Refusal to Buy Coverage Defeats Suit
Barry Zalma
Sep 29, 2023
Read the full article at https://lnkd.in/gHganPZT and see the full video at https://lnkd.in/gH_FQVyZ and at https://lnkd.in/geWvCzk6 and https://zalma.com/blog plus more than 4600 posts.
In Texas Windstorm Insurance Association v. Kevin Kelly and Tiffany Kelly, No. 09-22-00173-CV, Court of Appeals of Texas (September 21, 2023) the Texas Windstorm Insurance Association’s (TWIA) appealed from an order granting Plaintiffs’ summary judgment and denying TWIA’s summary judgment motion.
THE STATUTE
Section 2210.208 of the Texas Insurance Code requires an offer of Windstorm and Hail Insurance policies issued by TWIA to include coverage for wind-driven rain. Coverage may be made available through an endorsement that requires the insured to pay an additional premium to the carrier to compensate the carrier for insuring against the additional risk of covering the property against the casualty of being damaged by wind-driven rain.
BACKGROUND
The Kellys live in Port Arthur, Texas. In 2017, the Kellys purchased a windstorm and hail insurance policy from TWIA through their insurance agent to cover their residential property. The policy insures the property against direct loss resulting from the perils of Windstorm and Hail only. The policy specifically excluded the following loss to the covered property: “6. Rain. We do not cover loss or damage caused by or resulting from rain, whether driven by wind or not, unless direct force of wind or hail makes an opening in a roof or wall and rain enters through this opening and causes the damage.”
The Kellys’ home was damaged by Hurricane Harvey on or about August 29, 2017. On September 1, the Kellys’ filed a notice of claim with TWIA. The adjuster hired by TWIA made the following findings:
1 the Kellys’ property sustained covered damage to the garage door tracks,
2 damage to the roof was not caused by wind or hail, and
water damage to the interior of the property did not result from a wind or hail created opening in the roof or walls, as required for coverage under the policy.
TWIA issued a Notice of Claim Acceptance in Part and Denial in Part, accepting coverage for damage to the tracks on the detached garage but denying coverage from rainwater intrusion.
TWIA filed an unsuccessful motion for summary judgment.
The dispute centered on whether the “must include coverage for” clause is satisfied by TWIA’s offering their insureds the opportunity to purchase a Department of Insurance approved endorsement, which extends the basic coverage in TWIA’s windstorm and hail policy to damages caused by wind-driven rain.
The trial court found that the TWIA policy issued to the Kellys improperly and ineffectively omits coverage for wind driven rain damage.
ANALYSIS
The Court of Appeal construes statutory language to determine and give effect to the Legislature’s intent. The Court must not interpret the statute in a manner that renders any part of the statute meaningless or superfluous.
TWIA argued that it complied with the Act by offering to cover losses caused by wind-driven rain through an endorsement to the basic windstorm and hail policy that it issued to the Kellys, an endorsement the Kellys did not obtain.
The Act imposes no non-compliance penalty on TWIA but instead allows it to comply with the statute by offering its insureds the opportunity to obtain an endorsement that covers damage caused by wind-driven rain by paying an additional premium approved by the commissioner when purchasing a windstorm and hail policy.
The Court of Appeals’ reading of the statute supports the policy that led to the enactment of the windstorm statute. Under well-established rules of statutory interpretation, an appellate court may not interpret one portion of a statute so as to render another portion of the statute meaningless.
Accordingly, the Court of Appeals concluded that TWIA complied with the requirements of the statute by offering the Kellys the opportunity to obtain coverage for damage caused by wind-driven rain through the purchase of an endorsement that, if purchased, would have provided coverage for losses caused by wind-driven rain.
The Court of Appeals reversed the trial court’s Order granting summary judgment in favor of the Kellys and reversed the trial court’s Order denying TWIA’s summary judgment.
ZALMA OPINION
Statutes requiring insurers to provide various types of insurance must be read in a manner to provide the desires of the Legislature and not provide less or more than that required by the statute. TWIA followed the statute by offering an endorsement providing wind driven rain coverage, which it offered to the Kellys’ only to have them refuse the coverage and then, when damaged by wind driven rain, attempted to cure their error by litigation misinterpreting the statute. They received the coverage they paid for and did not receive the additional coverage for which they refused to pay.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to substack at https://lnkd.in/gcZKhG6g
Go to Rumble.com at https://lnkd.in/gV9QJYH; Go to Barry Zalma on YouTube- https://lnkd.in/g2hGv88; Go to the Insurance Claims Library – https://lnkd.in/gYq44VM
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ¬¬¬Perpetrators than any Other Crime.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
