Tex. Codes » Insurance Code · TITLE 5. PROTECTION OF CONSUMER INTERESTS · SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES · CHAPTER 542. PROCESSING AND SETTLEMENT OF CLAIMS
Texas Codes

Tex. Ins. Code § 542.003 (2026)

Unfair Claim Settlement Practices Prohibited

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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.

Notes of Decisions
Cited in 26 cases (11 in the last 5 years), 2005–2026 · leading case: Lundstrom v. United Servs. Auto. Ass'n-CIC, 192 S.W.3d 78 (Tex. App.—Houston [14th Dist.] 2006).
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Lundstrom v. United Servs. Auto. Ass'n-CIC, 192 S.W.3d 78 (Tex. App.—Houston [14th Dist.] 2006). · cites it 2× “Laws 2988 , 2997-3000 (amended 1995, 2001) (repealed and *83 recodified 2003) (current version at Tex. Ins. Code Ann. § 542.003 (Vernon Supp.”
Guzman v. Allstate, 18 F.4th 157 (5th Cir. 2021). “Tex. Ins. Code §§ 542.003(b), 542.060–61.”
In re Crawford & Co., Crawford & Co. Healthcare Mgmt., Inc., Patsy Hogan & Old Repub. Ins. Co., 458 S.W.3d 920 (Tex. 2015). “” Tex. Ins. Code § 542.003(a)(3). “[I]n light of the specific substantive and procedural requirements built into the Act,” we concluded, “and the detrimental effects on carriers flowing from penalties that can be imposed for failing to comply with those requirements, the…”
Old Am. Ins. Co. v. Lincoln Factoring, LLC, 571 S.W.3d 271 (Tex. App.—Fort Worth 2018). “Tex. Ins. Code Ann. § 542.003 (a)–(b). The Act provides for administrative enforcement of its terms by the Texas Department of Insurance and does not explicitly create a private cause of action for violations.”
Lopez v. United Prop. & Cas. Ins. Co., 197 F. Supp. 3d 944 (S.D. Tex. 2016). “” Tex. Ins. Code ANN. § 542.003. Lopez alleges that Aguilar violated these provisions when she “knowingly underestimated the amount of damage” to his home.”
Nunn v. State Farm Mut. Auto. Ins., 729 F. Supp. 2d 801 (N.D. Tex. 2010). “V Nunn also alleges that State Farm engaged in unfair claim and settlement practices by the manner in which it investigated and denied Nunn’s claim, in violation of Tex.”
Kathryne Vause v. Liberty Ins. Corp., 456 S.W.3d 222 (Tex. App.—San Antonio 2014). “003 which prohibits an insurer from engaging “in an unfair settlement practice,” including “failing to adopt and implement reasonable standards for the prompt investigation of claims arising under the insurer’s policies -” Tex. Ins.Code § 542.003(3). The Court noted “the Act…”
Tebon v. Travelers Ins., 392 F. Supp. 2d 894 (S.D. Tex. 2005). “Tebon asserts the following causes of action against Defendants: 1) Unfair settlement practices in violation of Texas Insurance Code § 542.003; 2) Failure to provide timely notice of the acceptance or rejection of a claim and failure to timely pay the claim in violation of Texas…”
Shore Chan Bragalone Depumpo LLP v. Greenwich Ins., 856 F. Supp. 2d 891 (N.D. Tex. 2012). “Tex. Ins.Code Ann. § 542.003(a), (b)(1), (b)(4) (West 2009).”
England v. Liberty Mut. Ins., 831 F. Supp. 2d 1008 (S.D. Tex. 2011). · cites it 2× “060(a); see also Tex. Ins. Code § 542.003 (prohibiting unfair claim settlement practices).”
Juan Alvarez v. State Farm Lloyds, No. 04-17-00251-CV (Tex. App.—San Antonio Sept. 27, 2017). · cites it 4× “Tex. Ins. Code Ann. § 542.003 (b)(3). 2 Cases that cite this headnote [6] Insurance Duty to settle or pay Liability of insurer was not reasonably clear, and thus insurer's alleged undervaluing of insured's loss to building from hail damage was not a violation of provision of…”
Tatiyana Geneva Altecor v. United Prop. & Cas. Ins. Co., No. 13-20-00148-CV (Tex. App.—Corpus Christi–Edinburg Feb. 24, 2022). · cites it 3× “Prohibited Claim Settlement Practices Texas Insurance Code § 542.003 prohibits insurers from engaging in certain unfair claim settlement practices.”
Show all 26 citing cases →
Tex. Ins. Code § 542.003(3): 2 cases
Kathryne Vause v. Liberty Ins. Corp., 456 S.W.3d 222 (Tex. App.—San Antonio 2014). “003 which prohibits an insurer from engaging “in an unfair settlement practice,” including “failing to adopt and implement reasonable standards for the prompt investigation of claims arising under the insurer’s policies -” Tex. Ins.Code § 542.003(3). The Court noted “the Act…”
Thrash v. Liberty Mut. Ins. Co., No. 1:21-cv-00375 (W.D. Tex. Mar. 9, 2022).
Tex. Ins. Code § 542.003(4): 2 cases
Banda v. Allstate Prop. & Cas. Ins. Co., No. 4:19-cv-03418, 2020 WL 3972537 (S.D. Tex. July 14, 2020).
Thrash v. Liberty Mut. Ins. Co., No. 1:21-cv-00375 (W.D. Tex. Mar. 9, 2022).
Tex. Ins. Code § 542.003(a): 3 cases
Shore Chan Bragalone Depumpo LLP v. Greenwich Ins., 856 F. Supp. 2d 891 (N.D. Tex. 2012). “Tex. Ins.Code Ann. § 542.003(a), (b)(1), (b)(4) (West 2009).”
Juan Alvarez v. State Farm Lloyds, No. 04-17-00251-CV (Tex. App.—San Antonio Sept. 27, 2017). “Tex. Ins. Code Ann. § 542.003 (b)(3). 2 Cases that cite this headnote [6] Insurance Duty to settle or pay Liability of insurer was not reasonably clear, and thus insurer's alleged undervaluing of insured's loss to building from hail damage was not a violation of provision of…”
Gonzalez v. Blue Cross Blue Shield Ass'n, No. 3:20-cv-02149 (N.D. Tex. Apr. 26, 2021).
Tex. Ins. Code § 542.003(a)(3): 1 case
In re Crawford & Co., Crawford & Co. Healthcare Mgmt., Inc., Patsy Hogan & Old Repub. Ins. Co., 458 S.W.3d 920 (Tex. 2015). “” Tex. Ins. Code § 542.003(a)(3). “[I]n light of the specific substantive and procedural requirements built into the Act,” we concluded, “and the detrimental effects on carriers flowing from penalties that can be imposed for failing to comply with those requirements, the…”
Tex. Ins. Code § 542.003(b): 1 case
Guzman v. Allstate, 18 F.4th 157 (5th Cir. 2021). “Tex. Ins. Code §§ 542.003(b), 542.060–61.”
Tex. Ins. Code § 542.003(b)(1): 2 cases
Juan Alvarez v. State Farm Lloyds, No. 04-17-00251-CV (Tex. App.—San Antonio Sept. 27, 2017). “Tex. Ins. Code Ann. § 542.003 (b)(3). 2 Cases that cite this headnote [6] Insurance Duty to settle or pay Liability of insurer was not reasonably clear, and thus insurer's alleged undervaluing of insured's loss to building from hail damage was not a violation of provision of…”
Old Am. Ins. Co. v. Lincoln Factoring, LLC, No. 02-17-00186-CV (Tex. App.—Fort Worth Dec. 21, 2017).
Tex. Ins. Code § 542.003(b)(2): 1 case
Tatiyana Geneva Altecor v. United Prop. & Cas. Ins. Co., No. 13-20-00148-CV (Tex. App.—Corpus Christi–Edinburg Feb. 24, 2022). “Prohibited Claim Settlement Practices Texas Insurance Code § 542.003 prohibits insurers from engaging in certain unfair claim settlement practices.”
Tex. Ins. Code § 542.003(b)(3): 2 cases
England v. Liberty Mut. Ins., 831 F. Supp. 2d 1008 (S.D. Tex. 2011). “060(a); see also Tex. Ins. Code § 542.003 (prohibiting unfair claim settlement practices).”
Bernal v. Allstate Veh. & Prop. Ins., No. 7:22-cv-00015 (S.D. Tex. Apr. 6, 2022).
Tex. Ins. Code § 542.003(b)(4): 2 cases
Juan Alvarez v. State Farm Lloyds, No. 04-17-00251-CV (Tex. App.—San Antonio Sept. 27, 2017). “Tex. Ins. Code Ann. § 542.003 (b)(3). 2 Cases that cite this headnote [6] Insurance Duty to settle or pay Liability of insurer was not reasonably clear, and thus insurer's alleged undervaluing of insured's loss to building from hail damage was not a violation of provision of…”
Vollandt v. Axis Ins. Co., No. 4:19-cv-00311 (E.D. Tex. Mar. 17, 2022).
Tex. Ins. Code § 542.003(b)(5): 3 cases
MB2 Dental Solutions LLC v. Zurich Am. Ins. Co., No. 3:20-cv-01430 (N.D. Tex. Jan. 11, 2021).
Garcia v. State Farm LLoyds, 629 F. Supp. 3d 504 (N.D. Tex. 2022).
Bernal v. Allstate Veh. & Prop. Ins., No. 7:22-cv-00015 (S.D. Tex. Apr. 6, 2022).
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