Policy Limit is the Most an Insured Can Recover for a Loss

Post 5174

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Water Damage Special Limit of Liability Enforced

In Abraham & Co. Inc v. Markel Insurance Company And Hirschfield Risk Services, Inc. D/B/A H&H Claims Consultants, No. 14-24-00242-CV, Court of Appeals of Texas, Fourteenth District (August 19, 2025) dealt with damages caused by Winter Storm Uri in February 2021 when pipes at Abraham's location burst, causing water damage to numerous rugs.

KEY FACTS:

Insurance Policy:

Markel issued an insurance policy to Abraham, effective from November 16, 2020, to November 16, 2021, with a liability limit of $2 million for covered property and a special limit of $750,000 for water damage.

Claim and Dispute:

Abraham filed a claim under the policy and Markel paid only $750,000 based on an endorsement limiting liability for water damage.

Legal Proceedings:

Abraham filed suit against Markel for breach of contract and other claims, and against H&H for negligence and violations of the Texas Insurance Code.

LEGAL CONCLUSIONS:

Coverage Limit:

The trial court concluded that the policy's unambiguous language limited the coverage for Abraham's claim to $750,000.

Negligence Claims:

The Court of Appeals concluded that the trial court did not err in granting summary judgment for H&H on the negligent claims handling but erred in dismissing Abraham's general negligence claim.

Extra-Contractual Claims:

The trial court did not err in granting summary judgment on Abraham's extra-contractual claims against Markel and H&H.

CONCLUSIONS:

It was undisputed that Abraham's claim was based on a loss caused by water damage and that Markel has paid $750,000 on this claim and the trial court did not err in granting summary judgment and dismissing with prejudice Abraham's breach-of-contract claim against Markel.

To the extent the trial court granted summary judgment as to Abraham's claim for negligent claims handling, dismissed the claim, and determined that H&H cannot be liable based on a theory of negligent claims handling, the trial court did not err, and the Court of Appeals affirmed the trial court's judgment.

To the extent the trial court granted summary judgment as to Abraham's General Negligence Claim, dismissed the claim, and determined that H&H cannot be liable on a theory of general negligence, the trial court erred and the Court of Appeals reversed the trial court's judgment and remanded the case for further proceedings.

Did The Trial Court Err In Granting Summary Judgment As To Abraham's Negligence Claims Against H&H?

In part of its first issue and in its second issue Abraham challenges the trial court's granting of summary judgment as to its negligence claims against H&H, the claims consultants.

To the extent the trial court granted summary judgment as to Abraham's claim for negligent claims handling, dismissed the claim, and determined that H&H cannot be liable based on a theory of negligent claims handling, the trial court did not err, and the trial court's judgment was affirmed. To the extent the trial court granted summary judgment as to Abraham's General Negligence Claim, dismissed the claim, and determined that H&H cannot be liable on a theory of general negligence, the trial court erred.

ZALMA OPINION

Many insurance companies do not have a claims staff to deal with all claims and retain the services of independent claims adjusters and consultants like H&H. The Court of Appeals found that everything that the insurer did was appropriate it still allowed the case to go forward against H&H who only can act as an agent of the insurer and, if it acted negligently, it can be liable for any damages resulting from its negligence. How, if the claim was handled appropriately and the insured paid the limit of liability of the policy, the claims handler could be negligent is difficult to prognosticate.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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