Excess Underwriters at Lloyd's, London v. Frank's Casing Crew & Rental Tools, Inc.
246 S.W.3d 42 | Texas Supreme Court | 2008
What This Case Means for Subcontractors
A drilling platform fabricator (Frank's Casing) was sued after a platform collapse. The company's excess insurance carrier settled the claim without getting explicit written consent from Frank's Casing to reimburse the insurer if coverage was later denied. The Texas Supreme Court ruled that excess insurers cannot recover settlement money from their insured unless the insured clearly agrees in advance to both the settlement AND the reimbursement obligation. This protects subcontractors from surprise bills when insurers settle disputes on their own.
Key Takeaways
- •Require your insurance broker to get written confirmation from your excess carrier that any settlement will NOT trigger a reimbursement demand against you. Get this in writing before disputes arise.
- •If your insurer wants to settle a claim on your behalf, demand a written agreement stating whether you will owe them money back if coverage is later denied. Do not rely on verbal assurances.
- •Even if you think a settlement offer is reasonable and push your insurer to accept it, that does not automatically obligate you to reimburse them later. Protect yourself with explicit written language.
An insurer may fund the settlement and seek reimbursement only if it obtains the insured's clear and unequivocal consent.
Frequently Asked Question
Can my excess insurance company make me pay them back if they settle a claim without my permission?
No, not in Texas. Your excess insurer must get your clear, written agreement to both the settlement AND your obligation to reimburse them if coverage is later denied. Simply accepting a settlement offer does not automatically obligate you to pay the insurer back. Always require written confirmation of reimbursement terms before any settlement is finalized.
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