Texas insurance companies are regulated by the Texas Department of Insurance. The written laws for most insurance companies are found in the Texas Insurance Code. These laws and regulations apply to all insurance companies in Texas. So whether the company is located or does business in Dallas, Fort Worth, Arlington, Irving, Grand Prairie, Carrollton, Mesquite, Weatherford, Granbury, or anywhere else in the State of Texas the same laws and regulations apply to the insurance company.
The worst acts of insurance companies may be criminal in nature, but the majority are violations of civil laws and statutes, and what are being addressed in this writing. Violations of these civil laws and statutes may result in fines to the companies and issuance of cease and desist orders, and revocation of licenses or suspensions of insurance licenses. Most of the penalties just mentioned are enforced through the Texas Department of Insurance or the Texas Attorney Generals Office.
The recourse for insureds against their own insurance companies for violations to them personally, are addressed in different parts of the Insurance Code and depend on exactly which statute the insurance company violated. Punishment for violations of Insurance Code, Chapter 541 are found in Section 541.152. Here, the plaintiff who prevails in their cause of action may obtain: 1) the amount of actual damages to the plaintiff, plus court costs and reasonable and necessary attorney’s fees, and 2) any other relief the court determines is proper. What is important here and in other statutes that allow for the recovery of attorneys fees, is that if your cause is just and right, that at the end of your case, you can recover your court costs and attorneys fees. This is also why it is important to seek an experienced Insurance Law Attorney so that they can inform you whether you have a case worth pursueing.
If you are like most people, you might say “is that all, the insurance company cheats me, and all they have to do is pay what they should have paid in the first place plus my attorney and they just walk away”. The answer to that is – it depends. If your case is the type that a Judge or Jury would find that the insurance company acted “knowingly”. Then you could be entitled to an amount up to three times your actual damages. “Knowlingly” is defined in Section 541.002 as having an actual awareness of the falsity, unfairness, or deceptiveness of the act or practice on which the claim is based. This on its face seems fairly simple but the courts of this State make it much more difficult than it seems. This is another example or reason why an experienced Insurance Law Attorney is needed to look over a case.
Violations by the insurance companies of Subchapter B, Prompt Payment of Claims Act, are found in Section 542.060 of the Texas Insurance Code. In this section, an insurance company is liable for the amount of the claim, plus interest on the amount of the claim at a rate of 18% a year as damages, together with reasonable attorneys fees and court costs.
Depending on the nature of the wrong by the insurance company, the insurance company may also be subjected to liability for causes of action outside of the Insurance Code. Some of these other causes of action would be: 1) Breach of Contract, 2) Fraud, 3) Negligence, and 4) Misrepresentation, to name just a few. Plus, depending on the severity of their conduct the insurance companies could be subjected to punitive damages.
When it comes to holding an insurance company accountable for its actions, the law has a lot of “teeth” to it. However, a person is well advised to seek an attorney who regularly deals with Insurance Law to make sure their rights are fully protected and the insurance company is not getting away with doing wrong.