28 Tex. Admin. Code § 21.203 - Unfair Claim Settlement Practices
No insurer may engage in unfair claim settlement practices. Unfair claim settlement practices means committing or performing any of the following:
(1) misrepresenting to
claimants pertinent facts or policy provisions relating to coverages at
issue;
(2) failing to acknowledge
with reasonable promptness pertinent communications with respect to claims
arising under its policies, provided that "pertinent communications" will
exclude written communications that are direct responses to specific inquiries
made by the insurer after initial report of a claim. An acknowledgment within
15 business days is presumed to be reasonably prompt;
(3) failing to adopt and implement reasonable
standards for prompt investigation of claims arising under its
policies;
(4) not attempting in
good faith to effectuate prompt, fair, and equitable settlements of claims
submitted in which liability has become reasonably clear;
(5) compelling policyholders to institute
suits to recover amounts due under its policies by offering substantially less
than the amounts ultimately recovered in suits brought by them;
(6) failure of any insurer to maintain, in
substantial compliance with §
21.2504 of this title (relating to
Complaint Record; Required Elements; Explanation and Instructions), a complete
record of all complaints, as that term is defined in §
21.202(4) of
this title (relating to Definitions), which it has received during the
preceding three years or since the date of its most recent financial
examination by the Commissioner of Insurance, whichever time is shorter. For
purposes of this section, "substantial compliance" has the meaning set out in §
21.2503 of this title (relating to
Compliance Standard);
(7) failing
to provide promptly, when provided for in the policy, claim forms when the
insurer requires such forms as a prerequisite for a claim settlement;
(8) not attempting in good faith to promptly
settle claims where liability has become reasonably clear under one portion of
the policy in order to influence settlement under other portions of the policy
coverage. (This provision does not apply to those situations where payment
under one portion of coverage constitutes evidence of liability under another
portion of coverage.);
(9) failing
to promptly provide to a policyholder a reasonable explanation of the basis in
the insurance policy in relation to the facts or applicable law for denial of a
claim or for the offer of a compromise settlement;
(10) failing to affirm or deny coverage of a
claim to a policyholder within a reasonable time. The reasonable submission of
a reservation of rights letter by an insurer to a policyholder within a
reasonable time is deemed compliance with the provisions of this
paragraph;
(11) except as may be
specifically provided in the policy, to refuse, fail, or unreasonably delay
offer of settlement under applicable first-party coverage on the basis that
other coverage may be available or third parties are responsible in law for
damages suffered;
(12) attempting
to settle a claim for less than the amount to which a reasonable person would
have believed she/he was entitled by reference to an advertisement, as
described in §
21.102 of this title (relating to
Scope), made by an insurer or person acting on behalf of an insurer;
(13) undertaking to enforce a full and final
release from a policyholder when, in fact, only a partial payment has been
made. (This provision will not prevent or have application to the compromise
settlement of doubtful or disputed claims.);
(14) failing to establish a policy and proper
controls to make certain that agents calculate and deliver to policyholders or
their assignees funds due under policy provisions relative to cancellation of
coverage within a reasonable time after such coverages are
terminated;
(15) refusing to pay
claims without conducting a reasonable investigation based upon all available
information;
(16) failing to
respond promptly to a request by a claimant for personal contact about or
review of the claim;
(17) with
respect to the Texas personal auto policy, delaying or refusing settlement of a
claim solely because there is other insurance of a different type available to
satisfy partially or entirely the loss forming the basis of that claim. The
claimant who has a right to recover from either or both insurers is entitled to
choose under which coverage and in what order payment is to be made;
(18) a violation of Insurance Code Chapter
542, Subchapter B, by an insurer subject to its provisions; or
(19) 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 insurer unless the claimant is ordered to
produce those tax returns by a court of competent jurisdiction, the claim
involves a fire loss, or the claim involves a loss of profits or
income.
Notes
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