V. INSURANCE

Question 1

Misrepresentation and Discrimination Chapter 541

1. Objective
2. Scope

Answer 1

1. Objective
   541 protects against unfair and deceptive acts or practices in the business of insurance
   DTPA for insurance
2. Scope
   almost identical to the DTPA
   ***with 2 SIGNIFICANT different: 1, 541 applies to any person; 2, protect insurance companies against anti-competitive acts and practices

Question 2

Unfair Methods of Competition and Deception

6

Answer 2

1. Misrepresentations and False Advertising of Policy Contracts
   by a agent or company
2. Defamation
   prohibts company from defaming a competitor
3. Unfair Discrimination
   prohibts discriminaiton of ppl of the same insurance, risk, and class
4. Deceptive Name, Word, Symbol, Device, or Slogan
   prohibts the use of deceptive Word, Symbol and trading off another’s name symbol or logo
5. Unfair Settlement Practices (statutory bad faith)
   failing to attempt in good faith, to affectuate a prompt fair and equitable settlement, with the insured once liability
   is reasonably clear
6. Misrepresentation of Insurance Policy
   misrepreseting the terms or existance of a policy

Question 3

Relief Available to Injured Persons
DTPA

potential claims

Answer 3

almost identical to the DTPA, 2 key differences: 1, person not consumer; 2, actual damages not economic damages

a. Deceptive Trade Practices Act
the Insurance Code 541 also authorizes a suit to be brought for any violation of the DTPA laundry list to be brought under IC 541. so One act may result in four causes of action.
IC and DTPA claims can be brought under each other

***not a tie-in statute

4 claims: pure 541, pure DTPA, 541 based on the DTPA, DTPA based on the 541

Question 4

Remedies

4

Answer 4

***1. Actual Damages
In a suit filed under this section, any plaintiff who prevails may obtain “actual damages” plus court costs and reasonable and necessary attorneys’ fees.

***a. Actual Damages Defined: same as DTPA, but substitute the word actual with economic

2. Additional Damages
   when an act is committed knowingly, the jury may award an amount between actual damages and three times actual damages.
3. Plaintiff’s Attorneys’ Fees
   same as DTPA: amount that is “reasonable and necessary.”

**4. Defendants’ Attorneys’ Fees ** different from DTPA
On a finding by the court that an action under Chapter 541 was “groundless and brought in bad faith or brought for the purpose of harassment,” the court shall award to the defendant reasonable and necessary attorneys’ fees and court costs.

Question 5

statute of limitation

Answer 5

All actions under Chapter 541 must be commenced within two years after the date on which the unfair method of competition or unfair or deceptive act or practice occurred

Question 6

Notice

Remedy for Failure to Give Notice

Answer 6

Notice: as a prerequisite to filing suit a consumer must give the defendant written notice at least 60 days before filing the suit.
Remedy for Failure to Give Notice

all same as DTPA

Question 7

settlement

5

Answer 7

1. When Offered (same as DTPA)
   A person who receives notice as provided by the statute may tender an offer of settlement at any time during the period beginning on the date notice is received and ending on the 60th day after that receipt.
2. Contents of Settlement
   same as DTPA
3. Effect of Settlement
4. Attorneys’ Fees
   Rejection of a reasonable settlement offer also limits a claimant’s attorneys’ fees.

mediation
same as DTPA

Question 8

PROMPT PAYMENT OF CLAIMS [Chapter 542]

5

Answer 8

1. Notice of Claim
   An insurer must respond to a claim not later than the 15th day after receipt of notice
2. Unable to Accept or Reject
   extend to 45 days
3. Failure to Accept or Reject
   statutory penalty

4.Payment of Claims
must pay within 5 days of acceptance or statutory penalty

5, damages
violation results in a penalty of 18% anuual interest and attorney’s fees

Question 9

COMMON LAW DUTY OF GOOD FAITH
1, definition:
2. Third Party Claims

Answer 9

1, definition: an insurer has a common law duty to exceicise good faith and fair dealing with the insured, failure to do so is a tort
bona fide dispute: there is no bad faith if there is BFD as to the law or facts

2. Third Party Claims-Stowers Doctrine
   a, problem: if an claimant (3rd party P.) offers to settle with the insured for policy limits, when liability is reasonably clear, insurer has a duty to settle

b. The Rule-Stowers Doctrine (by TX supreme court)
wrongful refusal of settlement violates the insurer’s duty of good faith

c. Extent of Stowers Liability
a stowers violation subjects the insurer to all damages even if they are in excess of the policy’s coverage limit