Grand Prairie residents, residents of Arlington, Mansfield, Fort Worth, Dallas, Weatherford or anywhere else in Texas have the same insurance laws apply to each other. They all need to know there is a law that prohibits unfair settlement practices in the State of Texas.
Texas Insurance Code, Section 541.060, is titled “Unfair Settlement Practices”. It is the law that prohibits these types of actions. The statute prohibits engaging in any of the following settlement practices with respect to a claim by an insured person or his beneficiary:
(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;
(2) failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim:
(a) with respect to which the insurer’s liability has become reasonably clear; or (b) a claim under one portion of a policy of a claim with respect to which the insurer’s
liability has become reasonably clear in order to influence the claimant to settle an additional claim under another portion of the coverage, unless payment under
one portion of the coverage constitutes evience of liability under another portion of the policy;
(3) failing to provide promptly to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or for the offer of a compromise settlement of a claim;
(4) failing within a reasonable time to:
(a) affirm or deny coverage of a claim to a policyholder; or (b) submit a reservation of rights to a policyholder:
(5) refusing, failing, or unreasonably delaying an offer of settlement under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages suffered, except as may be specifically provided in the policy:
(6) undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim;
(7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim;
(8) with respect to a Texas personal auto policy, delaying or refusing settlement of a claim solely because there is other insurance of a different type available to satisfy all or any part of the loss forming the basis of that claim; or (9) requiring a claimant, as a condition of settling a claim, to produce the claimant’s federal income tax returns for examination or investigation by the person unless:
(a) a court orders the claimant to produce those tax returns;
(b) the claim involves a fire loss; or (c) the claim involves lost profits or income.
Here are a couple of examples where courts have held that the insurance company violated the above section of the Insurance Code. The first is a 1988, Texas Supreme Court case. The style is, Vail v. Texas Farm Bureau Mutual Insurance Company. In this case Texas Farm Bureau Mutual Insurance Company denied a fire loss claim, based on an arson defense that the jury rejected. The court found that Texas Farm committed an unfair insurance practice by failing to act in good faith to settle once its liability became reasonably clear.
The second case, is a 2000 case, decided by the Texas Court of Appeals in Corpus Christi. The style of this case is, Colonial County Mutual Insurance Company v. Valdez. Here, the court ruled that proving Colonial County Mutual Insurance Company did not meet the deadlines in the Prompt Payment of Claims statute, Texas Insurance Code, Section 542.051 thru 542.061, may be proof to show Colonial County committed an unfair settlement practice by not meeting the “reasonable time” requirements in the above statute.
Whenever a person gets the feeling they are not being treated right by an insurance, they should seek legal help with an experienced Insurance Law Attorney. In fact, they should talk to an attorney any time they are having to make a claim against an insurance company.
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