Texas insurance law has its quirks which are different than the majority. My experience is that every state has its nuances of insurance coverage law. Not necessarily wrong, just different. Sometimes, incorrect judicial decisions are made and then remain the law for generations. Often, adjusters in the field simply ignore statutes or common law rules and adjust claims the way they are taught.

One example is in California where the law requires payment of insurance loss on real property based on loss of market value. It is a stupid rule of law since modern policies contemplate payment based on repair costs regardless of market value. Most California adjusters simply disregard the law and pay based on construction repair estimates.

Texas has a very fair method to determine the value of personal property within a household. The rule certainly is not being told to policyholders. Indeed, most policyholders are told to list their personal household goods, list the date of purchase and the replacement cost, and then provide that list to the insurance adjuster. The adjuster arbitrarily applies depreciation and pays a figure claiming it is the "actual cash value" of the personal property loss. This practice is wrong under Texas law and probably results in underpayment.

In Crisp v. Security Nat’l Ins. Co., 369 S.W.2d 326, 329 (Tex. 1963), the Texas Supreme Court held:

"The law of damages distinguished between marketable chattels possessed for purposes of sale and chattels possessed for the comfort and well-being of their owner. In the instance of the former it judges their value by the market price. In the instance of the latter it measures their loss, not by their value in a second-hand market, but by the value of their use to the owner who suffers from their deprivation. The latter measure is employed in the case of household furniture, family records, wearing apparel, personal effects, and family portraits.

The courts have not abandoned the consideration of either market or reproduction or replacement values in arriving at actual value to the insured, but evidence of those values may be used as a guide in making that determination rather than a shackle which compels strict adherence thereto. The trier of facts may consider original cost and cost of replacement, the opinions upon value given by qualified witnesses, the gainful uses to which the property has been put as well as any other facts reasonably tending to shed light upon the subject.

Where property, such as household goods and wearing apparel, has no recognized market value, the actual value to the owner must be determined without resort to market value." (Emphasis added)

In 1979, the Texas Supreme Court overruled a lower appellate Court that wrongly excluded the testimony of the policyholder’s estimate of value. It upheld the finding in Crisp and stated:

"Thus, the rule is that where household goods have no recognized market value, the trier of fact may consider, in determining the actual value to the owner at time of loss, the original cost, cost of replacement, opinions of qualified witnesses, including the owner, the use to which the property was put, as well as any other reasonably relevant facts.

The Court of Civil Appeals erred in holding that the testimony of Mrs. Chance was not competent evidence on the value of household possessions at time of trial. This holding is contrary to the Texas Supreme Court’s holding in Crisp."

Allstate Ins. Co. v. Chance, 590 S.W.2d 703, 704 (Tex. 1979).

Power to the Policyholder!