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The Texas Supreme Court recently increased policyholders’ influence over an insurer’s right to settle a third-party claim for less than policy limits. Insurers have long enjoyed a nearly absolute right to settle claims, even over policyholders’ objections; but
In re Farmers Texas County mus. Ins Co., S.W.3d , 2021 WL 1583878 (Tex. Apr 23, 2021) changed this, giving policyholders the right to seek reimbursement from an insurer who settles for less than the policy limits, but forces contribution by the insured to obtain the release.
Cassandra Longoria rear-ended a vehicle driven by Gary Gibson, who sued her for $1 million. Farmers undertook Longoria’s defense; but rejected Gibson’s offer at mediation to settle for $350,000, refusing to pay more than $250,000. Gibson withdrew the offer and increased his claim to $2 million. As trial approached, Longoria negotiated Gibson back to $350,000, but Farmers agai
Texas Insured Who Paid Part of Settlement May Seek Recovery from Carrier
A woman who chipped in $100,000 toward a settlement after a car crash can sue her insurer to seek recovery of that cost, but cannot seek damages in excess of the policy limits for negligent failure to settle because there was no final judgment in the case, the Texas Supreme Court ruled.
Plaintiff’s attorney Thomas G. Kemmy said during oral arguments that Texas’ high court has never before ruled on what recourse is available to a policyholder who faces the kind of dilemma that was imposed on his client Cassandra Longoria.
Texas Policyholder Who Paid Part of Settlement May Seek Recovery From Insurer
A woman who chipped in $100,000 toward a settlement after a car crash can sue her insurer to seek recovery of that cost, but cannot seek damages in excess of the policy limits for negligent failure to settle because there was no final judgment in the case, the Texas Supreme Court ruled.
Plaintiff’s attorney Thomas G. Kemmy said during oral arguments that Texas’ high court has never before ruled on what recourse is available to a policyholder who faces the kind of dilemma that was imposed on his client Cassandra Longoria.