Texas Businesses Ask State Supreme Court to Hold Insurance Companies Accountable for Damage Claim Denials

Coalition seeks fairness for Texas business owners in property damage claims

AUSTIN, Texas, Aug. 24, 2022 /PRNewswire/ -- Business and industry groups in the state are asking the Supreme Court of Texas to reverse a series of legal opinions that for generations have allowed insurance companies to exempt coverage for property damage claims while leaving policyholders the burden to prove that those claims should be covered.

Texas is the only state in the nation that places policyholders in such a disadvantaged position.

Veteran insurance and construction litigation attorney Marc Gravely filed a friend of the court brief on Tuesday on behalf of the Texas Hospital Association, the Texas Hotel and Lodging Association, the Texas League of Community Charter Schools, the Texas Community Association Advocates, the Texas Automobile Dealers Association, the Texas Independent Automobile Association, and the Texas Organization of Rural and Community Hospitals.

The amicus brief urges the Supreme Court to reverse earlier opinions and follow Section 554.002 of the Texas Insurance Code statute that was specifically created in 1991 to clarify the issue, and which places the burden squarely on insurance companies. For more than 30 years, courts have applied faulty logic and effectively ignored the plain language in the statute, according to the amicus brief.

"Every other state follows the well-worn rule – reiterated over and over in all the major academic treatises on insurance law for decades – that the insurer bears the burden of proving when a loss falls within the exclusionary language of a policy," the Gravely brief states.

The matter before the court is Harold Franklin Overstreet v. Allstate Vehicle and Property. In that case, a homeowner filed a claim for roof damage following a hailstorm. Allstate claimed that most of the damage was from other causes, like wear and tear and previous storm damage. A lower court dismissed the lawsuit because Mr. Overstreet was not able to prove what portion of the damages was caused by the storm.

"The fact that we're in the middle of hurricane season puts this injustice in sharp relief," said Mr. Gravely. "This issue is of paramount importance to a range of Texas businesses and commercial property owners who pay their property insurance premiums with the assumption that insurance companies will act in good faith to honor those agreements."

Gravely Attorneys & Counselors has developed a national reputation based on record outcomes in large and complex construction defect litigation and first-party and bad-faith insurance disputes. The firm's veteran litigators are trusted advisors to commercial property owners, boards and governmental entities in disputes involving general contractors, design professionals and insurance companies. The firm pioneered the use of the contingent-fee litigation model for construction defect disputes and is known for its high degree of expertise in the complex engineering, scientific and technical issues at the heart of these disputes. Visit: https://www.gravelylaw.com/.  

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SOURCE Gravely Attorneys & Counselors