Texas Extends Emergency Adjuster Licensing Eligibility Period from 90 to 180 Days due to Extensive Claims Resulting from Harvey

Texas Insurance Code §§4101.002(b) and 4101.101 authorize carriers to immediately use nonresident and emergency adjusters to handle claims. Hurricane Harvey made landfall in Texas on August 25, 2017. As the Code authorizes — and with the relocation of hurricane victims and other personal hardships sustained by residents of counties covered in the governor’s disaster proclamations due to the effects of Harvey — the Texas Insurance Commissioner has just signed Order # 2017 dated November 16, 2017. This order extends for an additional 90-day period the …

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Massachusetts Court Holds that All Excess Policies are Created Equal

In Massachusetts, competing excess insurance policies will apply equally to provide excess coverage even if one policy is a true excess policy and the other is a hybrid policy that provides either primary or excess coverage depending on the circumstances. See Great Divide Ins. Co. v. Lexington Ins. Co., 2017 WL 4969942 (Mass. Nov. 1, 2017). In a November 1, 2017 opinion, the Supreme Judicial Court of Massachusetts held that the plain language of the insurance policies was the determinative factor in establishing priority of …

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Enough is Enough: Fifth Circuit Holds Duty to Defend Does Not Include Costs of Prosecuting Insured’s Fee-Dispute Counterclaim

Aldous v. Darwin National Assurance Co., No. 16-10537 (5th Cir. Mar. 16, 2017), presents a thicket of coverage issues. However, the clearest and most significant one for the insurance industry is that the duty to defend, under Texas law, does not extend to the cost of prosecuting an insured’s counterclaim.

This coverage litigation started as an attorney-client dispute over the non-payment fees and then morphed into a legal malpractice action. Darwin National Assurance Co. insured Aldous under a professional liability insurance policy. Aldous, following …

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Below Limit Settlement Obliterates Excess Coverage

In Martin Resource Management Corporation v. AXIS Insurance Company, an excess insurer was held by the United States Court of Appeals for the Fifth Circuit to have no obligation to indemnify its insured under the terms of its excess insurance policy after the insured settled with its primary insurer for an amount below the primary policy limits.

The insured had sought coverage from both its primary and excess policies for the cost of defending underlying litigation in Texas state court. The primary insurer settled …

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Texas Supreme Court Holds that EPA Proceedings Constitute “Suit”

In McGinnes Industrial Maintenance Corp., v. The Phoenix Ins. Co., the Texas Supreme Court answered a certified question from the Fifth Circuit on whether a U.S. Environmental Protection Agency proceeding against an alleged polluter constitutes a suit under an insurance policy, warranting defense coverage. In a 5-4 decision, the Texas court determined that the EPA proceedings constitute suits against and found that the insured could now pursue claims against the insurers for defense costs.

The policyholder sought a ruling allowing it to go after …

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Policyholder Required to Pay Back Insurer $900,000 Based on Misrepresentations

A Texas appellate court upheld a substantial jury award against a policyholder on fraud claims in Jackson Fulgham v. Allied Property and Casualty Ins. Co.. The insurer counter-sued the policyholder real estate firm over fraudulent claims it had made about hailstorm damage, resulting in a $900,000 jury award in favor of the insurer. The appellate court upheld the verdict claiming that the evidence supported such finding.

In 2009, the policyholder made a claim under its property insurance policy for damage to the roof of …

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No Sanctions for Policyholder Discovery Abuses

An insurer brought a claim for sanctions in dismissing a property owner’s lawsuit over coverage for damage from Hurricane Ike over discovery abuses. The insurer sought what is commonly known in Texas as “death-penalty” sanctions over the discovery abuses.

The lower court had granted the sanctions, but this court found that the trial court had imposed excessive sanctions when it dismissed the plaintiff’s pleadings against the insurer and claims adjuster. This court determined that, while the purported discovery sanctions may be sanction-able, the conduct at …

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Texas Federal District Court Holds Both Professional Liability Insurers on the Hook for Insured’s Defense

In Corinth Investors Holdings, LLC v. Evanston Insurance Co., 2015 U.S. Dist. LEXIS 36273 (E.D. Tex. Mar. 24, 2015), the U.S. District Court for the Eastern District of Texas held that two professional liability insurers were both on the hook to defend an insured in an action where notice of the claim could have been received under separate, concurrent insurance policies issued by the two entities.

Corinth Investors Holdings, LLC, d/b/a Atrium Medical Center was the named insured under a “Health Care Organizations and Providers …

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Texas Supreme Court Rejects Additional Insured Coverage for BP To the Tune of $750 Million

In a decision handed down by the Supreme Court of Texas on Friday, the court determined that BP was not entitled to additional insured coverage under several insurance policies issued to Transocean by a variety of insurers.  In re:  Deepwater Horizon, No. 13-0670 (Tex. Feb. 13, 2015).  The opinion also provides significant insights regarding the relationship between insurance and indemnity as risk transfer mechanisms, namely, that:  (1) a named insured can purchase a greater amount or scope of coverage for an additional insured than required …

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