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DTPA & INSURANCE COVERAGE

Is a Deceptive Trade Practices Act claim covered by a CGL=Commercial General Liability insurance policy?

It depends.  It depends mostly on how you plead the claim.  You should know that all insurance policies exclude intentional acts.  So if you assert that a misrepresentation was made and then claim it was done intentionally or knowingly, the intentional knowing claim will not be covered.  So what can you do? 

Ideally, you should plead your underlying DTPA or Deceptive Trade Practices Act claim as something that happened accidentally.  As if it was just an accident or negligence.  You can always include the intentional claim as an alternative pleading, but it is vital that you separate the claims.  If you merely assert all conduct was intentional and knowing, then you are excluding your claim from coverage. 

So for instance, if a major home builder represents that a home is not in a flood plain, and you later find out that it is in a flood plain and that the builder even tried to have the flood zone characteristic changed, you have pretty solid evidence that they knew and intended to misrepresent the flood zone characteristic.  That is fine, but in your pleading, the claim against the builder should still look like this:

        Big Ugly Homes has violated the Deceptive Trade Practices Act by representing that the home     had characteristics and qualities it did not have, namely that the home was not in a flood zone. 

This is generic and does not include any element of intent.  In a following paragraph, you can plead as follows:

Plaintiff would further show that Big Ugly Homes committed a knowing violation of the Deceptive Trade Practices Act. 

That would satisfy the pleading requirements and be vague enough not to startle an insurance adjustor into denying coverage.  Moreover, the defense attorney could specially except and request more definitive pleading, but he or she would be working against the interest of their client, the insured. 

 

NEW PHONE & FAX: Phone: 512 221 0121 Fax: 512 233 2559

Evin G. Dugas - Attorney at Law 512.261.0044 Evin@housedefects.com
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