Raizner Slania filed a lawsuit on behalf of a Houston widow whose husband’s life insurance claim with American General Life Insurance Company (“American General”) was wrongfully denied under Texas law.
In late 2014, the plaintiff’s late husband purchased a life insurance policy with American to protect his loved ones from financial obligations in the event of his death. He provided a thorough medical history and underwent stringent medical review, providing American General with a thorough background so the company could underwrite his policy. Satisfied with his initial application, American issued a life insurance policy.
After the life insurance policy was in full effect, plaintiff’s husband began experiencing gastrointestinal discomfort, and he was subsequently diagnosed with colon cancer. Despite a valiant fight against the disease, he passed away in September 2015, leaving behind his wife of twelve years and their two young children.
After her husband’s death, the plaintiff informed the insurance company of his passing and filed a claim for benefits. American General assigned an adjuster to the file, but did not openly disclose that they were engaged in an aggressive campaign to manufacture fraud allegations against the deceased husband. Revealing nothing of their true purpose, the adjuster and American General continually denied the plaintiff’s request for an update on the claim and improperly told her the company was not subject to any rules determining the length of time it takes to conduct an investigation and respond to a claim.
The plaintiff fully cooperated with American General’s investigation by giving interviews, providing medical history, and meeting with investigators. The investigation continued for months. During this process, American General engaged fraud examiners and lawyers in an aggressive effort to avoid payment on the policy without any factual or legal basis.
The plaintiff’s financial situation quickly declined, but the adjuster and American General continued to delay the process. Nine months after her husband’s death, American General insurance denied her life insurance claim. The denial letter contained false, manufactured allegations plaintiff’s husband deceived the insurer on his initial application, but failed to provide any evidence to support this claim. In direct violation of Texas law, American denied the life insurance claim without any evidence of misconduct by the plaintiff or her late husband.
American General’s Misuse of Contestability Clauses in Life Insurance Policies
Under Texas law, an insurance company cannot dispute a claim filed under a life insurance policy already in effect for more than two years. However, if a claim is made within the first two years of the issuance of the policy, during what is called “the contestability period,” insurance companies are permitted to investigate claims. The purpose of the Texas law is to prohibit payment disputes after an insurance policy has been in effect for two years, not to authorize systematic denials if death occurs within the first two years after the policy is issued. An insurance company may only deny this type of claim when it has sufficient evidence to prove that the insured intended to deceive the insurer on an insurance application. There was no such evidence in this case.
Plaintiff alleges American failed to effectuate a prompt, fair, and equitable settlement of a claim and failed to provide a reasonable explanation for the denial of a claim. Additionally, plaintiff alleges American misrepresented the insurance policy in such a manner as to mislead the plaintiff.
Nothing can bring back the plaintiff’s husband – and to add to her pain, she was forced to hire a lawyer to pursue her life insurance claim to give her the financial security he wanted for his family.
Raizner Slania: Life Insurance Denial Attorneys
Life insurance companies often abuse the contestability period listed in their policies, which is meant to protect policyholders, to avoid having to pay out on life insurance claims. Not only is this wrong, it’s also a violation of Texas law. If your life insurance claim was wrongfully denied, the attorneys at Raizner Slania can help. We know how challenging the loss of a loved one can be, and we want you to know that we will fight for your rightful compensation. Call us today for a free consultation to discuss your case.