Texas Supreme Court allows loss-of-use damages for total loss cases

On January 8, 2016, the Texas Supreme Court released a decision that reversed a 60-year trend in Texas auto insurance litigation. In J&D Towing, LLC vs. American Alternative Insurance Corp. (AAIC), the Court reversed a confusing trend of prohibiting the recovery of loss-of-use damages in total loss cases. Traditionally, claimants whose damaged property can be repaired are entitled to recovering the cost of repairs as well as loss-of-use damages. Because claimants whose property is totally destroyed often replace the property immediately, and because courts have tried to limit the possibility of double recovery, claimants who have suffered a total loss have only been entitled to the fair market value of the lost property. Though it has been the norm in Texas courts for decades, the Fort Worth Court of Appeals decided in Morrison v. Campbell in 2014 that “there is no compelling or logical reason to treat loss of use claims differently in destroyed property cases than we do in repairable property cases.” The Court was not trying to establish a new general rule, but ruled that a claimant should be able to recover loss-of-use damages on top of the fair market value of lost property when an insurer delays payment on a total loss. This 2014 ruling helped support J&D Trucking’s successful appeal to the Texas Supreme Court concluded two years later. Chronology of the case: How J&D Towing, LLC vs. American Alternative Insurance Corp. (AAIC) upended a 60-year tradition In December 2011, on its way to repossess a vehicle, J&D Towing’s only tow truck was struck in the passenger side by a car. All parties agreed that...
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