Texas Insurance Code § 541.060 – Unfair Settlement Practices and Bad Faith

Sec. 541.060. UNFAIR SETTLEMENT PRACTICES.
It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:

(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;

(2) failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of:
    (A) a claim with respect to which the insurer’s liability has become reasonably clear; or
    (B) a claim under one portion of a policy with respect to which the insurer’s liability has become reasonably clear to influence the claimant to settle another portion of the policy;

(3) failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement of a claim;

(4) failing within a reasonable time to:
    (A) affirm or deny coverage of a claim to a policyholder; or
    (B) submit a reservation of rights to a policyholder;

(5) refusing, failing, or unreasonably delaying a settlement offer under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages;

(6) undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is clearly designated as a partial payment or release;

(7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim; or

(8) for an insurer to cancel or nonrenew a policy in violation of Section 544.153.