Texas General Lines — Property and CasualtyTexas Laws and RegulationsEasy
A Texas-licensed adjuster is found to have repeatedly delayed claim payments without reasonable explanation, misrepresented policy provisions to claimants, and failed to affirm or deny coverage within a reasonable time. These actions are examples of what type of prohibited practice?
- AUnfair Claims Settlement Practices
- BUnfair Marketing Practices
- CUnfair Underwriting Practices
- DUnfair Premium Rating Practices
Show answer & explanationAnswer & explanation
Correct answer: A. Unfair Claims Settlement Practices
The described actions—delaying payments, misrepresenting policy provisions, and failing to affirm/deny coverage—directly relate to the handling of claims and are specifically defined as Unfair Claims Settlement Practices by Texas insurance law.
Why the other options are wrong
- B. Unfair Marketing Practices relate to how policies are advertised, sold, or solicited, not how claims are handled.
- C. Unfair Underwriting Practices involve discriminatory or inappropriate selection and classification of risks, not claims processing.
- D. Unfair Premium Rating Practices involve discriminatory or excessive pricing of insurance, which is unrelated to claims handling.
Unfair Claims Settlement Practices
Prohibited actions by insurers or adjusters during the claims handling process that are deemed unfair or deceptive by law.
- Includes delaying payments, misrepresenting coverage, and failing to investigate promptly.
- Protects policyholders from predatory claims handling.
- Violations can lead to fines and license suspension.
Memory trick: Each practice has its own forbidden zone.