“5 Insurance Battlegrounds To Watch In Texas”
The Texas Supreme Court will soon decide whether two terms common in commercial general liability policy exclusions are ambiguous, a decision that experts say could affect coverage disputes over the replacement of defective products, while courts across the state consider other hotly contested cases.
Texas law provides that if language in an exclusion is found to be ambiguous, a court must adopt the policyholder’s interpretation of the language if it is reasonable. If the Texas high court rules that “physical injury” and “replacement” are ambiguous, U.S. Metals and insureds in similar cases may be able to prevail by showing their interpretations of the terms are reasonable.
However, that outcome is far from guaranteed, according to attorneys. David White, counsel in Thompson & Knight LLP’s Dallas office, said he thinks the state high court will refuse to find the business risk exclusions ambiguous and will instead follow the reasoning of a Georgia federal court’s 2008 decision in Gentry Machine Works v. Harleysville Mutual Insurance.