Insurance Misrepresentations

Fort Worth insurance lawyers know the statutes dealing with insurance misrepresentations can be found in the Texas Insurance Code. Several sections deal with this issue. The different types of misrepresentations that are prohibited by statute are found in sections, 541.051, 541.052, 541.053, 541.055, 541.059, 541.060(a)(1), and 541.061.
These misrepresentations are also against the law under the DTPA, Section 17.46(b), which is incorporated into the Texas Insurance Code. Both the DTPA and Insurance Code prohibit misrepresentation by non-disclosure.
Section 541.051 broadly prohibits making any statement misrepresenting the terms of a policy, or the benefits, advantages, or dividends of a policy, making misrepresentations about the financial condition of an insurer, misrepresenting the true nature of any policy or class or policies, or making any misrepresentation to a policy holder for the purpose of inducing or intending to induce the policy holder to allow an existing policy holder to lapse, forfeit, or to surrender his insurance. This provision is sometimes referred to as the “anti-twisting” provision, because the latter portion is aimed at preventing one insurer stealing away the insureds of another insurer by making misrepresentations.
Section 541.052 prohibits making any advertisement or statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business that is untrue, deceptive, or misleading.
Section 541.061 prohibits misrepresenting an insurance policy by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make other statements made not misleading, considering the circumstances under which the statements were made;
(3) making a statement in such a manner as to mislead a reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or (5) failing to disclose a matter required by law to be disclosed, including failing to make disclosure in accordance with another provision of the Insurance Code.

A key here is that the statute forbids statements that are outright false, as well as those that are misleading.
One prime example that is sued upon on a regular basis is where an insurance company is guilty of making a misrepresentation by contractually promising benefits and then refusing to pay the benefits. This is the heart of most lawsuit.