Big Win for Excess Carriers Regarding Presuit Notice

Excess property insurers recently earned a favorable ruling on what an insured's presuit notice must contain to avoid abatement under Chapter 542A of the Texas Insurance Code.  In a school district's bid against its primary and excess property insurers for storm-related damage, the Seventh Court of Appeals (Amarillo) reiterated that “[a]n excess carrier’s potential liability is only triggered after the primary insurers and all lower layers have exhausted their policy limits,” even in the presuit-notice context.  In Re James River, p.3 (quotation omitted). The Seventh Court of Appeals ruled that Section 542A.003's presuit-notice requirement demands that “a claimant’s notice letter must clearly articulate (a) the precise sum alleged to be owed (b) by each insurer and (c) for each claim.” In Re Westchester, p. 7 (emphasis added). This ruling is significant because it provides new guidance on the hurdles that an insured must clear to give effective notice under Section 542A.003 concerning damages caused by forces of nature, particularly when the primary and excess layers have yet to exhaust their respective policy limits. And if notice is deficient, the insured risks its ability to recover all reasonable and necessary attorney fees.