Coverage

STAY TUNED:   A Fifth Circuit U.S. Court of Appeals panel on Nov. 19 certified a question for the Texas Supreme Court as to whether an insured can pursue a private cause of action under Texas Insurance Code Chapter 541  if it is denied coverage by an insurer, holding that decisions from the state Supreme Court and its appellate courts have cast doubt on the vitality of the ruling in Vail v. Texas Farm Bureau Mutual Insurance Co.

In Peter Tsai and Barbara Tsai v. Liberty Mutual Insurance Company, 2015 Tex. App. LEXIS 11147, the First Court of Appeals addressed the applicability of the surface water exclusion.  The Tsais do not argue that the term “surface water” is patently ambiguous.  Instead, the Tsais indicated that exclusionary language became ambiguous when viewed in the context of the undisputed determination that the loss was caused when water migrated from the neighbor’s planter to underneath their hardwood floors. The court noted that surface water has been defined as “water or natural precipitation diffused over the surface of the ground until it either evaporates, is absorbed by the land, or reaches channels where water naturally flows.”  The water that migrated under the Tsais’ flooring derived from rain and sprinkler water that had fallen onto the surface of the planter.  After falling on the planter’s surface, the water did not follow a defined path or channel.  Instead, it passed freely, moving through the upper two to three inches of mulch.  It was not until the planter was “overwhelmed” … Continue reading →

The issue presented to the First Court of Appeals in Oleksy v. Farmers Ins. Exchange, 410 S.W.3d 378 (Tex. App. – Houston [1st District] 2013, pet. denied) was whether the exception to the auto exclusion in a homeowner policy applied.  The exception provided that the auto exclusion does not apply to motor vehicles which are not subject to motor vehicle registration and are designed and used for recreational purposes and are not owned by an insured.  Farmers asserted that the exception did not apply because the snowmobile was subject to registration in New York, and there was an inference that Oleksy owned the snowmobile.  Oleksy filed a cross-motion wherein he argued that Texas law applied, and the exception applied because the snowmobile was not subject to motor-vehicle registration in Texas and he did not own the snowmobile.  The trial court granted summary judgment in favor of Farmers, denied Oleksy’s motion, and issued a final declaratory judgment that the policy provided no coverage for the snowmobile accident and that Farmers had no duty to defend or … Continue reading →