Texas Supreme Court Rules in Favor of Prodigy Communications

05/08/2009

AT&T Unit Wins Case Over Claims Coverage
Dallas Business Journal

A unit of AT&T Inc. has won a major victory at the Texas Supreme Court that will make it tougher for insurers to deny coverage to corporate customers that fail to report claims in a timely fashion.

At issue in the case involving Prodigy Communications Corp. was whether an insurer was obligated to cover a claim by Prodigy even though Prodigy failed to give notice to the insurer “as soon as practicable,” as was required by the policy. Prodigy is an Internet services provider that, through a series of acquisitions, became AT&T Internet Services some years ago. 

“Unfortunately, we had lost in the trial court and in the (Fifth District) Court of Appeals,” says Werner Powers, a litigation partner in Dallas at Haynes and Boone who represented Prodigy. “It took the Texas Supreme Court to get it right.”

Powers worked on the case with Charles C. Keeble Jr., of counsel at Haynes and Boone.

The case is significant for businesses of all sizes because the policy at the center of the case was what’s known as “claims made,” meaning claims receive coverage only if they are brought to the insurer’s attention during the time when the policy is in effect (or in a set period after the policy expires). Certain types of insurance policies that businesses buy, including directors and officers, and errors and omissions coverage, tend to be claims-made policies.

Article excerpted from Dallas Business Journal.

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