The Zelle Lonestar Lowdown
May 21, 2025
Recently, the United States District Court for the Northern District of Texas, Dallas Division, rejected an insured’s attempt to reframe its claim from a “forces of nature” claim and enforced Section 542A.006 of the Texas Insurance Code. Texas Insurance Code § 542A.006 allows an insurer to elect to accept responsibility for an agent’s acts or omissions related to a weather-related insurance claim.[1]
In Herrera v. AmGuard Ins. Co., the policyholders’ property sustained damage allegedly arising from an alleged lightning strike and tree fall, resulting in an electrical event.[2] The policyholders attempted to sidestep the application of Section 542A.006 by arguing that it did not apply because their property was damaged by a voltage surge rather than “forces of nature,” as required by § 542A.006.[3] The policyholders filed suit against AmGuard and its field adjuster, Jeremy Robert, alleging violations of the Texas Insurance Code, violations of the Deceptive Trade Practices Act, benefits loss rule, and independent injury and independent loss of benefits.
Before the policyholders filed suit, AmGuard elected to accept full responsibility for Robert’s actions, as permitted by the Insurance Code.[4] AmGuard moved to dismiss all claims against Robert based on improper joinder and Section 542A. AmGuard argued that there was no possibility of recovery against Robert because AmGuard elected to accept responsibility for Robert’s actions prior to the filing of the instant lawsuit.
Under Section 542A.006(b), when an insurer accepts an agent’s liability before an action is filed, there is no possibility of recovery against the agent and the action against the agent must be dismissed with prejudice.[5] However, the policyholders argued that Section 542A.006 did not apply because their claim arose from an electrical event rather than by “forces of nature.”[6] The policyholders argued their petition lacked allegations regarding damage caused by a force of nature and therefore the case did not involve a weather-related claim.
The court disagreed. The court held that Section 542A applied to the instant lawsuit because multiple insurance estimates from the policyholders actually designated hail as the cause of damage to the Property. Thus, the court concluded that at a minimum part of the claim arose from hail, satisfying the claim requirements of Section 542A.[7]
Based on the foregoing, this opinion reinforces Section 542A’s goal to reduce an adjuster’s liability and applies to any claims that may even partly arise from forces of nature.[8]
[1] Tex. Ins. Code § 542A.006.
[2] Herrera v. AmGuard Ins. Co., No 3:24-CV-2679-B, 2025 WL 1083212 (N.D. Tex. Apr. 10, 2025).
[3] Id. at *2.
[4] Id.
[5] Tex. Ins. Code § 542A.006(b).
[6] Herrera v. AmGuard Ins. Co., No 3:24-CV-2679-B, 2025 WL 1083212, *2 (N.D. Tex. Apr. 10, 2025).
[7] Id. at *3.
[8] Tex. Ins. Code § 542A.001(2).
_________________________________
