INSURANCE AGENTS GENERALLy HAVE NO DUTy TO INSUREDS fOR NEGLIGENCE IN INVESTIGATING CLAIMS
Justice v. State Farm Lloyds Ins. Co., 246 S.W.3d 762 (Tex. App.—Houston [14th Dist.] 2008).
fACTS: In 2000, a tree fell on the Justices’ home and they filed a claim under their homeowner insurance policy, which State Farm paid. In 2001, the Justices made another claim with State Farm for mold damage to the walls of the home. State Farm hired FTI/SEA Consulting (“FTI”) to evaluate the mold damage and subsequently paid the Justices for remediation of their home, alternate living expenses, and cleaning costs. e Justices then filed suit against State Farm and FTI for additional mold damage. Both State Farm and FTI moved for summary judgment, which
the trial court granted. e Justices appealed. HOLDING: Affirmed. REASONING: e Justices alleged that State responsible for damage to the house because State
identifying the part the tree and water
of their house that had from subsequent heavy
entered the house through mold damage. State Farm
this damaged area, causing additional moved for summary judgment on the
ground that Texas per does not claim handling. (Higginbotham
recognize an v. State Farm
action for negligent Mut. Auto. Ins. Co.,
103 F.3d 456, 460 (5th Cir. 1997)) e Higginbotham was not applicable because
Justices asserted that the adjuster assumed
a duty to claimants the Justices’ cited no
when assessing damage. e court found legal authority or evidence supporting their
claim that there was a duty, or explaining how any would fall outside the scope of the claim handling recognizes no negligence duty.
such negligence for which Texas
e Justices also alleged that FTI was negligent because
it failed to initially detect some of the areas containing mold causing the Justices to incur additional expenses. FTI argued that there was no evidence it owed a duty to the Justices or that any breach by FTI proximately caused any additional damage.
e court again found the Justices’ cited no legal authority for
their position. e court held that agents of insurance companies generally have no duty to insureds for negligence in investigating claims.
ARTICLE 21.35B AUTHORIZES INSURERS TO SOLICIT AND COLLECT PREMIUMS AND TAXES
Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618 (Tex. 2007).
fACTS: Shefqet Ademaj and others brought a class action suit against Mid-Century Insurance Company of Texas and Texas Farmers Insurance Company (“Mid-Century”) seeking a declaratory judgment that insurers did not have the right to collect an automobile theft prevention fee in addition to the premium.
e court of appeals affirmed the trial court’s ruling in favor of
Ademaj. Mid-Century appealed. HOLDING: Reversed. REASONING: e Supreme Court of Texas filed with Commissioner did not need to include
held that “rates all taxes and the
Journal of Texas Consumer Law
its discussion on whether insurance carriers must include authority fees within rates filed under Article 5.101 of the Texas Insurance Code or whether carriers may recoup the fee independently under Article 21.35B. e issue was which article took precedence concerning insurers recouping authority fees from the insured.
e court determined that Article 21.35B authorize all insurers
to solicit and collect payments within its enumerated categories considering there was no intervening statute to the contrary.
e court looked to the plain meaning of Article 21.35B which
a d d r e s s e d “ a l l i n s u r e r s ” a s i n d i c a t i v e o f t h e l e g i s l a t i v e i n t e n t .
e court stressed that the commissioner had already
specified which statute most appropriately applied to authority fees. e commissioner promulgated a rule which stated that the insurers were not required to include the authority fee in their Article 5.101 filings. e court justified its choice to defer to the commissioner’s ruling because the commissioner “is well positioned to protect insureds from abusive and unregulated charges under construct of Article 5.101.” “Because the Commissioner made a reasonable determination that the Authority fee should be charged directly and not as part of the Article 5.101 premium, . . . Mid-Century properly recouped the fee from Ademaj.” e court reversed the court of appeals and a take-nothing judgment was rendered in Mid-Century’s favor.
UNTIMELy NOTICE MAy NOT DEfEAT INSURANCE COVERAGE
PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. 2008).
fACTS: PAJ, Inc., a jewelry manufacturer and distributor, purchased a commercial general liability (“CGL”) policy from Hanover Insurance Company that covered, among other things,
liability for advertising Hanover of any claim practicable.” In 1998,
injury. e policy required PAJ to notify or suit brought against PAJ “as soon as PAJ was sued for copyright infringement.
did not notify Hanover litigation commenced.
of the suit until four to six months after PAJ brought this suit against Hanover
seeking a to defend stipulated
declaration that Hanover was contractually obligated and indemnify PAJ in the copyright suit. e parties that PAJ failed to notify Hanover “as soon as practicable”
Both parties moved for summary judgment on the notice issue based on these undisputed facts. e trial court granted Hanover’s motion and denied PAJ’s, holding that Hanover was not required to demonstrate prejudice to avoid coverage under the policy. e court of appeals affirmed. HOLDING: Reversed. REASONING: e court held that an insured’s failure to timely notify its insurer of a claim or suit does not defeat coverage if the insurer was not prejudiced by the delay. Hanover contended the prompt-notice provision created a condition precedent, the failure of which defeated coverage under the policy irrespective of prejudice to the insurer. PAJ contended that the policy language created a covenant such that only a material breach would excuse performance and that even if the language created a condition precedent, the insurer was still required to demonstrate prejudice to excuse performance.
While the parties disputed whether the policy’s prompt-