based on the premium payments, if the certain interest rates apply. The illustrations usually project the expected value of the policy over time, and often contain disclaimers and numerous assumptions, making comprehension difficult. This complexity causes insureds often to rely heavily on oral explanations by the agent, which may be inaccurate or misunderstood. This can be a source of trouble if the policy’s actual performance does not match the insured’s expectations.

Your Duties After A Homeowners Loss

September 9, 2017 | Mark S. Humphreys

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:

Forced Insurance

September 7, 2017 | Mark S. Humphreys

The New York Times published a story in July 2017, about forced insurance on autos. The title of the story is Wells Fargo Forced Unwanted Auto Insurance On Borrowers.

More than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and some of them are still paying for it, according to an internal report prepared for the bank’s executives.

The expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, according to the 60-page report, which was obtained by The New York Times. Among the Wells Fargo customers hurt by the practice were military service members on active duty.

ERISA And Quick Time Limitations

September 5, 2017 | Mark S. Humphreys

Quick time limitations in ERISA policies are not unusual. Failure to follow the limitations can be fatal to a claim. This is illustrated in a Houston Division, Southern District opinion styled, RedOak Hospital LLC, v. GAP Inc., and GAP Health and Life Insurance Plan.

RedOak sued GAP under ERISA, Section 502(a). GAP filed a motion for summary judgment which was granted by the court.

RedOak treated patient, SK, as an out-of-network provider. Before treatment, RedOak verified SK had out-of-network benefits under the ERISA Plan. SK signed an assignment of benefits plan. RedOak submitted billing of $68,517.00 and GAP eventually paid $0.

Concurrent Causation In Property Damage Cases

September 3, 2017 | Mark S. Humphreys

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.

Concurrent Causation And The Insurance Code

September 2, 2017 | Mark S. Humphreys

When two events 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. In the San Antonio Court of Appeals case, Wallis v. United Serv. Auto. Assoc., the court held that the insurance company will only be liable for that portion of the damage that was caused by a covered event.

When the covered and excluded perils combine to cause 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 damages.

Generally, courts have held that if a loss occurs as a result of two concurring perils, one insured and one not, then the loss is covered only to the extent that it can be traced to the covered peril. Expert testimony allocating damage between covered and excluded causes may satisfy this burden of proof, according the United States 5th Circuit, in Fiess v. State Farm Lloyds.

Hurricane Harvey News

August 31, 2017 | Mark S. Humphreys

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.

Renters Insurance Claims

August 29, 2017 | Mark S. Humphreys

The San Antonio Court of Appeals issued an opinion in USAA Texas Lloyd’s Company v. John Doe and Jane Doe, and as next friends of XXX, a Minor. The case is an appeal from a motion for summary judgment in a declaratory judgment action filed by USAA seeking a declaration that it had no duties under a renters policy insuring the Doe’s.

The Doe’s thirteen year old son had sexually assaulted a five year old and the Doe’s were sued by the parents of the five year old and the Doe’s sought to have USAA defend them under the renters policy.

USAA claimed there was no coverage for the incident, pointing to the liability section of the policy which read: