Who is Liable if You Find Yourself Underinsured in Texas?

If you just experienced a catastrophic property loss, the last thing you want to worry about is the amount of coverage your policy provides. If your house is completely wiped by something covered under your policy, you expect to receive the limits of your policy. You expect that the policy limit will be enough to repair and replace all that you lost. But what if the limits aren’t enough? What then? In Bryce v. Unitrin Preferred Insurance Company,1 the Texas Court of Appeals out of Austin, Texas, dealt with this issue.

In Bryce, a fire destroyed the insureds’ home in Georgetown, Texas. When the fire occurred, the Bryces’ home was insured by Unitrin Preferred Insurance Company under a “replacement cost” policy, intended to cover the cost, up to policy limits, of reconstructing the home after a loss. Because of the fire, Unitrin paid the Bryces their full policy limits of $474,000 for the dwelling and $284,400 for the contents of the home. The actual replacement cost, however, of both the dwelling and the personal property far exceeded the policy limits.

The insured sued Unitrin and their insurance agent alleging causes of action for negligence and violations of the insurance code, and seeking damages in the amounts necessary to fully rebuild the home and replace their personal property. The insureds’ experts estimated that the replacement cost of the home was approximately $1.7 million and that the replacement cost of their personal property was approximately $864,000. The Bryces claimed their home was grossly underinsured because Unitrin and EEB negligently set inadequate policy limits and failed to disclose to the Bryces their insurance coverage would not cover the full replacement cost of the home and its contents.

At the trial level, the jury returned a verdict that the Bryces’ negligence alone proximately caused their home to be underinsured. The jury further found that neither Unitrin nor EEB committed unfair or deceptive acts in violation of the insurance code. The trial court entered judgment that the Bryces take nothing on their claims. The Bryces appealed.

On appeal, the appeals court affirmed the trial court’s judgment noting the jury’s determination that the Bryces’ negligence alone proximately caused their home to be underinsured was supported by factually sufficient evidence. The appellate court also found the jury’s determination that neither Unitrin nor EEB made any misrepresentations as to the replacement cost of the Bryces’ home in violation of the insurance code was supported by factually sufficient evidence.

This case serves as a reminder that at the end of the day you, the property owner, are ultimately responsible for ensuring your property is adequately covered by your insurance policy. Sure, there may be occasions when an agent or insurance company uses underhanded tactics that hurt you, but as shown in Bryce, if the evidence does not convince a jury that wrongdoing occurred, you’ll be left holding the bag. I encourage all of your to review your policy and property to make sure that you’re fully protected!

1 No. 03-08-00670, Not Reported in S.W.3d, 2010 WL 1253579 (Court of Appeals of Texas, Third District, Austin April 1, 2010).


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SHIRLEY HEFLIN - December 11, 2012 10:48 AM

Why am I not surprised that this verdict - and the affirmation of same by the Appellate Court - is out of Texas?

Geez, what's the point of hiring/employing an Insurance Agent - who's job it is to "ensure" that their customers/Insureds are adequately insured?

Sure, at the end of the day it's ultimately the homeowners left holding the bag - especially in the State of Texas - because they "should have known;" technically and legally that may be true, but in Florida I beg to differ. It's like someone appearing pro se in court and having no idea what's going on - when people review a Declarations Page of an ins. policy (very rarely reading the entire policy) very rarely do they understand all the nuances of same. I'm sure the Bryce's relied - and paid - their Insurance Agent (who's supposed to be the closest thing to an expert at selling ins. policies and knowing what insureds should have in the event of a loss).

I can't help but believe that an E&0 action against the Agent here in Florida would have had different results for the Bryce family; if not at the trial court level, most assuredly at the appellate level.

Sirley Heflin
(Tampa, FL)

John Nixon - December 16, 2012 9:02 AM

The best solution I've seen for valuing a historic property for insurance replacement was to have a reputable restoration contractor fully document the construction features and create a detailed estimate to rebuild the entire structure. I saw this done with extensive interior and exterior photos, impressions of custom moldings, measured floor plans, etc. This relatively easy for the contractor before a loss rather than the alternative of trying to sift through the ashes and searching the library for historic photos.

The resulting file can be used after a catastrophic loss (keep the report stored off site) to help with the restoration work, for negotiations with insurance and the local historical commission, etc..

This would be preferred to any computer model or opinions of local real estate appraisers or builders that specialize in new construction projects. Computer models could be used to update the detailed replacement cost estimate for several years.

In this case, it might not have cost the insured much additional expense for the report. It appears they had material renovations done shortly after they purchased the home; during the planning for that renovation would have been the optimal time.

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