Clarification in Texas for Insurance Coverage Disputes

Apr 19, 2017

On April 7, 2017 the Texas Supreme Court issues it's opinion for USAA Texas Lloyds Company v. Gail Menchaca  in which it sought to clarify "substantial confusion" amongst the lower courts from prior decisions by announcing give rules that govern the relationship between contractual and extra-contractual insurance claims.
 

Per the opinion:

 

1. An insured cannot recover policy benefits as damages for an insurer's statutory violation if the policy does not provide the insured a right to received those benefits. 

2. An insured who establishes a right to receive benefits under the insurance policy can recover those benefits as actual damages under the Insurance Code if the insurer's statutory violation causes the loss of the benefits. 

3. Even if the insured cannot establish a present contractual right to policy benefits, the insured can recover benefits as actual damages under the Insurance Code if the insurer’s statutory violation caused the insured to lose that contractual right.

4. If an insurer's statutory violation causes an injury independent of the loss of policy benefits, the insured may recover damages for that injury even if the policy does not grant the insured a right to benefits

5. Finally, an insured cannot recover any damages based on an insurer’s statutory violation if the insured had no right to receive benefits under the policy and sustained no injury independent of a right to benefits.

 

The Texas Supreme Court found the trial court erred by disregarding the jury's response as it was neither immaterial nor unsupported by the evidence. As such, the lower court was reversed and the case was remanded for a new trial.  A new date has not been set at this time.