Texas Insurance And The Deceptive Trade Practices Act

Grand Prairie residents and residents of Arlington, Fort Worth, Dallas, Weatherford, and every other town in Texas should know a few things about holding insurance companies accountable. One is, they should always report wrongs to the Texas Department of Insurance. The other thing they should do is contact an experienced Insurance Law Attorney.
An attorney will discuss the fact that remedies for the wrongs committed by insurance companies are addressed in at least two areas of law in Texas; The Texas Insurance Code and the Texas Business & Comerce Code which contains the laws dealing with violations of the Deceptive Trade Practices Act (DTPA).
The Texas Insurance Code, Section 541.151(2) cross-references and prohibits conduct defined in The Business & Commerce Code, Section 17.46(b) of the DTPA. The latter statute applies to all types of consumer transactions, not just insurance, thus not all of the provisions are relevant to insurance issues. The sections that matter most in insurance cases are:
Section 17.46(b)(2) – causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services.
Section 17.46(b)(5) – representing that goods or services have … benefits, … which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he does not.
Section 17.46(b)(12) – representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law.
Section 17.46(b)(24) – the failure to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.
The above Section 17.46 is known as the “laundry list” of claims by attorneys. Insurance business fits within these prohibitions because courts have held that insurance is a “service.” The supporting law for this was declared in a 1984, Corpus Christi Courts of Appeals case, McCrann v. Klaneckey.
Insurance Code, Section 541.151(2), says that to sue for conduct in violation of one of the above provisions, the wronged person must show they relied on the act or practice to their detriment.
Here is a couple of examples:
The Texas Supreme Court case, Aetna Casualty & Surety Company v. Marshall, says “An insurer’s breach of its contractual promise to pay future medical benefits was precisely the sort of conduct forbidden by Texas Business & Commerce Code, Section 17.46(b)(5), which prohibits misrepresenting “benefits.” This case was decided in 1987.
Another Texas Supreme Court case, Royal Globe Insurance Company v. Bar Consultants, Inc., states, “Misrepresenting that the policy affords coverage it does not have violates Section 17.46(b)(12). This is a 1979 case.
It must be remembered that even though the Insurance Code and the DTPA both prohibit misrepresentations and nondisclosures, it can be important for a potential plaintiff to carefully choose the part of the statutes that best fit their exact situation and which is the easier to prove. This is where an attorney is most valuable.