Texas Court Affirms Insurance Coverage Limits and Insurer No-Duty Rule

In the case of Century Surety Co. v. EC & SM Guerra, LLC, the United States District Court for the Western District of Texas upheld that Century Surety did not breach its insurance contract with the insured child development center based in San Antonio, Texas. The insured had requested specific coverage limits, which were provided in the renewed policy, including a building limit of $635,220. After damage from a fire, Century paid out the full policy limits covering the structure, business personal property, and debris removal. The insured contested the payout, claiming insufficient coverage and seeking additional payments for items such as signage, increased costs of compliance, electronic data, and valuable papers. However, the court consolidated the cases after Century filed for declaratory judgment asserting no further payment obligations. The court found that since the insured accepted the coverage limits explicitly stated in the policy documents and application, and was charged with knowledge of these terms, Century held no duty to advise on the coverage's adequacy. The court reinforced the principle under Texas law that policyholders bear responsibility for understanding and selecting appropriate coverage. It disallowed the insured's claims based on verbal statements that contradicted the written agreement, emphasizing the strength of clear documentation. Century's full payment pursuant to the policy limits precluded further recovery claims, resulting in a summary judgment favoring the insurer. This ruling underscores the critical role of transparent policy documentation and the insured's responsibility in coverage decision-making. Insurance companies benefit from ensuring policyholders are well informed about their coverage scope to reduce litigation risks. The case clarifies the limits of insurer obligations regarding advising coverage sufficiency under Texas insurance law, reinforcing contractual clarity as pivotal in dispute resolution.