Articles Posted in Insurance

House fire.jpgSometimes when marriages go sour and spouses can no longer get along with one another, one spouse whose emotions have taken over them might do something out of anger to harm the other spouse, such as deliberately setting fire to their home. So what happens to you ability to bring an insurance claim if your spouse deliberately sets fire to your home.

In Kulubis v. Texas Farm Bureau Undw’rs Ins. Co., 706 S.W.2d 953 (Tex. 1986), the Texas Supreme Court first recognized what is known as the innocent spouse exception to otherwise non-covered insurance claims. The innocent spouse doctrine usually involves cases of arson or other intentional destruction of property by one spouse and a claim for insurance coverage by the other who was unaware and did not participate in the conduct. In applying the innocent spouse doctrine courts usually hold that if the house and contents are owned equally by the husband and wife, then the innocent spouse would be entitled to the insurance proceeds covering one-half the property while the other culpable spouse would be denied any recovery.

In Kulubis, the court reasoned that the innocent spouse had a reasonable expectation of coverage, based on the policy terms, that would be defeated if his or her spouse’s conduct deprived that spouse of coverage. The facts of Kulubis were the husband destroyed the couple’s mobile home after his wife served him with divorce papers. The wife was not only innocent, she was the intended victim of his actions. The court stated that adopting the innocent spouse doctrine will best protect the insurance company from fraud while assuring that the insurance company will not be unjustly enriched. It will also permit an innocent victim whose property has been destroyed to collect under an insurance policy for a loss reasonably expected to be covered.

Apprasial.jpgInsurance policies that provide coverage for loss of property, both personal and commercial, typically contain an appraisal provision. Appraisal, when the circumstances are appropriate, is an efficient method to determine the amount of loss under most property policies. However, an appraisal to determine the amount of the loss should not be invoked when causation, coverage, or liability under the policy are still in dispute.

For many years, Texas courts had been consistent in their interpretation of appraisal clauses in insurance policies. Appraisal was to be used to provide a simple, speedy, inexpensive, and fair method of determining the amount of loss. If the appraisal clause is properly invoked, carried out, and awarded, the determination of the amount of loss is binding on the insurer and insured. Because of the binding nature of appraisal, an appraisal award can only be set aside in three circumstances: (1) when the award was made without authority; (2) when the award was the result of fraud, accident or mistake; and (3) when the award was not made in substantial compliance with the terms of the insurance policy. An award is made without authority when the appraiser attempts to determine questions of causation, coverage, or liability.

The status of appraisal law appeared predictable and settled until the Texas Supreme Court’s decision in State Farm Lloyds v. Johnson, 290 S.W.3d. 886 (Tex. 2009). The Johnson case involved the determination of whether the meaning of the term “amount of loss” in an appraisal clause of a homeowner’s insurance policy includes the extent of loss and whether the insured can compel the insurer to appraisal when there is a dispute about the extent of loss. Johnson argued that the amount of loss includes a dispute over the extent of the damage. Whereas, State Farm argued that no appraisal can be compelled unless the parties agree on causation, coverage, and liability. Specifically, State Farm took the position that because it had only acknowledged coverage for hail damage to the ridgeline of the Johnson’s roof and the remainder of the roof was damaged due to wear and tear, which is excluded under the policy, the issue was in dispute was coverage and not the amount of loss. State Farm further argued that the amount of loss does not include the extent of loss, because determining the extent of loss, would necessarily include a determination of coverage, causation, and/or liability.

House Fire.jpgIf you have a fire or someone breaks into your house and you need to file a claim on your homeowner’s insurance, you could be in for a long and tedious process if you haven’t done your home work properly, particularity with respect to your items of personal property.

For personal property claims, known as a “contents” claims, one of the first things you have to do is prepare a contents inventory of your property for your insurance company. Taking pictures of your property before having to make a claim is highly recommended. If possible take photographs of each room and, in particular, photograph expensive items and/or items that are special to you. Also, keeping an inventory of all your property is good idea, but can be time consuming. The failure to do these things before you have a claim may result in weeks or months of work for you to properly document your loss and give the insurance company an excuse for not promptly paying your claim.

If your property was lost in a fire, most insurance policies require the property owner to take steps to protect the remaining property from further damage. These steps should be taken as soon as possible. You need to make arrangements to have any openings in the structure covered in order to secure your property from further damage or theft. It is not recommended that you dispose of any damaged property until your claim is settled, except for health and safety reasons.

Penatlies.jpgChapter 542 of the Texas Insurance Code requires insurance companies to follow certain procedures and meet certain deadlines when it receives, accepts, rejects or pays an insurance claim. The purpose of Chapter 542 is to promptly pay claims made by their insureds. Thus, Chapter 542 only applies to what is known as first party claims. Chapter 542 applies to most types of insurance claims except workers compensation, title insurance and marine insurance as well as a few others.

If an insurance company fails to comply with Chapter 542, it can be held liable for the statutory damages pursuant to Section 542.060 of the Texas Insurance Code which provides that if an insurer that is liable for a claim under an insurance policy is not in compliance with Chapter 542, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable attorney’s fees.

However, the amount of the claim used to calculate the statutory damages depends on whether the insurance company tendered any partial payment of the claim. If the insurance company did not tender any partial payment, statutory damages are calculated on the full amount of the jury verdict. If the insurance company tenders a partial payment then statutory damages are calculated on the difference between the amount of the claim as determined by the jury and the amount tendered.

Insurance Company.jpgWhen an insurance company in Texas delays the payment of your claim it may be subject to certain penalties if it has failed to comply with Chapter 542 of the Texas Insurance Code. Sections 542.051-542.061 of the Texas Insurance Code regulate an insurance company’s duties and obligations with respect to prompt payment of claims.

Chapter 542 applies only to what is known as first-party claims. First-party claims are claims made by a policyholder against their own insurance company. Chapter 542 does not apply to third-party claims which are claims asserted against someone else’s insurance company, usually for personal injuries or property damage. Chapter 542 also does not apply to certain types of insurance companies such as those providing workers’ compensation, title or mortgage guaranty insurance.

Unless the insurer is an eligible surplus lines insurer, Chapter 542 requires that not later than the 15th day after the date an insurer receives notice of a claim, the insurer must: (1) acknowledge receipt of the claim; (2) commence an investigation of the claim; and (3) request from the claimant all items, statements, and forms that the insurer reasonably believes, at that time, will be required from the claimant. An insurer may make additional requests for information, if during the investigation of the claim, the additional requests are necessary. If the acknowledgment of receipt of a claim is not made in writing, the insurer must make a record of the date, manner, and content of the acknowledgment.