HOUSTON COURT OF APPEALS REVERSES INSURANCE CODE, CONTRACT JUDGMENT IN FAVOR OF INSUREDS WHO FAILED TO RENEW POLICY

The First Court of Appeals in Houston recently reversed a $40,000 judgment in favor of two homeowners who did not renew their policy prior to a fire that damaged their residence.  In Texas Farm Bureau Underwriters et al v. Douglas Rasmussen and Kathy Rasmussen, No. 01-12-00992-CV (Tex. App.—Houston [1st Dist.] July 11, 2013), the plaintiffs had contended that their policy should have renewed automatically because they allegedly did not receive a renewal notice in the mail.  The jury agreed, finding that there was a policy in place at the time of the fire, that Texas Farm Bureau breached the policy, and that Texas Farm Bureau made false or misleading statements in violation of the insurance code.

The court of appeals found legally insufficient evidence for all of the jury’s finding, and rendered judgment for Texas Farm Bureau.  There was no automatic renewal, the court said, because the plaintiffs never asked that the policy be renewed and never paid the premium.  The fact that the plaintiffs claimed that they never received renewal notice was not relevant, however, because an insurer has no duty to inform its insured about a delinquent premium.  The plaintiffs’ insurance code claims also failed, because first, there was no policy to support an unfair claims settlement cause of action, and second, the false statements purportedly made by the plaintiffs’ agent were unrelated to the circumstances of the plaintiff’s claim.