Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 21 - TRADE PRACTICES › Subchapter C - UNFAIR CLAIMS SETTLEMENT PRACTICES › Section 21.203 - Unfair Claim Settlement Practices

Current through Reg. 49, No. 28; July 12, 2024
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.