The Unfair Claims Act in Texas
The Unfair Claims Settlement Practices Act in Texas is designed to protect policyholders from unfair or deceptive practices by insurance companies. This law sets clear rules on how insurers must handle claims and ensures that customers are treated fairly throughout the claims process.
Purpose of the Act
The main goal of the Unfair Claims Act is to prevent insurers from delaying, denying, or underpaying claims without valid reasons. It creates accountability by requiring insurance companies to handle claims promptly, honestly, and transparently.
Examples of Unfair Practices
Under Texas law, several actions are considered unfair claims practices, including:
- Unreasonable Delays – Failing to acknowledge or process claims within the required timeframe.
- Lowball Offers – Offering settlements far below the actual value of the claim.
- Failure to Investigate – Not conducting a proper investigation into the claim.
- Misrepresentation – Providing misleading information about policy terms or coverage.
- Unjustified Denials – Denying claims without a valid or reasonable explanation.
Policyholder Protections
The Act requires insurers to:
- Acknowledge receipt of a claim within 15 days.
- Begin investigating promptly.
- Provide a decision on acceptance or denial within 15 business days after receiving necessary documentation (this may extend to 45 days with proper notice).
- Pay accepted claims within five business days after notifying the policyholder.
These deadlines ensure that policyholders are not left waiting indefinitely for resolution.
Remedies for Policyholders
If an insurance company violates the Unfair Claims Act, policyholders have legal options. They can:
- File a complaint with the Texas Department of Insurance (TDI).
- Pursue legal action for bad faith insurance practices.
- Potentially recover additional damages if the insurer acted knowingly or maliciously.
Conclusion
The Unfair Claims Act in Texas gives consumers strong protections against insurance company misconduct. By holding insurers accountable, the law helps ensure that policyholders receive timely and fair claim settlements. If you believe your insurer has violated this Act, consulting with an attorney or filing a complaint with the TDI may be the best next step.