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Texas Supreme Court Clarifies Damages Recoverable For Violations Of The Texas Insurance Code

The Texas Supreme Court has clarified years of confusion over the damages recoverable for statutory ?Ç£bad-faith?Ç¥ by holding that policy benefits can constitute actual damages resulting from violations of the Texas Insurance Code. The Problem Since at least 1998, Texas policyholders and insurers have labored under some uncertainty regarding the damages recoverable when an insurer engages in ?Ç£unfair or deceptive acts or practices?Ç¥ denominated as such under Chapter 541 of the Texas Insurance Code.?áSection 541.060, for example, prohibits insurers from, among other things, (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 claim with respect to which the insurer’s liability has become reasonably clear; (3) failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts… Continue Reading

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