In Century Surety Co. v. EC & SM Guerra, LLC, 5:23-CV-01215-XR-RBF, 2025 WL 2602288 (W.D. Tex. Aug. 21, 2025) aff’2025 WL 2598375 (Sept. 5, 2025), the United States District Court for the Western District of Texas reaffirmed the magistrate’s report and recommendation holding that because the insured received a policy with its requested limits, Century did not breach the insurance contract. The Court further held that Century had no duty to advise the insured of the adequacy of the coverage for the insured property.
Factual Background
The insured operates a child development center in San Antonio, Texas, and procured a renewal policy with the insurer, covering its property with a building limit of $635,220, plus additional coverage for business personal property and debris removal. In 2022, after a fire damaged the insured’s property, Century paid out the full policy limits for the structure, debris removal, and business personal property. Dissatisfied with the payout, the insured initiated legal action asserting fraud and breach of contract arguing that the coverage was insufficient to replace the damaged property and seeking additional payments for other coverages such as signage, increased cost of compliance, electronic data, and valuable papers. Century responded by filing a declaratory judgment action, seeking a ruling that it owed the insured no further payments under the policy. The cases were consolidated.
Analysis
The Court found that the insured’s fraud claims failed because Century provided the exact insurance policy the insured requested, including the stated coverage limits which appeared on both the application and the policy documents. The insured was charged with knowledge of the policy’s terms, and the Court found no duty for Century to disclose additional information about coverage. The Court similarly rejected the insured’s argument that it relied upon contrary statements of limits of liability because the express terms of the application and policy were clear. The Court followed the tenet that an insured party is charged with knowledge of its own insurance policy, admonishing against reliance on verbal statements contradicting written agreements.
The Court agreed with Century that it paid the full policy limits, precluding the insured’s additional recovery for signage, valuable papers, and electronic data. As a result, the insured was not entitled to further payment under the policy. The Court granted summary judgment in favor of Century and declared that Century had fulfilled its obligations and owed no further payments to the insured.
Conclusion
This case highlights the importance of clear, written documentation of the coverage limits and terms requested by an insured. Here, Century prevailed because it could show that the insured requested and knowingly accepted the coverage limits it proposed. Further, the Court reaffirmed that under Texas law, an insurer is not generally required to advise policyholders if their chosen coverage limits are adequate as the insured is responsible for understanding and selecting the appropriate coverage. By ensuring policyholders understand their coverage and documenting all transactions, insurance companies can minimize disputes and prevail in litigation.