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5 Cards in this Set

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What is the purpose of the Unfair Claim Settlement Practices Act?
Designed to help guarantee that no insurer doing business in TX engages in unfair claims settlement

Unfair settlement practices: not settling with insured when you should

It is a tie-in-statute; an insurer who commits prohibited practice under this article violates DTPA
What does Ch. 542 cover?
Prompt payment of claims

Notice of claim: insurer must respond to claim not later than 15th day after receipt fo notice of claim or on 30th business day if insurer is an eligible surplus lines insurer

Must accept or reject claim within 15 days

If unable to accept or reject, can extend 45 days
If an insurer fails to accept or reject a claim within allotted time limits, what result?
Penalty.

Liquidated damages to complaint; delay results in 18% penalty plus attorneys’ fees
Describe the common law duty of good faith that the insurer has?
Insurer has duty of good faith and fair dealing with respect to insured [tort duty]; ensure ‘prompt, fair, equitable’ settlement

Same as Chapter 541 (duty of good faith), but here it’s a tort

If there is bona fide dispute about coverage, denial of claim will not be in bad faith
What is the Stowers Doctrine?
Relates to third party claims.

If claimant offers to settle for policy limits, when liability is reasonably clear, insurer has duty to settle (or else assume Stowers liability: wrongful refusal to settle subjects insurer to all damages)