The Texas Insurance Code defines and prohibits deceptive and unfair insurance practices. The statute allows a person to bring suit against a party who has harmed them, causing actual damages, by engaging in any act or practice that is defined as an unfair method of competition or unfair or deceptive act or practice in the business of insurance. Some unfair insurance practices specifically prohibited under the law are:

• misrepresentations and false advertising of policy contracts;
• false information and advertising generally;
• coercion and intimidation in the business of insurance;
• unfair discrimination;
• rebates;
• deceptive names, words, symbols, devices, and slogans;
• unfair settlement practices;
• misrepresentation of insurance policies

The provisions of the Texas Insurance Code that are most commonly used in lawsuits brought by insurance customers against their insurance companies are those relating to unfair settlement practices and misrepresentation of insurance policies.

Unfair Insurance Claim Settlement Practices

Texas insurance law prohibits certain unfair settlement practices as they relate to claims by insured parties or beneficiaries of insurance policies. Prohibited practices include:

• misrepresenting a material fact or policy provision relating to coverage;
• failing to make prompt, fair, and equitable settlement of a claim after the insurer's liability is established;
• failing to promptly and fairly settle a claim under one portion of a policy in order to influence the claimant to settle an additional claim under another portion of the coverage;
• failing to promptly provide a reasonable explanation of the basis for denial of a claim or for the offer of a compromise settlement;
• failing to affirm or deny coverage of a claim or to submit a reservation of rights within reasonable time;
• refusing, failing, or delaying an offer of settlement under applicable first-party coverage on the basis that other coverage may be available or that other parties may be liable for damages, unless specifically provided in the policy;
• attempting to enforce a full and final release of a claim when only a partial payment has been made (unless it is a compromise settlement of a doubtful or disputed claim);
• refusing to pay a claim without conducting a reasonable investigation of the details of the claim;
• delaying a personal auto policy claim solely because there is other insurance of a different type available to satisfy all or part of the loss;
• requiring a claimant, as a condition of settlement, to provide their federal income tax returns for examination or investigation unless the claimant is ordered to do so by a court, the claim involves a fire loss, or the claim involves lost profits or income.

Misrepresentations

Texas insurance law prohibits insurance companies and their agents from making statements that are outright false or misleading. Prohibited acts include:

• misrepresenting the terms, benefits, or dividends of an insurance policy;
• misrepresenting the financial condition of the insurer;
  misrepresenting the true nature of an insurance policy or class of policies;
• making any misrepresentation intended to cause a policyholder to allow an existing insurance policy to lapse or be forfeited (such as to lure away or steal another insurer's customers).

An insurer is guilty of misrepresentation if they promise insurance benefits and then refuse to pay them. They are also guilty of misrepresentation when they falsely represent that an insurance policy offers benefits it does not have.

You may be entitled to compensation.

If you have been injured by the deceptive or unfair practices of an insurance company, you may be entitled under the Texas Insurance Code to claim compensation for damages from responsible parties. Parties who may be liable can include any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers, adjusters and life insurance counselors.

Contact an Insurance Lawyer

If you have been injured by the unfair practices or other misconduct of your insurance company, consult an experienced insurance lawyer to understand your options.