Relationship Between Texas Insurance Contract Claims and Insurance Code Claims

The relationship between insurance contract claims and Insurance Code claims in USAA Texas Lloyds Co. v.  Menchaca.  The case arose from jury findings that,  although USAA did not fail to comply with the terms of the insurance policy with regard to a claim, USAA did engage in various unfair or deceptive practices, including refusal “to pay a claim without conducting a reasonable investigation with respect to” that claim.  The jury then awarded damages  in the amount of the difference between the amount USAA should have paid  and the amount that was actually paid.

Thus, the question arose as to whether an insured can recover damages against their insurance company even though the insurance company did not fail to comply with its contractual obligations.  In answering the question the Texas Supreme Court “announced” five rules that address the relationship between contract claims under an insurance policy and tort claims under the Insurance Code:

1. The general rule is that 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 receive 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;and
5. 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.

East Texas Personal Injury Attorney

We have experience with cases involving insurance claims and if you need a Texas attorney, please do not hesitate to give East Texas Attorney, Chris Jones, Board Certified Personal Injury Trial Law, a call at 903-236-4990 for a free initial consultation or send us a message at Contact Us.