Ulico Casualty Co. v. Allied Pilots Ass'n

Summary

The Supreme Court of Texas considered whether waiver and estoppel could expand coverage under a claims-made insurance policy for a lawsuit reported after the policy period expired. The court held that those doctrines cannot create or rewrite contractual coverage for an uninsured risk, although an insurer may be estopped from denying benefits for prejudice caused by its actions. The court affirmed the judgment insofar as it disregarded jury findings that the insurer granted an extended reporting period or separately agreed to cover defense costs.

Holdings

1. Waiver and estoppel cannot rewrite an insurance contract or create coverage for a risk that the policy does not cover. If an insurer's conduct prejudices the insured after the insurer assumes or controls the defense, the insured may pursue estoppel-based recovery for damages caused by that conduct, measured by benefits that would have been payable had the claim been covered; the doctrines do not create contractual coverage.
2. The jury questions submitting waiver and estoppel theories to expand Ulico's policy coverage were immaterial and could not support a judgment against Ulico.
3. The evidence did not support a finding that Ulico granted APA an extended reporting period covering the Allen claim.
4. There was no enforceable separate agreement requiring Ulico to reimburse APA for the Allen defense costs because there was no evidence of consideration.
5. Ulico preserved error because it consistently argued that waiver and estoppel could not create coverage and maintained that position through the charge conference and post-verdict motions.

Questions Presented

1. Whether waiver or estoppel can expand coverage under a claims-made insurance policy to cover a claim reported after the policy period expired.
2. Whether the trial court properly disregarded the jury finding that Ulico granted an extended reporting period.
3. Whether Ulico and APA formed a separate agreement requiring Ulico to reimburse APA's defense costs.
4. Whether Ulico preserved its challenges to the jury questions on waiver and estoppel.

Disposition

reversed