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.
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Source Note: The provisions of this §21.203 adopted to be effective January 1, 1976; amended to be effective September 9, 1982, 7 TexReg 3148; amended to be effective January 16, 1985, 10 TexReg 82; amended to be effective August 19, 1992, 17 TexReg 5458; amended to be effective December 7, 1998, 23 TexReg 12397; amended to be effective November 7, 2021, 46 TexReg 7408 |