Texas Supreme Court Ruling on Insurance Claims

This document is a legal update regarding a recent ruling by the Texas Supreme Court on February 23, 2024, concerning the ability of a claimant to sue insurers directly after a settlement agreement. The court unanimously held that a claimant suffers a 'loss' when a settlement is reached, allowing them to pursue claims against the insurer directly. The ruling clarifies that while the insured is not liable beyond the insurance proceeds, the settlement agreement does not bind the insurers in subsequent coverage litigation. The document outlines the background of a securities class action involving Cobalt International Energy and the implications of the court's decision on future insurance claims. It details the court's findings on whether the insured suffers a loss under liability policies, the conditions under which a claimant can sue insurers directly, and the admissibility of settlement agreements in coverage litigation. The court concluded that the settlement agreement, not resulting from a fully adversarial proceeding, is neither binding nor admissible against the insurers.