Some observations on the Supreme Court of Texas’ recent decision in Seger v. Yorkshire Ins. Co., Ltd., No. 13-0673 (Tex. Jun. 17, 2016):
- The plaintiff/insured must establish coverage as an essential element of its Stowers claim. The plaintiff/insured bears the initial burden of establishing coverage. If the plaintiff/insured proves coverage, the burden shifts to the insurer to establish the policy excludes coverage.
- Under certain circumstances, an insured may reject or void, at its option, a policy issued by an unauthorized insurer. If the insured elects to enforce a policy subject to avoidance, it must enforce the entire contract, including any policy exclusions. An insured cannot select provisions which favor coverage and reject exclusions. In other words, the plaintiff/insured must accept all of the policy terms or none.
- As an aside to #2 above, I wonder whether a plaintiff/insured must accept provisions in a voidable policy that are otherwise unenforceable on public policy grounds. I don’t think the “all or nothing” logic mandates such a result. The Seger Court didn’t discuss that issue.
- This case gives Jarndyce vs. Jarndyce a run for its money. The underlying accident and death occurred in 1992. That’s unacceptable.
The bottom line: No coverage? No Stowers claim.