Most – if not all — insurance policies contain a cooperation provision stating that a policyholder must cooperate when making an insurance claim. I have often found that insurance companies like to argue that they cannot properly evaluate the damages because a policyholder has violated the policy by not cooperating during the investigation. In fact, I am currently responding to that very claim in a case where the policyholder has allowed the carrier access to its property more than 50 times! So that got me thinking, under Texas law, what does it mean to cooperate with respect to insurance claim investigations?
In Lidawi v. Progressive County Mut. Ins. Co., 112 S.W.3d 725 (Tex.App.—Houston [14th Dist.] 2003, no pet.), the Court dealt with the following cooperation provision: “A person seeking any coverage must … [c]ooperate with us in the investigation … of any claim.” In Lidawi, an argument arose over the examination under oath and what it means to cooperate with that portion of the insurance policy. The Court noted that the policy was silent as to the specifics of both the cooperation and examination under oath provisions of the policy. “When a contract is silent on an issue, Texas court will infer reasonable terms.” The Court added that Texas courts will add missing terms when required to bring about the purposes of the parties under the agreement.
However, before analyzing the cooperation clause’s requirements, “[t]he court must determine what the parties bargained for when they agreed to the terms of the cooperation clause.” The Court determined that the policyholder “bargained for the right to make an honest claim under the policy and to receive compensation with a minimum of inconvenience.” And in return, the Court determined that “[the insurer] bargained for a reasonable means to ascertain the truth surrounding a claim.” As to the cooperation clause, the Court concluded that it “embodies [the insurer’s] right to uncover the probability of truth from the [insureds].” The Court proclaimed that it “must bear these interests in mind when construing the cooperation clause.”
Because the policy did not specify what it meant to “cooperate,” the Court concluded that it:
[S]hould assume the parties implicitly intended for the agreement to operate in a reasonable manner. … The cooperation clause, therefore, should be deemed to allow [the insurer] to take reasonable steps to ascertain the truth of the claims.
So if your insurance policy is like most others – and it doesn’t specify what it means to cooperate – that does not give you free reign to pick and choose when to cooperate. The key is that you are reasonable with your cooperation and allow your insurance company to complete their investigation.