Texas Bar Journal • October 2026

Insurance Basics

Checklists for the general practitioner.

Written by Andrea M. Palmer

Some lawyers are insurance nerds. We enjoy discussing the history of insurance, recent caselaw on coverage, and esoteric ideas of “what is insurance?” We have been to Lloyd’s of London to view the loss book. We know the etymology of the oxymoronically named “inland marine” coverage.

For the general practitioner, a basic understanding of insurance, coverage, and how insurance works aids in representing clients, and in making strategic decisions. A checklist helps as well.

REPRESENTING CLIENTS IN CONTRACT NEGOTIATION
Scenario One: You are editing a contract, where your client provides services to customers.

  • Discuss with your client broker placed coverages, limits, and deductibles.

  • What limits and deductibles are appropriate? Your client may carry $50 million in general liability but doesn’t need that to be contractually binding. Use industry standard minimums for coverage and deductibles, allowing flexibility.

  • Is a higher limit required? Rather than raising the limit for the entire policy (raising the premium), ask the

  • client’s broker whether the limit may be increased via endorsement for just this contract, typically for a smaller premium.

  • When your client is the vendor, never raise the limit or lower the deductible.

  • Consider additional insured and waiver of subrogation. Most customers ask for this, but it removes control from the client insured. However, be aware of industry standards—in construction or oil and gas, this is the norm for certain coverages.

Scenario Two: You are editing a vendor contract, where your client receives services from a vendor.

  • Are industry standard coverages missing?

  • What limits and deductibles will protect your client?

  • Never lower the limit or raise the deductible when your client is the customer.

  • Will you require additional-insured status, or waiver of subrogation? Consider the industry standard. Being an additional insured allows your client to open claims directly.

  • Require a certificate of insurance. This has the names of the carriers and policy numbers, allowing you to contact the carrier directly if there is a claim—even if your client is not additional insured.

  • Require carriers with a strong financial rating.1 A higher-rated carrier is more likely to have funds to pay claims.

REPRESENTING THE INSURED
Scenario One: Your client has suffered a loss.

  • Discuss the claim with the broker or agent who placed the policies.

    • Does the broker believe there may be coverage?

    • What are the available limits and applicable deductible? Previous claims may have eroded funds.

    • Is the policy form claims made or occurrence? If claims made, the carrier must be notified before the policy expires (at the latest), or coverage will be denied.

  • If the claim is uncertain or under the deductible, consider making a “record-only” or “notice-only” report. This allows the claim to “relate back” if it later matures.

  • If your client is renewing or placing new coverage, ensure the potential claim is reported. If the insured does not disclose potential claims when filling out an application, it may void future coverage.2

Scenario Two: Someone has made a claim against your client.

  • Discuss the claim with the broker or agent who placed the policies; consider the above questions.

  • Does the policy cover defense? Ask if the carrier will agree to your representation, paying some or all of your fees.

  • Do not settle before discussing with the carrier; the carrier may deny coverage.3

Scenario Three: The carrier denied coverage. You reviewed the policy and facts of the claim and believe the decision is wrong.

  • Discuss the claim with the broker. Are they able to advocate with the carrier for your client?

  • Consider quick wins:

    • Does the claim fit the exclusion? In Texas, the facts alleged, not the legal theories, determine whether an exclusion is applicable.4

    • Is the insured’s breach of policy requirements not causally connected to the loss? A carrier may deny coverage for technical violations of policy conditions (a flight hours requirement for a pilot, a state license requirement for a driver). In Texas, the breach must be causally connected to the loss5 (e.g., if a pilot did not meet the hours requirement, but the crash was caused by mechanical failure, the carrier cannot deny based on the breach.).

    • Has the carrier been prejudiced by late reporting? Some policies have reporting windows as short as 30 days. Texas is an “anti-technicality” state; a carrier cannot deny coverage due to late reporting unless the carrier has been prejudiced.6 Certain events are de facto prejudice (e.g., allowing a final default judgment,7 or failure to notify under a claims-made policy).8

    • Has the carrier been prejudiced by voluntary payment or settlement? The carrier generally has the “right and duty” to indemnify the insured. Any decision to settle belongs to the carrier, not the insured. In Texas, the carrier must prove it was prejudiced by the non-approved payment.9 Be ready to show you thoroughly investigated the claim, the amount is reasonable, and the settlement agreement is sound.

Consider broker error.

  • In Texas, the broker has no obligation to explain policies to the insured; an insured has a duty to read the policy and is charged with knowledge of its conditions and coverage.10

  • However, there are situations where the broker acted as a risk manager or adviser. Or the broker may have failed to send updated schedules or applications to the carrier.

Consider engaging an expert first-party coverage attorney.

  • Insurance coverage is complex and arcane and bringing a claim against a broker or carrier requires specialized knowledge.

  • It is easy for attorneys to unknowingly prejudice their client in coverage matters.

REPRESENTING THE CLAIMANT
You represent a claimant who suffered a loss. You believe the other party has insurance coverage.

  • Locate policy information. Ask if the client has a certificate of insurance from the other party. If the other party is regulated, search agencies to see if policy information is public.

  • Ask that the other party put you in touch with its insurance broker or the adjuster.

  • If the other party is uncooperative, contact the carrier directly.

    • If your client has additional-insured status, make a first-party claim with the carrier.

    • Even if not, the carrier may open a claim and begin working with you.

  • File a lawsuit. Send a copy of the filed petition to the other party and its carrier.

  • Do not take a default judgment if you are relying on insurance funds to make your client whole. A default judgment in Texas is de facto prejudice;11 the carrier will deny coverage.

MANAGING THE INSURANCE PROGRAM FOR YOUR COMPANY OR LAW FIRM
Scenario One: Managing claims.

  • Discuss potential claims with your broker; consider making a “record-only” or “notice-only” report.

  • Educate teammates on the importance of sharing information with you immediately and establish internal reporting mechanisms.

  • Understand the difference between occurrence-based and claims-made forms.

    • For occurrence-based coverage, the incident must occur during the policy period, but the claim may arise later.

    • For claims-made coverage, both the incident and the claim must occur and be reported to the carrier during the policy period, plus any extended reporting periods. If the policy is renewed continuously with the same carrier, it typically extends the reporting period.

    • Malpractice and cyber insurance are almost always claims-made coverage.

Scenario Two: Filling out new and renewal applications.

  • Lean on the broker. Have them present the application questions in a spreadsheet. Discuss the questions and your answers with the broker.

  • Seek multiple inputs. Share the questions with internal departments. Confirm all information with review of data or documents.

  • Completing applications should be a key risk management process, not administrative work to delegate. Generally, the application forms part of the insurance contract. If an incorrect answer “was material to the risk,” the carrier may deny coverage.12

  • Never rely on previous applications. While you may use them to guide your work, you should independently verify every detail or have a process to ensure accuracy.

Notes

  1. Examples of rating institutions include AM Best (https://web.ambest.com/home ) and Demotech (https://www.demotech.com/).

  2. Tex. Ins. Code § 705.004.

  3. See Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691 (Tex. 1994).

  4. See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 142 (Tex. 1997).

  5. See Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936 (Tex. 1984).

  6. See Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 174 (Tex. 1995).

  7. Supra note 6.

  8. See Matador Petroleum Corp. v. St. Paul Surplus Lines Ins. Co., 174 F.3d 653, 659 (5th Cir. 1999).

  9. Supra note 3.

  10. See Rodgers v. Ins. Co. of Pa., 513 S.W.2d 113, 119 (Tex. Civ. App.—Fort Worth 1974, writ ref ’d n.r.e.); see also Ruiz v. Gov’t Employees Ins. Co., 4 S.W.3d 838, 841 (Tex. App.—El Paso 1999, no pet.).

  11. Supra note 6.

  12. Supra note 2.

ANDREA M. PALMERANDREA M. PALMER is corporate counsel and vice president of legal and compliance at TTI, Inc., a Berkshire Hathaway Company. Based at headquarters in Fort Worth, she has responsibility for global legal and compliance functions, supporting the 50-plus subsidiaries, 9,300-plus employees, and 180-plus locations that drive revenue of more than $10 billion. After attending the University of Texas at Austin (BA ’08), and Baylor School of Law (JD ’13, cum laud), Palmer began her career in aviation litigation, then moved in-house to a national insurance broker, where she became an insurance nerd.