Category Archives: Insurance

Last Friday, the Texas Supreme Court issued a decision that will substantially impact how underinsured motorist (UIM) claims will now be litigated in Texas.  In Allstate Ins. Co. v. Irwin, Case No. 19-0885, a sharply divided court (5-4) held that an insurance carrier’s liability for UIM benefits may now be established in a declaratory judgment action.  The Court’s ruling signals a departure from the traditional manner in which these claims have typically been litigated, and will likely have a drastic impact on how they are litigated in the future.

In Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809 (Tex. 2006), the Court held that an insurance carrier has no legal obligation to pay UIM benefits until the insured obtains a judgment establishing the liability and underinsured status of the other motorist.  These are conditions precedent to recovery of contractual UIM benefits.  Until those determinations are made, the Court explained, “no contractual duty to pay” arises and “no just amount [is] owed.”  Id.  at 818.  Simply put, there can be no breach of the policy until these conditions have been satisfied.

In Allstate v. Irwin, the Court gave plaintiff attorneys a new procedural remedy for having UIM   claims decided.  Noting that UIM claims are contractual in nature, the Court held that the Declaratory Judgment Act can be used to determine the prerequisites for, and existence of, a valid UIM claim.  The Court reasoned that the issues to be decided were about coverage, rather than breach of the policy contract, and thus were proper subjects for declaratory relief.

The Court’s decision in Allstate v. Irwin signals a sea change in how UIM claims will likely now be litigated in Texas.  One major impact that the Court’s decision will have is on the recovery of attorneys’ fees.  In a typical breach of contract action, recovery of attorneys’ fees is not authorized unless there has been a breach of the contract.  Therefore, in a UIM context, those fees ordinarily would not be recoverable until there has been a refusal by the carrier to pay UIM benefits after liability and damages have been established.  Under the Declaratory Judgment Act, however, fees are discretionary with the court, but are typically awarded to the prevailing party.  Consequently, counsel representing claimants in these cases will likely be able to recover their fees before there has even been a breach or refusal by the carrier to pay policy benefits.  The potential ability to recover fees before there has been a breach will no doubt be the driving force behind the initiation of new UIM suits under the Declaratory Judgment Act.

Alex Beard has 30 years of experience representing individuals and businesses, with a practice focusing on liability insurance coverage, property damage insurance, and civil appeals. He has extensive experience with liability insurance claims, and enjoys analyzing coverage issues under numerous types of insurance, including commercial general liability, commercial auto and life. Read more about Alex and his insurance-related practice here: https://saunderswalsh.com/insurance-related-disputes/.

One of the hottest insurance issues stemming from the COVID pandemic is whether business interruption losses resulting from governmental shut-down orders are covered under standard commercial property insurance policies. Under most policies, the issue boils down to whether the shutdown of the business constitutes “direct physical loss of or damage to the property” so as to be covered. Courts across the country continue to grapple with this issue, primarily because the typical policy does not include definitions for the words “direct,” “physical,” and “loss,” leaving the meaning of those words (and thus the scope of coverage) unclear.

One of my clients, Aggie Investments, LLC, operates a small spice and tea shop located in downtown McKinney. The shop, Spice and Tea Merchants of McKinney, was forced to close its doors for a brief period last year in response to the Mayor of McKinney’s “shelter in place” order. The tea shop submitted a claim for its losses to its property insurer, and the insurance company promptly denied the claim, contending there was no “physical loss of or damage to” the property.

As a result of the denial of coverage, my client was forced to file a lawsuit against the insurer in Aggie Investments, LLC v. Continental Casualty Company, Case No. 4:21-cv-0013, in the United States District Court for the Eastern District of Texas, Sherman Division. The insurer then filed a motion to dismiss the case on the basis that no coverage was afforded by the tea shop’s policy. In ruling on the motion, U.S. District Judge Amos Mazzant followed what he believed to be mandatory authority from the Fifth Circuit. In this connection, he stated that “the Policy’s provisions require demonstrable harm to property to trigger coverage.” Applying this standard, he concluded that the tea shop did not sustain “direct physical loss” of the property, and dismissed the tea shop’s case.

We believe that Justice Mazzant’s decision is in error, and is contrary to well-recognized Texas principles of contract interpretation. We also believe that the Fifth Circuit “authority” he and other Texas federal judges have relied upon in dismissing similar COVID coverage cases is flawed and does not accurately reflect Texas law. Therefore, earlier this week my client filed its notice of appeal to the U.S. Fifth Circuit Court of Appeals.

This will likely be the first case in which the Fifth Circuit squarely addresses this issue, so stay tuned for updates.

Alex Beard has 30 years of experience representing individuals and businesses, with a practice focusing on liability insurance coverage, property damage insurance, and civil appeals. He has extensive experience with liability insurance claims, and enjoys analyzing coverage issues under numerous types of insurance, including commercial general liability, commercial auto and life. Read more about Alex and his insurance-related practice here: https://saunderswalsh.com/insurance-related-disputes/.

The Insurance Council of Texas categorized the recent winter storm as the “largest insurance claim event in history.” At Saunders, Walsh & Beard, our insurance attorneys help businesses whose insurers have failed to perform their duties under their related policies. Therefore, if you do not receive the coverage you expect, you have options. Our insurance attorneys assist clients (large and small) to get the insurance coverage they paid for when they purchased their policy. If your company has a property damage claim your insurance company refuses to pay (or is making a “lowball” offer on) and you disagree with their decision/evaluation, then we can help. Our firm’s insurance coverage lawyers enjoy helping our clients in getting their property damage claims paid. We welcome the opportunity to discuss your case or situation. Call us today and schedule a time when we can discuss your insurance-related issue or dispute.

Mr. Alexander N. Beard & Mr. Mark D. Johnson focus their practice primarily on insurance coverage issues and related litigation. Their successful track record in these endeavors brings a great deal of recognition from fellow attorneys, including an AV Preeminent* peer review rating through Martindale-Hubbell and a “Superb” peer review rating through Avvo. You can learn more about their practice here.

Most business-interruption coverage includes losses from physical damage caused by hurricanes, fires, winds or theft—not a virus. Lawmakers have recently urged insurers to provide business interruption coverage under existing commercial property policies for companies’ losses due to closures tied to the novel coronavirus (COVID-19). These initial legislative efforts mark a good first step in trying to address companies’ business interruption coverage needs as the coronavirus crisis unfolds, but these matters are complex and will dictate the ultimate survival of countless businesses.

At Saunders Walsh & Beard, we help our clients (large and small) get the insurance coverage they paid for when they purchased their insurance policy. Two of our partners–Alex Beard and Mark Johnson–each have decades of experience dealing with insurance companies and analyzing insurance policies.

If your business has insurance coverage, but has been denied coverage for economic losses caused by government shutdowns over coronavirus, we welcome the opportunity to discuss your particular case or situation. We provide a free, initial review of your company’s insurance policy to assess the coverage that is afforded. If your company’s insurance claim has already been denied, we will analyze the insurance company’s position, determine whether it is correct, and advise you of your company’s rights.

Call us today and schedule a time when we can discuss your particular insurance-related issue or dispute.

Congratulations to Saunders, Walsh & Beard’s client, The Dinosaur Company (a division of Billings Productions), for obtaining full insurance benefits for the loss of 21 of its dinosaur replicas in North Carolina due to Hurricane Florence. The insurer for the Dinosaur Company initially filed the claim for the loss, and SWB’s own “dinosaur” lawyers, Alex Beard and Mark Johnson, stepped in to make sure Billings received all the insurance benefits it was entitled to under its insurance policy. Mr. Beard & Mr. Johnson convinced the insurance company its initial decision to pay only a portion of the loss was incorrect and, as a result, the Dinosaur Company received over a half a million dollars in additional policy benefits–all without having to file a lawsuit.

At SWB, we help our clients (large and small) get the insurance coverage they paid for when they purchased their insurance policy. Two of our partners–Alex Beard and Mark Johnson–each have decades of experience dealing with insurance companies and analyzing insurance policies. In fact, both Mr. Beard and Mr. Johnson both represented insurance companies exclusively for several years, and they now leverage that valuable experience in representing our policyholder clients and assisting them with their insurance-related issues. You can read more about our Insurance-Related Dispute practice here: https://saunderswalsh.com/insurance-related-disputes/.

Call us today and schedule a time when we can discuss your particular insurance-related issue or dispute.