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Insurer Claims It Should Not Have To Pay Penalties For Violating Consumer Protection Laws


November 13, 2009
Topic: Insurance Claims

The Texas Windstorm Insurance Association (TWIA), facing over 900 lawsuits stemming from hurricanes Ike, Dolly and Rita, wants to try to avoid paying penalties and other damages for violations of several consumer protection laws. In two separate lawsuits, TWIA has filed motions seeking immunity from paying penalties, policyholder attorneys' fees and other expenses for wrongfully denying claims. TWIA argues it's an instrument of a government agency, and as such is entitled to sovereign immunity that protects governments from some legal liability. While TWIA was created by the state, it is a privately run organization.

Lawyers for policyholders say the association is effectively a private company, and that immunity would let the insurer escape the consequences for its decisions to knowingly violate consumer protection laws and the rights of its customers. Attorneys for the policyholders point to the fact that the Legislature decided not to grant immunity to the insurer. In addition, attorneys for the policyholders also point out that TWIA previously took the position that it was not a state agency, that it was a private company. Specifically, following an "Open Records Request" by the Houston Chronicle in 2008, TWIA's general manger explained that it was not subject to Open Records Requests because it was not a state agency when it refused to produce requested documents to the Chronicle explaining, "TWIA is a private company that was set up by legislation. It is a nonprofit company." However, two opinions of the Texas Attorney General released earlier this month ruled the association is subject to the Public Information Act because it was created by lawmakers and is accountable to the state insurance commissioner.

In addition to trying to get their claims paid, nearly all of the lawsuits filed by policyholders against TWIA have asserted "extra-contractual" claims for punitive damages, attorney fees and penalties under the Texas Insurance Code.


The experienced personal injury attorneys of the Montes Herald Law Group, LLP, based in Irving, TX, represent clients throughout north Texas and statewide, with focus on the Dallas-Fort Worth (DFW) Metroplex and Dallas County, Tarrant County, Denton County, Harris County, Travis County and Baylor County. This includes cities such as Irving, Las Colinas, Valley Ranch, Dallas, Fort Worth, Plano, Arlington, Carrollton, Coppell, Lewisville, Grapevine, Addison, Southlake, Colleyville and the Hurst, Euless, Bedford Heb-mid cities area.

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