In an insurance-coverage dispute arising from a theft of gold coins with a fraudulent check, the supreme court said: “We hold that a loss sustained “consequent upon” an event connotes but-for causation under the policy’s exclusion of coverage for property handed over to a third party against a fraudulent check. Accordingly, we answer the Fifth Circuit’s first certified question yes.” Dillon Gage, Inc. v. Certain Underwriters, No. 21-0312 (Dec. 3, 2021).
Category Archives: Insurance
Pay Promptly Please
“[P]ayment of an appraisal award does not absolve the insurer of statutory liability when an insurer accepts a claim but pays only part of the amount it owes within the statutory deadline. Because the insurer in this case did not pay the amount that ‘must be paid’ on the claim before the statutory deadline, it was not entitled to summary judgment.” Hinojos v. State Farm Lloyds, No. 19-0280 (March 19, 2021) (7-2 decision).
Eight corners, more or less
While Texas continues to strictly follow the “eight corners” rule about insurance coverage, that is a doctrine grounded in contract law. “Given the contractual foundations of the eight-corners rule, we conclude it does not bar courts from considering such extrinsic evidence regarding collusive fraud by the insured in determining the insurer’s duty to defend.” And while undisputed evidence of such fraud could justify an insurer’s denial of coverage without filing a declaratory-judgment action, the potential damages under various statutes “are adequate to ensure that insurers will seek a favorable declaratory judgment before withdrawing a defense in most cases where there is a real controversy regarding the duty to defend.” Loya Ins. Co. v. Hurtado Avalos, No. 18-0837 (May 1, 2019).
Eight corners = Eight corners
In Richards v. State Farm Lloyds, the Texas Supreme Court answered a certified question from the Fifth Circuit: “According to one federal district court applying Texas law, the eight-corners rule does not apply unless the policy includes language requiring the insurer to defend ‘all actions against its insured no matter if the allegations of the suit are groundless, false or fraudulent.’ The Fifth Circuit has asked whether the district court’s ‘policy language exception’ to the eight-corners rule is ‘a permissible exception under Texas law.’ As explained below, we answer that it is not.” No. 19-0802 (March 20, 2020).
