Hi! LegalGems here. My goal: To Do My Best To Assist You. Please remember, I can only provide general information,as this is a public forum.
I am sorry to hear of this situation. First, in order to determine if there is coverage, you should request copies of the policy itself, and review both policies to determine if the exceptions they are listing are in fact valid. Many policies do contain exclusions, but generally these exclusions are explicitly stated.
As for the insurance company stating that having an accident is a breach of contract, it would be interesting to see their legal argument behind that contention. As you know, the purpose of accident insurance is in case one has an accident, so an accident would not be a breach.
It is possible that they are breaching the contract - but this cannot be determined until the document is reviewed. If it does appear that this accident was covered by one of the two policies, and the company continues to refuse to pay on it, you can take them to court (since you are in Texas this will be difficult- however, if the RV was rented from Texas, Texas would have jurisdiction) to recover the damages you were forced to pay to the third party. Such cause of action could include breach of contract (failing to pay out per the terms of the policies). Depending on representations made by the company when you took out the policy (i.e. "You will be covered for everything") there could be a claim based on misrepresentation. You could also file a complaint. Since the company is also located in California, I am linking you to that State's Insurance Department, which oversees and regulates the insurance industry. http://www.insurance.ca.gov/contact-us/0200-file-complaint/index.cfm.
In order to determine if they truly have a case without incurring substantial legal fees, you may want to ask them to quote which portion of the policies support their position. Then based on a brief review by an attorney, you should be able to determine whether you have a valid claim.
WIth all this being said, typically SLI does cover damage (physical and personal property) to third parties, so it would be worthwhile to scrutinize that policy in particular for any odd exceptions.
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