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Insurance Law
South Texas College of Law Houston
Platts Jr., Henry S.

Insurance Law
M 5:20-7:20pm
Rm. 418
Prof. Platts
Rm. ?
713.655.2706 (w)
713.664.8711 (h) (M-F, before 10pm)
Attendance: two absences, dropped on third
Recitation: alphabetical; after recitation (next class) turn in a multiple choice exam question about case that you recited on (if everyone does this, the curve will be increased by 0.333, from B- to a B), include 4 or 5 choices and indicate the correct one
Exam: multiple choice (90), 1.5 minutes/question, closed book
-Insurer v Insured
-Name insured same as policy holder
I.         Chapter One: Texas Cases on Insurance Law
A.      Basic Principles
1.                   Two Basic Types of Insurance – First Party & Third Party
a.                   First Party – protects insured from loss on account of insured’s own damages
1)                   Life insurance, health insurance, medical insurance, fire insurance, collision insurance
b.                   Third Party – covers damage caused by insured to a third party (a.k.a. liability insurance)
c.                   Whose damages are being covered?
1)                   First party (party to the insurance contract)
2)                   Third party (someone not named on the insurance contract)
2.                   Rules of Insurance Policy (Contract) Construction
a.                   Contra proferentem – any ambiguities in the policy are construed against drafter
1)                   Construed in favor of the insured and of finding coverage for the claim
2)                   Must be a reasonable construction
b.                   Contract of adhesion – insurance company writes policy, and insured takes them as written (construed against drafter)
1)                   Contract must be taken by the insured as it is written by the insurer; the insured cannot negotiate the terms of the contract so the terms of the policy are construed against the drafter (insurer)
2)                   In Texas, the Texas Insurance Board dictates what is included in the insurance policy, so this is not so applicable
c.                   Reasonable expectations – what the average insured expects the policy to cover, regardless of what the policy states
1)                   If a term in the policy is ambiguous, the court will construe the policy in light of the insured’s reasonable expectation of the meaning of the term
a)                   I.e., what did the insured expect when he bough the policy?
2)                   Texas does not follow this
d.                   Barnett v. Aetna Life Ins. Co.
1)                   Rules of Construction
a)                   Insurance policies are just contracts and are construable as contracts
b)                   If the K is expressed in plain and unambiguous language, a court cannot resort to the various rules of construction
c)                   Policy is Ambiguous (question of law) – when language in a policy is susceptible to more than one reasonable con

any is prejudiced is a matter of fact
2)                   Carve-out provision – Aetna wanted to reduce the amount of benefits payable to the insured b/c he was receiving benefits from another source (here, the Federal Government under the VA Act)
3)                   Exclusions from coverage must be in plain and unambiguous language
e.                   National Union Fire Ins. Co. v. Hudson Energy Co.
1)                   Types of Ambiguities:
a)                   Patent ambiguity – ambiguous on its face
b)                   Latent ambiguity – when the language is compared to a fact pattern it obviously becomes ambiguous
c)                   Endorsement- changing a clause such as lengthening policy
d)                   An intent to exclude coverage must be unambiguous.
3.                   Three Basic Types of Insurance Policies
a.                   Commercial General Liability (CGL)
b.                   Texas Homeowner’s
c.                   Texas Personal Auto
B.      General Liability Insurance
1.                   Two Liability Insurer Contractual Duties
Duty to Defend – obligation by insurer to provide counsel to defend the insured against a claim