Tex. Ins. Code §542.003 — what it says, and how the exam tests it

Sec. 542.003. UNFAIR CLAIM SETTLEMENT PRACTICES PROHIBITED. (a) An insurer engaging in business in this state may not engage in an unfair claim settlement practice. (b) Any of the following acts by an insurer constitutes unfair claim settlement practices: (1) knowingly misrepresenting to a claimant pertinent facts or policy provisions relating to coverage at issue; (2) failing to acknowledge with reasonable promptness pertinent communications relating to a claim arising under the insurer's policy; (3) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under the insurer's policies; (4) not attempting in good faith to effect a prompt, fair, and equitable settlement of a claim submitted in which liability has become reasonably clear; (5) compelling a policyholder to institute a suit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit brought by the policyholder; (6) failing to maintain the information required by Section 542.005; or (7) committing another act the commissioner determines by rule constitutes an unfair claim settlement practice. Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.