The recourse that a Texas insurance policy holder has against their insurance company depends on exactly what it is that the insurance company does that is wrong or illegal. The types of wrong that can be committed by insurance companies are too numerous to mention all of them here. However, there are a few wrongs committed by insurance companies that policy holders should be aware of when dealing with their insurance agent or the insurance company.
Again, keep in mind that there are many wrongs that can be committed by an insurance company. The most wrongs that can be found without reading all the laws related to insurance can be found in the Texas Insurance Code Section 541.051, Section 541.060 and Section 542.003.
These Sections are appropriately found in Subtitle C of the Texas Insurance Code which is titled “Deceptive, Unfair, And Prohibited Practices”. Section 541.051 is in Chapter 541 and titled “Unfair Methods Of Competition And Unfair Or Deceptive Acts or Practices”.
Under this section is the law saying an insurance company cannot misrepresent to you the terms of a policy, the benefits or advantages promised by a policy, or make any misrepresentations regarding dividends or sharing of other monies on the policy. This section makes it illegal for an insurance company to make a misleading representation or misleading statement regarding the financial condition of an insurance company. It also makes it illegal for an insurance company to use a name or title of a policy that misrepresents the true nature of the policy.
Section 541.060 is titled “Unfair Settlement Practices”. This section is a common area of litigation and there are volumns of information that can be written about this section and will be the subject or future articles. Here, is where the insurance laws of Texas make it clear that an insurance company cannot; 1) misrepresent policy provisions relating to the coverage at issue, 2) fail to attempt in good faith to accomplish a prompt and fair settlement when the insurance companies liability has become reasonably clear, 3) fail to make clear to the policy holder a reasonable explanation of the reason within the policy itself why the insurance company is denying the claim, 4) fail to within a reasonable time affirm or deny coverage of a claim. The insurance company also cannot: 5) refuse of delay payment of a claim under the policy based on the belief there may be coverage under another policy, 6) refuse to pay a claim without conducting a reasonable investigation, 7) require a policy holder to produce a copy of their tax returns unless the claim involves a fire loss or the claim involves lost profits or income. This is just a portion of relevant law under Section 541.060.
Texas Insurance Code, Section 542.003 is found in Chapter 542, Subchapter A. Chapter 542 is titled “Processing And Settlement Of Claims”. Subchapter A is titled “Unfair Claim Settlement Practices”. Section 542.003 is titled “Unfair Claim Settlement Practices Prohibited”. The titles speak for themselves.
Under 542.003 it is made illegal for an insurance company to engage in an unfair claim settlement practice. The following are acts constituting unfair claim settlement practices; 1) knowingly misrepresenting pertinent facts or policy provisions relating to coverage, 2) failing to acknowledge with promptness communications relating to a claim under an insureds policy, 3) failing to have and implement reasonable standards for the prompt investigation of claims, 4) failing to effect a prompt and fair settlement when liability has become reasonably clear and, 5) causing a policy holder to file a lawsuit to recover monies due under a policy because the insurance company was offering substantially less than what was ultimately recovered in the lawsuit.
The above is just a sample of some of the laws insurance companies must follow. These were chosen as an example because of their central location. There are many other located throughout the Insurance Code plus there are many more in other law books. All serve as reasons why anyone having problems with an insurance company should seek an experienced Insurance Law Attorney to make sure their rights are protected. Whether you are in Dallas, Fort Worth, Arlington, Grand Prairie, Weatherford, or anywhere else in Texas, only an experienced Insurance Law Attorney is going to fully understand and know about all the laws that may apply to any given situation.