Thursday, September 21, 2017
   
Insurance Sidebar :: Amy Stewart PC’s Law Blog on Insurance Coverage Issues Minimize

Category: Texas Insurance Code

Submit Hurricane Harvey Claims in Writing Before Friday, September 1

New Texas Insurance Code provisions take effect this Friday, restricting policyholders' rights against insurers who mishandle business and personal property claims arising from storms and other natural disasters.

Our June 26 blog post, New Texas Hail Law Restricts Property Policyholder Rights Far Beyond Hail Claims, provides a detailed analysis of the new law, codified at section 542A of the Texas Insurance Code.

Although various aspects of the new law will likely impact Hurricane Harvey claims that end up in litigation after the law's effective date, reduced penalty interest provisions apply to claims made on or after September 1.

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New Texas Hail Law Restricts Property Policyholder Rights Far Beyond Hail Claims

On May 26, Gov. Greg Abbott signed into law House Bill 1774, a tort-reform bill that limits a policyholder’s ability to sue its insurer for mishandling property claims arising from natural disasters. Designed to curb the exploitation of storm victims and insurance companies by the plaintiff’s bar, the new law significantly undercuts incentives for insurers to act responsibly, while making it more difficult for policyholders to hold insurers accountable for improper delays and failing to pay claims.

Although popularly referred to as a “hailstorm” bill, the law applies more broadly to any “first-party claim . . . made by an insured” under a property insurance policy that “arises from damage to or loss of covered property caused, wholly or partly, by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.” Tex. Ins. Code § 542A.001(2).

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SCOT Menchaca Ruling Benefits Policyholders, Clarifies Case Law

Resolving significant confusion regarding the remedies available for violations of the Texas Insurance Code, on April 7, 2017, the Texas Supreme Court issued its much-awaited decision in USAA Texas Lloyds Co. v. Menchaca. In an opinion welcomed by the policyholder bar, the Supreme Court reconciled the principles articulated in earlier decisions, clearly setting forth “five rules that address the relationship between contract claims under an insurance policy and tort claims under the Insurance Code.”    

As noted in our March 2015 post, “Vail Remains ‘Un-Veiled,’” insurers have long taken the position that an insured must prove an injury separate and apart from injury caused by a breach of an insurance contract in order to recover statutory damages under the Texas Insurance Code.  In the earlier post, we make the case that this position was incorrect and that the independent injury requirement applies only where an insurer’s denial of coverage was not wrongful. Menchaca brought this dispute squarely before the Texas Supreme Court.

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Breaking News: Amy Stewart Explains Big Texas Insurance Ruling

The Supreme Court of Texas has issued one of the biggest insurance rulings in years, and our own Amy Elizabeth Stewart sat down for an extensive interview with the national legal publication Law360 to help explain the court’s decision. 

In USAA Texas Lloyd’s v. Menchaca, the Texas high court cleared up years of legal confusion by ruling that policyholders can recover benefits as actual damages if such benefits were lost due to an insurer’s violation of the Texas Insurance Code. The Supreme Court also established five rules that lower courts must observe when deciding cases over policy breaches and Insurance Code violations.

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Insured’s Duty to Read Policy May be Undercut by Agent's Misrepresentations, Appeals Court Affirms

Insurance policyholders should always read their policies, but a recent ruling out of Texas’ 14th Court of Appeals may provide support to those who rely on insurance agents for information regarding their policies.

Insureds often misunderstand the terms of an insurance policy or argue that they have been misled by an insurer’s or an agent’s statements regarding a policy’s terms or coverage. In these disputes, defendants often raise as a defense the insured’s duty to read its policy. The court’s Oct 18 ruling in ruling in 
Wyly v. Integrity Insurance Solutions, No. 14-15-0042-CV, reiterated the rule under Texas law that this defense fails where an insured has alleged or shown that an insurance agent has made a specific, affirmative misrepresentation about the policy.

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Insurers Take Note :: Texas Prompt Payment Act’s Bite IS as Big as its Bark

When an insurance company fails to act in accordance with deadlines established by the Texas Prompt Payment of Claims Act, it faces stiff consequences—specifically, 18% penalty interest on amounts owed to the insured.

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Policyholders Should Not Mourn the Death of SB 1628

Failing to make the cut for the May 26th House calendar, Senate Bill 1628 is dead.  
 

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Vail Remains “Un-Veiled”

On March 27, 2015, the Texas Supreme Court dismissed United National Insurance Company’s petition for review of United National Insurance Company v. AMJ Investments, LLC, 447 S.W.3d 1 (Tex. App.—Houston, June 26, 2014).  This development leaves intact AMJ, which follows Vail v. Texas Farm Bureau Mutual Insurance Company, 754 S.W.2d 129 (Tex. 1988), with respect to Texas Insurance Code damages.

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Amy Stewart Law is a boutique law firm that represents policyholders in insurance coverage litigation and bad faith, with an emphasis in directors & officers liability, cyber insurance, fiduciary liability, professional liability and other specialty liability coverages.


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  • insurance coverage litigation
  • bad faith litigation
  • policy interpretation & analysis
  • insurance review & planning advice
  • advice | insurance disputes
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