INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES

CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 541.001. PURPOSE. The purpose of this chapter is to regulate trade practices in the business of insurance by:

(1) defining or providing for the determination of trade practices in this state that are unfair methods of competition or unfair or deceptive acts or practices; and

(2) prohibiting those trade practices.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.002. DEFINITIONS. In this chapter:

(1) "Knowingly" means actual awareness of the falsity, unfairness, or deceptiveness of the act or practice on which a claim for damages under Subchapter D is based. Actual awareness may be inferred if objective manifestations indicate that a person acted with actual awareness.

(2) "Person" means an individual, corporation, association, partnership, reciprocal or interinsurance exchange, Lloyd's plan, fraternal benefit society, or other legal entity engaged in the business of insurance, including an agent, broker, adjuster, or life and health insurance counselor.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.003. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage in this state in a trade practice that is defined in this chapter as or determined under this chapter to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.004. VENUE FOR ACTIONS INVOLVING DEPARTMENT OR COMMISSIONER. An action under this chapter in which the department or commissioner is a party must be brought in a district court in Travis County.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.005. APPLICABILITY TO RISK RETENTION OR PURCHASING GROUP. (a) A risk retention group or purchasing group described by Subchapter B, Chapter 2201, or Section 2201.251 that is not chartered in this state may not engage in a trade practice in this state that is defined as unlawful under this chapter.

(b) A risk retention group or purchasing group is subject to this chapter and rules adopted under this chapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2D.005, eff. April 1, 2009.

Sec. 541.006. PROHIBITED CONTENT OF CERTAIN INSURANCE POLICIES. Notwithstanding any other provision of this code, it is unlawful for an insurer engaged in the business of life, accident, or health insurance to issue or deliver in this state a policy containing the words "Approved by the Texas Department of Insurance" or words of a similar meaning.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.007. IMMUNITY FROM PROSECUTION. (a) This section applies to a person who requests to be excused from attending and testifying at a hearing or from producing books, papers, records, correspondence, or other documents at the hearing on the ground that the testimony or evidence may:

(1) tend to incriminate the person; or

(2) subject the person to a penalty or forfeiture.

(b) A person who, notwithstanding a request described by Subsection (a), is directed to provide the testimony or produce the documents shall comply with that direction. Except as provided by Subsection (c), the person may not be prosecuted or subjected to a penalty or forfeiture for or on account of a transaction, matter, or thing about which the person testifies or produces documents, and the testimony or documents produced may not be received against the person in a criminal action, investigation, or proceeding.

(c) A person who complies with a direction to testify or produce documents is not exempt from prosecution or punishment for perjury committed while testifying and the testimony or evidence given or produced is admissible against the person in a criminal action, investigation, or proceeding concerning the perjury, and the person is not exempt from the denial, revocation, or suspension of any license, permission, or authority conferred or to be conferred under this code.

(d) A person may waive the immunity or privilege granted by this section by executing, acknowledging, and filing with the department a statement expressly waiving the immunity or privilege for a specified transaction, matter, or thing. On filing the statement:

(1) the testimony or documents produced by the person in relation to the transaction, matter, or thing may be received by or produced before a judge or justice or a court, grand jury, or other tribunal; and

(2) the person is not entitled to immunity or privilege for the testimony or documents received or produced under Subdivision (1).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.008. LIBERAL CONSTRUCTION. This chapter shall be liberally construed and applied to promote the underlying purposes as provided by Section 541.001.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES DEFINED

Sec. 541.051. MISREPRESENTATION REGARDING POLICY OR INSURER. It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to:

(1) make, issue, or circulate or cause to be made, issued, or circulated an estimate, illustration, circular, or statement misrepresenting with respect to a policy issued or to be issued:

(A) the terms of the policy;

(B) the benefits or advantages promised by the policy; or

(C) the dividends or share of surplus to be received on the policy;

(2) make a false or misleading statement regarding the dividends or share of surplus previously paid on a similar policy;

(3) make a misleading representation or misrepresentation regarding:

(A) the financial condition of an insurer; or

(B) the legal reserve system on which a life insurer operates;

(4) use a name or title of a policy or class of policies that misrepresents the true nature of the policy or class of policies; or

(5) make a misrepresentation to a policyholder insured by any insurer for the purpose of inducing or that tends to induce the policyholder to allow an existing policy to lapse or to forfeit or surrender the policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.052. FALSE INFORMATION AND ADVERTISING. (a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to make, publish, disseminate, circulate, or place before the public or directly or indirectly cause to be made, published, disseminated, circulated, or placed before the public an advertisement, announcement, or statement containing an untrue, deceptive, or misleading assertion, representation, or statement regarding the business of insurance or a person in the conduct of the person's insurance business.

(b) This section applies to an advertisement, announcement, or statement made, published, disseminated, circulated, or placed before the public:

(1) in a newspaper, magazine, or other publication;

(2) in a notice, circular, pamphlet, letter, or poster;

(3) over a radio or television station;

(4) through the Internet; or

(5) in any other manner.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 2, eff. September 1, 2007.

Sec. 541.053. DEFAMATION OF INSURER. (a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to directly or indirectly make, publish, disseminate, or circulate or to aid, abet, or encourage the making, publication, dissemination, or circulation of a statement that:

(1) is false, maliciously critical of, or derogatory to the financial condition of an insurer; and

(2) is calculated to injure a person engaged in the business of insurance.

(b) This section applies to any oral or written statement, including a statement in any pamphlet, circular, article, or literature.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.054. BOYCOTT, COERCION, OR INTIMIDATION. It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to commit through concerted action or to enter into an agreement to commit an act of boycott, coercion, or intimidation that results in or tends to result in the unreasonable restraint of or a monopoly in the business of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.055. FALSE FINANCIAL STATEMENT. (a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to, with intent to deceive:

(1) file with a supervisory or other public official a false statement of financial condition of an insurer; or

(2) make, publish, disseminate, circulate, deliver to any person, or place before the public or directly or indirectly cause to be made, published, disseminated, circulated, delivered to any person, or placed before the public a false statement of financial condition of an insurer.

(b) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to make a false entry in an insurer's book, report, or statement or wilfully omit to make a true entry of a material fact relating to the insurer's business in the insurer's book, report, or statement with intent to deceive:

(1) an agent or examiner lawfully appointed to examine the insurer's condition or affairs; or

(2) a public official to whom the insurer is required by law to report or who has authority by law to examine the insurer's condition or affairs.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.056. PROHIBITED REBATES AND INDUCEMENTS. (a) Subject to Section 541.058 and except as otherwise expressly provided by law, it is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to knowingly permit the making of, offer to make, or make a life insurance contract, life annuity contract, or accident and health insurance contract or an agreement regarding the contract, other than as plainly expressed in the issued contract, or directly or indirectly pay, give, or allow or offer to pay, give, or allow as inducement to enter into a life insurance contract, life annuity contract, or accident and health insurance contract a rebate of premiums payable on the contract, a special favor or advantage in the dividends or other benefits of the contract, or a valuable consideration or inducement not specified in the contract, or give, sell, or purchase or offer to give, sell, or purchase in connection with a life insurance, life annuity, or accident and health insurance contract or as inducement to enter into the contract stocks, bonds, or other securities of an insurer or other corporation, association, or partnership, dividends or profits accrued from the stocks, bonds, or securities, or anything of value not specified in the contract.

(b) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to issue or deliver or to permit an agent, officer, or employee to issue or deliver as an inducement to insurance:

(1) company stock or other capital stock;

(2) a benefit certificate or share in a corporation;

(3) securities; or

(4) a special or advisory board contract or any other contract promising returns or profits.

(c) Subsection (b) does not prohibit issuing or delivering a participating insurance policy otherwise authorized by law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.057. UNFAIR DISCRIMINATION IN LIFE INSURANCE AND ANNUITY CONTRACTS. Subject to Section 541.058, it is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to make or permit with respect to a life insurance or life annuity contract an unfair discrimination between individuals of the same class and equal life expectancy regarding:

(1) the rates charged;

(2) the dividends or other benefits payable; or

(3) any of the other terms and conditions of the contract.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.058. CERTAIN PRACTICES NOT CONSIDERED DISCRIMINATION OR INDUCEMENT. (a) In this section:

(1) "Health-related services" means services that are available in connection with an accident and health insurance policy or certificate or an evidence of coverage and that are directed to an individual's health improvement or maintenance.

(2) "Health-related information" means that information that is directed to an individual's health improvement or maintenance or to costs associated with particular options available in connection with an accident and health insurance policy or certificate or an evidence of coverage.

(b) It is not a rebate or discrimination prohibited by Section 541.056(a) or 541.057:

(1) for a life insurance or life annuity contract, to pay a bonus to a policyholder or otherwise abate the policyholder's premiums in whole or in part out of surplus accumulated from nonparticipating insurance policies if the bonus or abatement:

(A) is fair and equitable to policyholders; and

(B) is in the best interests of the insurer and its policyholders;

(2) for a life insurance policy issued on the industrial debit plan, to make to a policyholder who has continuously for a specified period made premium payments directly to the insurer's office an allowance in an amount that fairly represents the saving in collection expenses;

(3) for a group insurance policy, to readjust the rate of premium based on the loss or expense experience under the policy at the end of a policy year if the adjustment is retroactive for only that policy year;

(4) for a life annuity contract, to waive surrender charges under the contract when the contract holder exchanges that contract for another annuity contract issued by the same insurer or an affiliate of the same insurer that is part of the same holding company group if:

(A) the waiver and the exchange are fully, fairly, and accurately explained to the contract holder in a manner that is not deceptive or misleading; and

(B) the contract holder is given credit for the time that the previous contract was held when determining any surrender charges under the new contract;

(5) in connection with an accident and health insurance policy, to provide to policy or certificate holders, in addition to benefits under the terms of the insurance contract, health-related services or health-related information, or to disclose the availability of those additional services and information to prospective policy or certificate holders;

(6) in connection with a health maintenance organization evidence of coverage, to provide to enrollees, in addition to benefits under the evidence of coverage, health-related services or health-related information, or to disclose the availability of those additional services and information to prospective enrollees or contract holders; or

(7) in connection with an offer or sale of a life insurance policy or contract, accident and health insurance policy or contract, or annuity contract, to give, provide, or allow or offer to give, provide, or allow an item that is a promotional advertising item, educational item, or traditional courtesy commonly extended to consumers and that is valued at $25 or less.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 112 (H.B. 2252), Sec. 1, eff. May 17, 2007.

Acts 2011, 82nd Leg., R.S., Ch. 1156 (H.B. 2277), Sec. 1, eff. September 1, 2011.

Acts 2013, 83rd Leg., R.S., Ch. 28 (S.B. 840), Sec. 1, eff. September 1, 2013.

Sec. 541.059. DECEPTIVE NAME, WORD, SYMBOL, DEVICE, OR SLOGAN. (a) Except as provided by Subsection (b), it is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to use, display, publish, circulate, distribute, or cause to be used, displayed, published, circulated, or distributed in a letter, pamphlet, circular, contract, policy, evidence of coverage, article, poster, or other document, literature, or public media:

(1) a name as the corporate or business name of a person or entity engaged in the business of insurance or in an insurance-related business in this state that is the same as or deceptively similar to the name adopted and used by an insurance entity, health maintenance organization, third-party administrator, or group hospital service corporation authorized to engage in business under the laws of this state; or

(2) a word, symbol, device, or slogan, either alone or in combination and regardless of whether registered, and including the titles, designations, character names, and distinctive features of broadcast or other advertising, that is the same as or deceptively similar to a word, symbol, device, or slogan adopted and used by an insurance entity, health maintenance organization, third-party administrator, or group hospital service corporation to distinguish the entity or the entity's products or services from another entity.

(b) If more than one person or entity uses names, words, symbols, devices, or slogans, either alone or in combination, that are the same or deceptively similar and are likely to cause confusion or mistake, the person or entity that demonstrates the first continuous actual use of the name, word, symbol, device, slogan, or combination has not engaged in an unfair method of competition or deceptive act or practice under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.060. UNFAIR SETTLEMENT PRACTICES. (a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:

(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) a claim with respect to which the insurer's liability has become reasonably clear; or

(B) a claim under one portion of a policy with respect to which the insurer's liability has become reasonably clear to influence the claimant to settle another claim under another portion of the coverage unless payment under one portion of the coverage constitutes evidence of liability under another portion;

(3) failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer's denial of a claim or offer of a compromise settlement of a claim;

(4) failing within a reasonable time to:

(A) affirm or deny coverage of a claim to a policyholder; or

(B) submit a reservation of rights to a policyholder;

(5) refusing, failing, or unreasonably delaying a settlement offer under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages suffered, except as may be specifically provided in the policy;

(6) undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim;

(7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim;

(8) with respect to a Texas personal automobile insurance policy, delaying or refusing settlement of a claim solely because there is other insurance of a different kind available to satisfy all or part of the loss forming the basis of that claim; or

(9) requiring a claimant as a condition of settling a claim to produce the claimant's federal income tax returns for examination or investigation by the person unless:

(A) a court orders the claimant to produce those tax returns;

(B) the claim involves a fire loss; or

(C) the claim involves lost profits or income.

(b) Subsection (a) does not provide a cause of action to a third party asserting one or more claims against an insured covered under a liability insurance policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.061. MISREPRESENTATION OF INSURANCE POLICY. It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to misrepresent 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 a manner that would 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 a disclosure in accordance with another provision of this code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER B-1. ADVERTISING REQUIREMENTS

Sec. 541.082. ADVERTISING AND INTERNET WEBSITES. (a) In this section, "insurer" includes:

(1) a life insurance company;

(2) a health insurance company;

(3) an accident insurance company;

(4) a general casualty company;

(5) a mutual life insurance company or other mutual insurance company;

(6) a mutual or natural premium life insurance company;

(7) a Lloyd's plan;

(8) a county mutual insurance company;

(9) a farm mutual insurance company;

(10) a reciprocal or interinsurance exchange;

(11) a fraternal benefit society;

(12) a local mutual aid association;

(13) a health maintenance organization;

(14) a group hospital service corporation; or

(15) a multiple employer welfare arrangement that holds a certificate of coverage under Chapter 846.

(b) A web page of an insurer's Internet website must include all appropriate disclosures and information required by applicable rules adopted by the commissioner relating to advertising only if the web page:

(1) describes specific policies or coverage available in this state; or

(2) includes an opportunity for an individual to apply for coverage or obtain a quote from an insurer for an insurance policy or certificate or an evidence of coverage.

(c) As may be permitted by commissioner rule, an insurer may comply with Subsection (b) by including a link to a web page that includes the information necessary to comply with the applicable rules relating to advertising. The link must be prominently placed on the insurer's web page.

(d) Web pages of an Internet website that do not refer to a specific insurance policy, certificate of coverage, or evidence of coverage or that do not provide an opportunity for an individual to apply for coverage or request a quote from an insurer are considered to be institutional advertisements subject to rules adopted by the commissioner relating to advertising.

(e) Web pages or navigation aids within an insurer's Internet website that provide a link to a web page described by Subsection (b) but that do not otherwise contain content described in Subsection (b) are considered to be institutional advertisements subject to rules adopted by the commissioner relating to advertising.

Added by Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 1, eff. September 1, 2007.

Sec. 541.083. ADVERTISEMENTS TO CERTAIN ASSOCIATIONS. An insurer may advertise to the general public policies or coverage available only to members of an association described by Section 1251.052.

Added by Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 1, eff. September 1, 2007.

Sec. 541.084. ADVERTISEMENTS RELATING TO MEDICARE PROGRAM. A person may not use an advertisement for an insurance product relating to Medicare coverage unless the advertisement includes in a prominent place the following language or similar language: "Not connected with or endorsed by the United States government or the federal Medicare program."

Added by Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 1, eff. September 1, 2007.

Sec. 541.085. ADVERTISEMENTS RELATING TO PREFERRED PROVIDER BENEFIT PLANS. It is sufficient for an insurer to use the term "PPO plan" in advertisements when referring to a preferred provider benefit plan offered under Chapter 1301.

Added by Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 1, eff. September 1, 2007.

Sec. 541.086. ADVERTISING REGARDING GUARANTEED RENEWABLE COVERAGE. (a) An advertisement for a guaranteed renewable accident and health insurance policy must include, in a prominent place, a statement indicating that rates for the policy may change if the advertisement suggests or implies that rates for the product will not change.

(b) If an advertisement is required to include the statement described by Subsection (a), the statement must generally identify the manner in which rates may change, such as by age, by health status, by class, or through application of other general criteria.

Added by Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 1, eff. September 1, 2007.

Sec. 541.087. ADVERTISEMENTS EXEMPT FROM FILING REQUIREMENTS.An advertisement subject to requirements regarding filing of the advertisement with the department for department review under this code or commissioner rule and that is the same as or substantially similar to an advertisement previously reviewed and accepted by the department is not required to be filed for department review.

Added by Acts 2007, 80th Leg., R.S., Ch. 475 (H.B. 2251), Sec. 1, eff. September 1, 2007.

SUBCHAPTER C. DETERMINATION OF UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES; SANCTIONS AND PENALTIES

Sec. 541.101. EXAMINATION AND INVESTIGATION. The department may examine and investigate the affairs of a person engaged in the business of insurance in this state to determine whether the person has or is engaged in an unfair method of competition or unfair or deceptive act or practice prohibited by Section 541.003.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.102. STATEMENT OF CHARGES; NOTICE OF HEARING. (a) When the department has reason to believe that a person engaged in the business of insurance in this state has engaged or is engaging in this state in an unfair method of competition or unfair or deceptive act or practice defined by Subchapter B and that a proceeding by the department regarding the charges is in the interest of the public, the department shall issue and serve on the person:

(1) a statement of the charges; and

(2) a notice of the hearing on the charges, including the time and place for the hearing.

(b) The department may not hold the hearing before the sixth day after the date the notice is served.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.103. HEARING. A person against whom charges are made under Section 541.102 is entitled at the hearing on the charges to have an opportunity to be heard and show cause why the department should not issue an order requiring the person to cease and desist from the unfair method of competition or unfair or deceptive act or practice described in the charges.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.104. HEARING PROCEDURES. (a) Nothing in this chapter requires the observance of formal rules of pleading or evidence at a hearing under this subchapter.

(b) At a hearing under this subchapter, the department, on a showing of good cause, shall permit any person to intervene, appear, and be heard by counsel or in person.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.105. RECORD OF HEARING. (a) At a hearing under this subchapter, the department may, and at the request of a party to the hearing shall, make a stenographic record of the proceedings and the evidence presented at the hearing.

(b) If the department does not make a stenographic record and a person seeks judicial review of the decision made at the hearing, the department shall prepare a statement of the evidence and proceeding for use on review.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.106. COMPLIANCE WITH SUBPOENA. (a) If a person refuses to comply with a subpoena issued in connection with a hearing under this subchapter or refuses to testify with respect to a matter about which the person may be lawfully interrogated, on application of the department, a district court in Travis County or in the county in which the person resides may order the person to comply with the subpoena or testify.

(b) A court may punish as contempt a person's failure to obey an order under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.107. DETERMINATION OF VIOLATION. After a hearing under this subchapter, the department shall determine whether:

(1) the method of competition or the act or practice considered in the hearing is defined as:

(A) an unfair method of competition or deceptive act or practice under Subchapter B or a rule adopted under this chapter; or

(B) a false, misleading, or deceptive act or practice under Section 17.46, Business & Commerce Code; and

(2) the person against whom the charges were made engaged in the method of competition or act or practice in violation of:

(A) this chapter or a rule adopted under this chapter; or

(B) Subchapter E, Chapter 17, Business & Commerce Code, as specified in Section 17.46, Business & Commerce Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.108. CEASE AND DESIST ORDER. On determining that a person committed a violation described by Section 541.107, the department shall:

(1) make written findings; and

(2) issue and serve on the person an order requiring the person to cease and desist from engaging in the method of competition or act or practice determined to be a violation.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.109. MODIFICATION OR SETTING ASIDE OF ORDER. On the notice and in the manner the department determines proper, the department may modify or set aside in whole or in part a cease and desist order issued under Section 541.108 at any time before a petition appealing the order is filed in accordance with Subchapter D, Chapter 36.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.110. ADMINISTRATIVE PENALTY. (a) A person who violates a cease and desist order issued under Section 541.108 is subject to an administrative penalty under Chapter 84.

(b) In determining whether a person has violated a cease and desist order, the department shall consider the maintenance of procedures reasonably adapted to ensure compliance with the order.

(c) An administrative penalty imposed under this section may not exceed:

(1) $1,000 for each violation; or

(2) $5,000 for all violations.

(d) An order of the department imposing an administrative penalty under this section applies only to a violation of the cease and desist order committed before the date the order imposing the penalty is issued.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.111. CIVIL PENALTY FOR VIOLATION OF CEASE AND DESIST ORDER. (a) A person who is found by a court to have violated a cease and desist order issued under Section 541.108 is liable to the state for a penalty. The state may recover the penalty in a civil action.

(b) The penalty may not exceed $50 unless the court finds the violation to be wilful, in which case the penalty may not exceed $500.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER D. PRIVATE ACTION FOR DAMAGES

Sec. 541.151. PRIVATE ACTION FOR DAMAGES AUTHORIZED. A person who sustains actual damages may bring an action against another person for those damages caused by the other person engaging in an act or practice:

(1) defined by Subchapter B to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance; or

(2) specifically enumerated in Section 17.46(b), Business & Commerce Code, as an unlawful deceptive trade practice if the person bringing the action shows that the person relied on the act or practice to the person's detriment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.152. DAMAGES, ATTORNEY'S FEES, AND OTHER RELIEF. (a) A plaintiff who prevails in an action under this subchapter may obtain:

(1) the amount of actual damages, plus court costs and reasonable and necessary attorney's fees;

(2) an order enjoining the act or failure to act complained of; or

(3) any other relief the court determines is proper.

(b) Except as provided by Subsection (c), on a finding by the trier of fact that the defendant knowingly committed the act complained of, the trier of fact may award an amount not to exceed three times the amount of actual damages.

(c) Subsection (b) does not apply to an action under this subchapter brought against the Texas Windstorm Insurance Association.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2011, 82nd Leg., 1st C.S., Ch. 2 (H.B. 3), Sec. 2, eff. September 28, 2011.

Sec. 541.153. FRIVOLOUS ACTION. A court shall award to the defendant court costs and reasonable and necessary attorney's fees if the court finds that an action under this subchapter is groundless and brought in bad faith or brought for the purpose of harassment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.154. PRIOR NOTICE OF ACTION. (a) A person seeking damages in an action against another person under this subchapter must provide written notice to the other person not later than the 61st day before the date the action is filed.

(b) The notice must advise the other person of:

(1) the specific complaint; and

(2) the amount of actual damages and expenses, including attorney's fees reasonably incurred in asserting the claim against the other person.

(c) The notice is not required if giving notice is impracticable because the action:

(1) must be filed to prevent the statute of limitations from expiring; or

(2) is asserted as a counterclaim.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.155. ABATEMENT. (a) A person against whom an action under this subchapter is pending who does not receive the notice as required by Section 541.154 may file a plea in abatement not later than the 30th day after the date the person files an original answer in the court in which the action is pending.

(b) The court shall abate the action if, after a hearing, the court finds that the person is entitled to an abatement because the claimant did not provide the notice as required by Section 541.154.

(c) An action is automatically abated without a court order beginning on the 11th day after the date a plea in abatement is filed if the plea:

(1) is verified and alleges that the person against whom the action is pending did not receive the notice as required by Section 541.154; and

(2) is not controverted by an affidavit filed by the claimant before the 11th day after the date the plea in abatement is filed.

(d) An abatement under this section continues until the 60th day after the date notice is provided in compliance with Section 541.154.

(e) This section does not apply if Section 541.154(c) applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.156. SETTLEMENT OFFER. (a) A person who receives notice provided under Section 541.154 or 542A.003 may make a settlement offer during a period beginning on the date notice under Section 541.154 or 542A.003 is received and ending on the 60th day after that date.

(b) In addition to the period described by Subsection (a), the person may make a settlement offer during a period:

(1) if mediation is not conducted under Section 541.161, beginning on the date an original answer is filed in the action and ending on the 90th day after that date; or

(2) if mediation is conducted under Section 541.161, beginning on the day after the date the mediation ends and ending on the 20th day after that date.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 1, eff. September 1, 2017.

Sec. 541.157. CONTENTS OF SETTLEMENT OFFER. A settlement offer made by a person against whom a claim under this subchapter is pending must include an offer to pay the following amounts, separately stated:

(1) an amount of money or other consideration, reduced to its cash value, as settlement of the claim for damages; and

(2) an amount of money to compensate the claimant for the claimant's reasonable and necessary attorney's fees incurred as of the date of the offer.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.158. REJECTION OF SETTLEMENT OFFER. (a) A settlement offer is rejected unless both parts of the offer required under Section 541.157 are accepted by the claimant not later than the 30th day after the date the offer is made.

(b) A settlement offer made by a person against whom a claim under this subchapter is pending that complies with this subchapter and is rejected by the claimant may be filed with the court accompanied by an affidavit certifying the offer's rejection.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.159. LIMIT ON RECOVERY AFTER SETTLEMENT OFFER. (a) If the court finds that the amount stated in the settlement offer for damages under Section 541.157(1) is the same as, substantially the same as, or more than the amount of damages found by the trier of fact, the claimant may not recover as damages any amount in excess of the lesser of:

(1) the amount of damages stated in the offer; or

(2) the amount of damages found by the trier of fact.

(b) If the court makes the finding described by Subsection (a), the court shall determine reasonable and necessary attorney's fees to compensate the claimant for attorney's fees incurred before the date and time the rejected settlement offer was made. If the court finds that the amount stated in the offer for attorney's fees under Section 541.157(2) is the same as, substantially the same as, or more than the amount of reasonable and necessary attorney's fees incurred by the claimant as of the date of the offer, the claimant may not recover any amount of attorney's fees in excess of the amount of fees stated in the offer.

(c) This section does not apply if the court finds that the offering party:

(1) could not perform the offer at the time the offer was made; or

(2) substantially misrepresented the cash value of the offer.

(d) The court shall award:

(1) damages as required by Section 541.152 if Subsection (a) does not apply; and

(2) attorney's fees as required by Section 541.152 if Subsection (b) does not apply.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.160. EFFECT OF SETTLEMENT OFFER. A settlement offer is not an admission of engaging in an act or practice defined by Subchapter B to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.161. MEDIATION. (a) A party may, not later than the 90th day after the date a pleading seeking relief under this subchapter is served, file a motion to compel mediation of the dispute in the manner provided by this section.

(b) The court shall, not later than the 30th day after the date a motion under this section is filed, sign an order setting the time and place of the mediation.

(c) The court shall appoint a mediator if the parties do not agree on a mediator.

(d) The mediation must be held not later than the 30th day after the date the order is signed, unless:

(1) the parties agree otherwise; or

(2) the court determines that additional time not to exceed 30 days is warranted.

(e) Each party who has appeared in the action, except as agreed to by all parties who have appeared, shall:

(1) participate in the mediation; and

(2) except as provided by Subsection (f), share the mediation fee.

(f) A party may not compel mediation under this section if the amount of actual damages claimed is less than $15,000 unless the party seeking to compel mediation agrees to pay the costs of the mediation.

(g) Except as provided by this section, the following apply to the appointment of a mediator and the mediation process provided by this section:

(1) Section 154.023, Civil Practice and Remedies Code; and

(2) Subchapters C and D, Chapter 154, Civil Practice and Remedies Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.162. LIMITATIONS PERIOD. (a) A person must bring an action under this chapter before the second anniversary of the following:

(1) the date the unfair method of competition or unfair or deceptive act or practice occurred; or

(2) the date the person discovered or, by the exercise of reasonable diligence, should have discovered that the unfair method of competition or unfair or deceptive act or practice occurred.

(b) The limitations period provided by Subsection (a) may be extended for 180 days if the person bringing the action proves that the person's failure to bring the action within that period was caused by the defendant's engaging in conduct solely calculated to induce the person to refrain from or postpone bringing the action.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER E. ENFORCEMENT BY ATTORNEY GENERAL

Sec. 541.201. INJUNCTIVE RELIEF. (a) The attorney general may bring an action under this section if the attorney general has reason to believe that:

(1) a person engaged in the business of insurance in this state is engaging in, has engaged in, or is about to engage in an act or practice defined as unlawful under:

(A) this chapter or a rule adopted under this chapter; or

(B) Section 17.46, Business & Commerce Code; and

(2) the action is in the public interest.

(b) The attorney general may bring the action in the name of the state to restrain by temporary or permanent injunction the person's use of the method, act, or practice.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.202. VENUE FOR INJUNCTIVE ACTION. An action for an injunction under this subchapter may be commenced in a district court in:

(1) the county in which the person against whom the action is brought:

(A) resides;

(B) has the person's principal place of business; or

(C) is engaging in business;

(2) the county in which the transaction or a substantial portion of the transaction occurred; or

(3) Travis County.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.203. ISSUANCE OF INJUNCTION. (a) The court may issue an appropriate temporary or permanent injunction.

(b) The court shall issue the injunction without bond.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.204. CIVIL PENALTY. In addition to requesting a temporary or permanent injunction under Section 541.201, the attorney general may request a civil penalty of not more than $10,000 for each violation on a finding by the court that the defendant has engaged in or is engaging in an act or practice defined as unlawful under:

(1) this chapter or a rule adopted under this chapter; or

(2) Section 17.46, Business & Commerce Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.205. COMPENSATION OR RESTORATION. The court may make an additional order or judgment as necessary to compensate an identifiable person for actual damages or for restoration of money or property that may have been acquired by means of an enjoined act or practice.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.206. CIVIL PENALTY FOR VIOLATION OF INJUNCTION. (a) A person who violates an injunction issued under this subchapter is liable for and shall pay to the state a civil penalty of not more than $10,000 for each violation.

(b) The attorney general may, in the name of the state, petition the court for recovery of the civil penalty against the person who violates the injunction.

(c) The court shall consider the maintenance of procedures reasonably adapted to ensure compliance with the injunction in determining whether a person has violated an injunction.

(d) The court issuing the injunction retains jurisdiction and the cause is continued for the purpose of assessing a civil penalty under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.207. REMEDIES NOT EXCLUSIVE. The remedies provided by this subchapter are:

(1) not exclusive; and

(2) in addition to any other remedy or procedure provided by another law or at common law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER F. CLASS ACTIONS BY ATTORNEY GENERAL OR PRIVATE INDIVIDUAL

Sec. 541.251. CLASS ACTION AUTHORIZED. (a) If a member of the insurance buying public has been damaged by an unlawful method, act, or practice defined in Subchapter B as an unlawful deceptive trade practice, the department may request the attorney general to bring a class action or the individual damaged may bring an action on the individual's own behalf and on behalf of others similarly situated to recover damages and obtain relief as provided by this subchapter.

(b) A class action may not be maintained under this subchapter if the department and attorney general have initiated an action under Subchapter G or an action under that subchapter has resulted in a final determination regarding the same act or practice and the same defendant in the action under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.252. RECOVERY. A plaintiff who prevails in a class action under this subchapter may recover:

(1) court costs and attorney's fees reasonable in relation to the amount of work expended in addition to actual damages;

(2) an order enjoining the act or failure to act; and

(3) any other relief the court determines is proper.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.253. FRIVOLOUS ACTION. The court may award to the defendant court costs and reasonable attorney's fees in relation to the work expended on a finding by the court that a class action under this subchapter was brought by an individual plaintiff in bad faith or for the purpose of harassment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.254. STATUTE OF LIMITATIONS TOLLED. The filing of a class action under this subchapter tolls the statute of limitations for bringing an action by an individual under Section 541.162.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.255. PRIOR NOTICE. (a) Not later than the 31st day before the date a class action for damages is commenced under this subchapter, the prospective plaintiff must:

(1) notify the intended defendant of the complaint; and

(2) demand that the defendant provide relief to the prospective plaintiff and others similarly situated.

(b) The notice must be in writing and be sent by certified or registered mail, return receipt requested, to:

(1) the place where the transaction occurred;

(2) the intended defendant's principal place of business in this state; or

(3) if notice to the place described by Subdivision (1) or (2) does not effect notice, the office of the secretary of state.

(c) A copy of the notice must also be sent to the commissioner.

(d) A class action for injunctive relief may be commenced under this subchapter without complying with Subsection (a).

(e) A plaintiff in a class action for injunctive relief under this subchapter may, on or after the 31st day after the date the action is commenced and after complying with Subsection (a), amend the complaint without leave of court to include a request for damages.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.256. PREREQUISITES TO CLASS ACTION. The court shall permit one or more members of a class to sue or be sued as representative parties on behalf of the class only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.257. CLASS ACTIONS MAINTAINABLE. (a) An action may be maintained as a class action under this subchapter if the prerequisites of Section 541.256 are satisfied and, in addition:

(1) the prosecution of separate actions by or against individual members of the class would create a risk of:

(A) inconsistent or varying adjudications with respect to individual members of the class that would establish incompatible standards of conduct for the party opposing the class; or

(B) adjudication with respect to individual members of the class that would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests;

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

(b) Matters pertinent to a finding under Subsection (a)(3) include:

(1) the interest of members of the class in individually controlling the prosecution or defense of separate actions;

(2) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

(3) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and

(4) the difficulties likely to be encountered in the management of a class action.

(c) In construing this section, the courts of this state shall be guided by the decisions of the federal courts interpreting Rule 23, Federal Rules of Civil Procedure, as amended.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.258. CLASS ACTIONS: ISSUES AND SUBCLASSES AUTHORIZED. When appropriate, an action may be brought or maintained as a class action under this subchapter with respect to particular issues or a class may be divided into subclasses and each subclass treated as a class, and the provisions of this subchapter shall be construed and applied accordingly.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.259. DETERMINATION REGARDING WHETHER CLASS ACTION MAY BE MAINTAINED. (a) As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be maintained as a class action under this subchapter.

(b) An order under this section may be altered or amended before a decision on the merits.

(c) An order determining whether the action may be maintained as a class action under this subchapter is an interlocutory order that is appealable. The procedures applicable to accelerated appeals in the Texas Rules of Appellate Procedure apply to the appeal.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.260. EFFECT OF DENIAL OF CLASS ACTION. A court order denying that an action under this subchapter may be brought as a class action does not affect whether an individual may bring the same or a similar action under Subchapter D.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.261. NOTICE OF CLASS ACTION. (a) If an action is permitted as a class action under this subchapter, the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.

(b) The notice must contain a statement that:

(1) the court will exclude from the class a notified member if the member requests exclusion by a specified date;

(2) the judgment, whether favorable or not, includes all members who do not request exclusion; and

(3) a member who does not request exclusion may enter an appearance through counsel.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.262. PROCEDURES IN CLASS ACTION. In a class action under this subchapter, the court may make appropriate orders:

(1) determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument;

(2) requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in a manner the court directs to some or all of the members or the attorney general of:

(A) any step in the action;

(B) the proposed extent of the judgment; or

(C) the opportunity for members to:

(i) signify whether the members consider the representation to be fair and adequate;

(ii) intervene and present claims or defenses; or

(iii) otherwise come into the action;

(3) imposing conditions on the representative parties or intervenors;

(4) requiring that the pleadings be amended to eliminate allegations relating to representation of absent persons, and that the action proceed accordingly; or

(5) dealing with similar procedural matters.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.263. EFFECT OF SETTLEMENT OFFER. (a) Damages may not be awarded to a class under this subchapter if, not later than the 30th day after the date the intended defendant receives notice under Section 541.255, the intended defendant provides to the plaintiff by certified or registered mail, return receipt requested, a written settlement offer.

(b) The settlement offer must include:

(1) a statement that all persons similarly situated have been adequately identified or a reasonable effort to identify those persons has been made;

(2) a description of the class identified and the method used to identify that class;

(3) a statement that all persons identified have been notified that, on request, the intended defendant will provide relief to those persons and all others similarly situated;

(4) a complete explanation of the relief being afforded;

(5) a copy of the notice or communication the intended defendant is providing to the members of the class;

(6) a statement that the relief being afforded the consumer has been or, if the offer is accepted by the consumer, will be given within a stated reasonable time; and

(7) a statement that the practice complained of has ceased.

(c) Except as provided by Subsection (d), an attempt to comply with this section by a person receiving a demand is:

(1) an offer to compromise;

(2) not admissible as evidence; and

(3) not an admission of engaging in an unlawful act or practice.

(d) A defendant may introduce evidence of compliance or an attempt to comply with this section for the purpose of:

(1) establishing good faith; or

(2) showing compliance with this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.264. DEFENSES. Damages may not be awarded in a class action under this subchapter if the defendant:

(1) proves that the action complained of resulted from a bona fide error, notwithstanding the use of reasonable procedures adopted to avoid an error; and

(2) made restitution of any consideration received from any member of the class.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.265. LIMITATIONS PERIOD FOR DAMAGES. In a class action under this subchapter, damages may not include any damages incurred more than two years before the date the action is commenced.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.266. DISPOSITION. (a) A class action under this subchapter may not be dismissed, settled, or compromised without the approval of the court.

(b) Notice of the proposed dismissal, settlement, or compromise shall be given to all members of the class in the manner the court directs.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.267. CONTENTS OF JUDGMENT; NOTICE. (a) The judgment in a class action under this subchapter must describe those to whom the notice under Section 541.261 was directed and who have not requested exclusion and those the court finds to be members of the class.

(b) The court shall direct to the members of the class the best notice of the judgment practicable under the circumstances, including individual notice to each member who can be identified through reasonable effort.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER G. DEPARTMENT ACTION FOR REFUND OF PREMIUMS

Sec. 541.301. REFUND OF PREMIUMS. (a) After notice and hearing as provided in Subchapter C, the department may require a person to make an accounting under Subsection (b):

(1) in connection with a method of competition or act or practice that is the basis of a cease and desist order issued under Section 541.108; or

(2) on application of an aggrieved person, in connection with a determination by the department that the aggrieved person and other persons similarly situated were induced to purchase an insurance policy as a result of the person engaging in a method of competition or act or practice in violation of:

(A) this chapter or a rule adopted under this chapter; or

(B) Section 17.46, Business & Commerce Code.

(b) A person required to make an accounting under this section must account for all premiums collected for policies issued by the person during the preceding two years in connection with the acts in violation of this chapter described by Subsection (a)(1) or (2).

(c) The department may require the person described by Subsection (a) to:

(1) give notice to all persons from whom the premiums were collected; and

(2) refund the total of all premiums collected from each person who elects to accept a premium refund in exchange for cancellation of the insurance policy issued.

(d) A person who refunds premiums under this section shall deduct from the amount of premiums refunded the amount of benefits actually paid by the person while the insurance policy was in force.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.302. TIME TO MAKE REFUNDS. The department shall specify a reasonable time within which a person required to make premium refunds under Section 541.301 must make the refunds.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.303. SANCTION. (a) The department may report to the attorney general a person's failure to comply with the department's requirement to refund premiums within the time specified under Section 541.302. The department may request that the attorney general file an action to enforce the department's requirement to refund premiums.

(b) Venue for the action is in a district court in Travis County.

(c) The court shall enter an appropriate order to enforce the department's requirement to refund premiums if the court finds that:

(1) the requirement was lawfully entered; and

(2) the person failed to comply with the requirement.

(d) The court may enforce its order through contempt proceedings.

(e) The sanction provided by this section is in addition to any other sanctions provided in this code or other applicable laws.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.304. EVIDENTIARY USE OF COMPLIANCE OR ATTEMPT TO COMPLY. (a) Compliance or an attempt to comply with the department's requirement to refund premiums is:

(1) an offer to compromise;

(2) not admissible as evidence; and

(3) not an admission of engaging in an unlawful act or practice.

(b) A defendant may introduce evidence of compliance or an attempt to comply with the department's requirement for the purpose of:

(1) establishing good faith; or

(2) showing compliance with the department's requirement.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER H. ASSURANCE OF VOLUNTARY COMPLIANCE

Sec. 541.351. ACCEPTANCE OF ASSURANCE. (a) In administering this chapter, the department may accept assurance of voluntary compliance from a person who is engaging in, has engaged in, or is about to engage in an act or practice in violation of:

(1) this chapter or a rule adopted under this chapter; or

(2) Section 17.46, Business & Commerce Code.

(b) The assurance must be in writing and be filed with the department.

(c) The department may condition acceptance of an assurance of voluntary compliance on the stipulation that the person offering the assurance restore to a person in interest money that may have been acquired by the act or practice described in Subsection (a).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.352. EFFECT OF ASSURANCE. (a) An assurance of voluntary compliance is not an admission of a prior violation of:

(1) this chapter or a rule adopted under this chapter; or

(2) Section 17.46, Business & Commerce Code.

(b) Unless an assurance of voluntary compliance is rescinded by agreement, a subsequent failure to comply with the assurance is prima facie evidence of a violation of:

(1) this chapter or a rule adopted under this chapter; or

(2) Section 17.46, Business & Commerce Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.353. REOPENING. A matter closed by the filing of an assurance of voluntary compliance may be reopened at any time.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.354. RIGHT TO BRING ACTION NOT AFFECTED. An assurance of voluntary compliance does not affect the right of an individual to bring an action under this chapter, except that the right of an individual in relation to money received according to a stipulation under Section 541.351(c) is governed by the terms of the assurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER I. RULEMAKING

Sec. 541.401. RULEMAKING AUTHORITY. (a) The commissioner may adopt and enforce reasonable rules the commissioner determines necessary to accomplish the purposes of this chapter.

(b) Notwithstanding a previous definition or interpretation of a term used in this chapter contained in or derived from the common law or other statutory law of this state, the commissioner may adopt an express provision necessary to accomplish the purposes of this chapter, including a provision the commissioner considers necessary to:

(1) achieve necessary uniformity with the laws of other states or the United States; or

(2) conform to the adopted procedures of the National Association of Insurance Commissioners.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.402. PETITION. (a) A petition may be submitted to the commissioner to adopt, amend, or repeal a rule. The petition must be:

(1) signed by 100 interested persons; and

(2) supported by evidence that:

(A) a particular act or practice has been or could be false, misleading, or deceptive to the insurance buying public; or

(B) an act or practice defined by department rule to be false, misleading, or deceptive is not false, misleading, or deceptive.

(b) Not later than the 30th day after the date the department receives the petition, the department shall:

(1) deny the petition as provided by Section 541.403; or

(2) initiate hearing proceedings under Section 541.404.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.403. DENIAL OF PETITION. (a) The department must state in writing the reason for denying a petition to adopt, amend, or repeal a rule.

(b) The department is expressly authorized to deny the petition if the action sought would:

(1) destroy uniformity with the laws of other states or the United States; or

(2) not conform to the adopted procedures of the National Association of Insurance Commissioners.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.404. HEARING ON PETITION. (a) A hearing held by the department in response to a petition to adopt, amend, or repeal a rule must be open to the public.

(b) At the hearing, any person may present to the department in writing or orally testimony, data, or other information regarding the act or practice under consideration.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.405. JUDICIAL REVIEW OF DEPARTMENT ACTION. (a) A person aggrieved by the denial of a petition under Section 541.402 or the adoption, amendment, or repeal of or failure to adopt a rule under this subchapter may file a petition in a district court in Travis County for:

(1) a declaratory judgment on the validity or applicability of an adopted, amended, or repealed rule; or

(2) review of the denial of a petition under Section 541.402.

(b) The commissioner must be made a party to the action.

(c) An action of the commissioner under this subchapter in adopting, amending, repealing, or failing to adopt a rule or denying a petition may be invalidated only if the court finds that the action:

(1) violates a constitutional or state statutory provision;

(2) exceeds the commissioner's statutory authority;

(3) is arbitrary or capricious or characterized by abuse of discretion or unwarranted exercise of discretion;

(4) is so vague that it does not establish sufficiently definite standards to which conduct can be conformed;

(5) is made following unlawful procedure; or

(6) is clearly erroneous in view of the reliable, probative, and substantial evidence in the whole record as submitted.

(d) The court may issue an injunction in an action under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER J. CONSTRUCTION OF CHAPTER WITH OTHER LAWS

Sec. 541.451. LIABILITY UNDER OTHER LAW. An order of the department under this chapter or an order by a court to enforce that order does not relieve or absolve a person affected by either order from liability under another law of this state.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.452. POWERS IN ADDITION TO OTHER POWERS AUTHORIZED BY LAW. The powers vested in the department and the commissioner by this chapter are in addition to any other powers to enforce a penalty, fine, or forfeiture authorized by law with respect to a method of competition or act or practice defined as unfair or deceptive.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.453. DOUBLE RECOVERY PROHIBITED. A person may not recover damages and penalties for the same act or practice under both this chapter and another law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 541.454. PENALTIES AND RELATED PAYMENTS BY INSURER. (a) Civil penalties, premium refunds, judgments, compensatory judgments, individual recoveries, orders, class action awards, costs, damages, or attorney's fees assessed or awarded under this chapter:

(1) may be paid only from the capital or surplus funds of the offending insurer; and

(2) may not take precedence over, be in priority to, or in any other manner apply to:

(A) Chapter 462 or 463 or any other insurance guaranty act; or

(B) Chapter 422.

(b) The statutes described by Subsection (a)(2) and the priorities of funds created by those statutes are exempt from the provisions of this chapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2D.006, eff. April 1, 2009.

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES

CHAPTER 542. PROCESSING AND SETTLEMENT OF CLAIMS

SUBCHAPTER A. UNFAIR CLAIM SETTLEMENT PRACTICES

Sec. 542.001. SHORT TITLE. This subchapter may be cited as the Unfair Claim Settlement Practices Act.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.002. APPLICABILITY OF SUBCHAPTER. This subchapter applies to the following insurers whether organized as a proprietorship, partnership, stock or mutual corporation, or unincorporated association:

(1) a life, health, or accident insurance company;

(2) a fire or casualty insurance company;

(3) a hail or storm insurance company;

(4) a title insurance company;

(5) a mortgage guarantee company;

(6) a mutual assessment company;

(7) a local mutual aid association;

(8) a local mutual burial association;

(9) a statewide mutual assessment company;

(10) a stipulated premium company;

(11) a fraternal benefit society;

(12) a group hospital service corporation;

(13) a county mutual insurance company;

(14) a Lloyd's plan;

(15) a reciprocal or interinsurance exchange; and

(16) a farm mutual insurance company.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

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.

Sec. 542.004. EXAMINATION OF TAX RETURNS PROHIBITED. (a) An insurer regulated under this code may not require a claimant, as a condition of settling a claim, to produce the claimant's federal income tax returns for examination or investigation by the insurer unless:

(1) the claimant is ordered to produce the tax returns by a court; or

(2) the claim involves:

(A) a fire loss; or

(B) a loss of profits or income.

(b) An insurer that violates this section commits:

(1) a prohibited practice under this subchapter; and

(2) a deceptive trade practice under Subchapter E, Chapter 17, Business & Commerce Code.

(c) A claimant affected by a violation of this section is entitled to remedies under Subchapter E, Chapter 17, Business & Commerce Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.005. RECORD OF COMPLAINTS. (a) In this section, "complaint" means any written communication primarily expressing a grievance.

(b) An insurer shall maintain a complete record of all complaints received by the insurer during the preceding three years or since the date of the insurer's last examination by the department, whichever period is shorter. The record must indicate:

(1) the total number of complaints;

(2) the classification of complaints by line of insurance;

(3) the nature of each complaint;

(4) the disposition of the complaints; and

(5) the time spent processing each complaint.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.006. PERIODIC REPORTING REQUIREMENT. (a) In this section, "claim" means a written claim filed by a resident of this state with an insurer engaging in business in this state.

(b) If, based on complaints of unfair claim settlement practices under this subchapter, the department finds that an insurer should be subjected to closer supervision with respect to the insurer's claim settlement practices, the department may require the insurer to file periodic reports at intervals the department determines necessary.

(c) Repealed by Acts 2015, 84th Leg., R.S., Ch. 42 , Sec. 3.01(4), eff. September 1, 2015.

(d) If at any time the department determines that the requirement to file a periodic report is no longer necessary to accomplish the objectives of this subchapter, the department may rescind the reporting requirement.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2015, 84th Leg., R.S., Ch. 42 (S.B. 784), Sec. 3.01(4), eff. September 1, 2015.

Sec. 542.007. COMPARISON OF CERTAIN INSURERS TO MINIMUM STANDARD OF PERFORMANCE; INVESTIGATION. (a) The department shall compile the information received from an insurer under Section 542.006 in a manner that enables the department to compare the insurer's performance to a minimum standard of performance adopted by the commissioner.

(b) If the department determines that the insurer does not meet the minimum standard of performance, the department shall investigate the insurer to determine the reason, if any, that the insurer does not meet the minimum standard.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.008. COMPLAINTS AGAINST INSURERS; INVESTIGATION. (a) The department shall establish a system for receiving and processing individual complaints alleging a violation of this subchapter by an insurer regardless of whether the insurer is required to file a periodic report under Section 542.006.

(b) The department shall investigate an insurer if the department determines that:

(1) based on the number and type of complaints against an insurer, the insurer does not meet the minimum standard of performance adopted under Section 542.007; or

(2) the number and type of complaints against the insurer are not proportionate to the number and type of complaints against other insurers writing similar lines of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.009. REVIEW OF INVESTIGATION RESULTS; HEARING. (a) On receiving the results of an investigation instituted under Section 542.007 or 542.008, the department shall review those results considering the standards of this subchapter to determine whether further action is necessary.

(b) If the department determines that further action is necessary, the department shall:

(1) set a date for a hearing to review the alleged violations of this subchapter; and

(2) notify the insurer of:

(A) the date of the hearing; and

(B) the nature of the charges.

(c) The department shall provide the notice required by Subsection (b)(2) not later than the 30th day before the date of the hearing.

(d) At a hearing under this section, the insurer may present the insurer's case with the assistance of counsel.

(e) Evidence relating to the number and type of complaints or claims prepared by the department from information received or compiled under Section 542.006, 542.007, or 542.008 is admissible in evidence at:

(1) the hearing; and

(2) any related judicial proceeding.

(f) The hearing shall be conducted in accordance with this code and rules adopted by the commissioner.

(g) An insurer may not be found to be in violation of this subchapter solely because of the number and type of complaints or claims against the insurer.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.010. CEASE AND DESIST ORDER; ENFORCEMENT. (a) If the department determines that an insurer has violated this subchapter, the department shall issue a cease and desist order to the insurer directing the insurer to stop the unlawful practice.

(b) If the insurer fails to comply with the cease and desist order, the department may:

(1) revoke or suspend the insurer's certificate of authority; or

(2) limit, regulate, and control:

(A) the insurer's line of business;

(B) the insurer's writing of policy forms or other particular forms; and

(C) the volume of the insurer's:

(i) line of business; or

(ii) writing of policy forms or other particular forms.

(c) The department shall exercise authority under this section to the extent that the department determines is necessary to obtain the insurer's compliance with the cease and desist order.

(d) At the request of the department, the attorney general shall assist the department in enforcing the cease and desist order.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.011. TIME LIMIT TO APPEAL. An insurer affected by a ruling or order of the department under this subchapter may appeal the ruling or order, in accordance with Subchapter D, Chapter 36, by filing a petition for judicial review not later than the 20th day after the date of the ruling or order.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.012. ATTORNEY'S FEES. The department is entitled to reasonable attorney's fees if judicial action is necessary to enforce an order of the department under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.013. PERSONNEL. The department may hire employees and examiners as needed to enforce this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.014. RULES. The commissioner shall adopt reasonable rules as necessary to implement and augment the purposes and provisions of this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER B. PROMPT PAYMENT OF CLAIMS

Sec. 542.051. DEFINITIONS. In this subchapter:

(1) "Business day" means a day other than a Saturday, Sunday, or holiday recognized by this state.

(2) "Claim" means a first-party claim that:

(A) is made by an insured or policyholder under an insurance policy or contract or by a beneficiary named in the policy or contract; and

(B) must be paid by the insurer directly to the insured or beneficiary.

(3) "Claimant" means a person making a claim.

(4) "Notice of claim" means any written notification provided by a claimant to an insurer that reasonably apprises the insurer of the facts relating to the claim.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.052. APPLICABILITY OF SUBCHAPTER. This subchapter applies to any insurer authorized to engage in business as an insurance company or to provide insurance in this state, including:

(1) a stock life, health, or accident insurance company;

(2) a mutual life, health, or accident insurance company;

(3) a stock fire or casualty insurance company;

(4) a mutual fire or casualty insurance company;

(5) a Mexican casualty insurance company;

(6) a Lloyd's plan;

(7) a reciprocal or interinsurance exchange;

(8) a fraternal benefit society;

(9) a stipulated premium company;

(10) a nonprofit legal services corporation;

(11) a statewide mutual assessment company;

(12) a local mutual aid association;

(13) a local mutual burial association;

(14) an association exempt under Section 887.102;

(15) a nonprofit hospital, medical, or dental service corporation, including a corporation subject to Chapter 842;

(16) a county mutual insurance company;

(17) a farm mutual insurance company;

(18) a risk retention group;

(19) a purchasing group;

(20) an eligible surplus lines insurer; and

(21) except as provided by Section 542.053(b), a guaranty association operating under Chapter 462 or 463.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2D.007, eff. April 1, 2009.

Sec. 542.053. EXCEPTION. (a) This subchapter does not apply to:

(1) workers' compensation insurance;

(2) mortgage guaranty insurance;

(3) title insurance;

(4) fidelity, surety, or guaranty bonds;

(5) marine insurance as defined by Section 1807.001; or

(6) a guaranty association created and operating under Chapter 2602.

(b) A guaranty association operating under Chapter 462 or 463 is not subject to the damage provisions of Section 542.060.

(c) This subchapter does not apply to a health maintenance organization except as provided by Section 1271.005(c).

(d) This subchapter does not apply to a claim governed by Subchapter C, Chapter 1301.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 11.009(a), eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2D.008, eff. April 1, 2009.

Sec. 542.054. LIBERAL CONSTRUCTION. This subchapter shall be liberally construed to promote the prompt payment of insurance claims.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.055. RECEIPT OF NOTICE OF CLAIM. (a) Not later than the 15th day or, if the insurer is an eligible surplus lines insurer, the 30th business day after the date an insurer receives notice of a claim, the insurer shall:

(1) acknowledge receipt of the claim;

(2) commence any investigation of the claim; and

(3) request from the claimant all items, statements, and forms that the insurer reasonably believes, at that time, will be required from the claimant.

(b) An insurer may make additional requests for information if during the investigation of the claim the additional requests are necessary.

(c) If the acknowledgment of receipt of a claim is not made in writing, the insurer shall make a record of the date, manner, and content of the acknowledgment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.056. NOTICE OF ACCEPTANCE OR REJECTION OF CLAIM. (a) Except as provided by Subsection (b) or (d), an insurer shall notify a claimant in writing of the acceptance or rejection of a claim not later than the 15th business day after the date the insurer receives all items, statements, and forms required by the insurer to secure final proof of loss.

(b) If an insurer has a reasonable basis to believe that a loss resulted from arson, the insurer shall notify the claimant in writing of the acceptance or rejection of the claim not later than the 30th day after the date the insurer receives all items, statements, and forms required by the insurer.

(c) If the insurer rejects the claim, the notice required by Subsection (a) or (b) must state the reasons for the rejection.

(d) If the insurer is unable to accept or reject the claim within the period specified by Subsection (a) or (b), the insurer, within that same period, shall notify the claimant of the reasons that the insurer needs additional time. The insurer shall accept or reject the claim not later than the 45th day after the date the insurer notifies a claimant under this subsection.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.057. PAYMENT OF CLAIM. (a) Except as otherwise provided by this section, if an insurer notifies a claimant under Section 542.056 that the insurer will pay a claim or part of a claim, the insurer shall pay the claim not later than the fifth business day after the date notice is made.

(b) If payment of the claim or part of the claim is conditioned on the performance of an act by the claimant, the insurer shall pay the claim not later than the fifth business day after the date the act is performed.

(c) If the insurer is an eligible surplus lines insurer, the insurer shall pay the claim not later than the 20th business day after the notice or the date the act is performed, as applicable.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.058. DELAY IN PAYMENT OF CLAIM. (a) Except as otherwise provided, if an insurer, after receiving all items, statements, and forms reasonably requested and required under Section 542.055, delays payment of the claim for a period exceeding the period specified by other applicable statutes or, if other statutes do not specify a period, for more than 60 days, the insurer shall pay damages and other items as provided by Section 542.060.

(b) Subsection (a) does not apply in a case in which it is found as a result of arbitration or litigation that a claim received by an insurer is invalid and should not be paid by the insurer.

(c) A life insurer that receives notice of an adverse, bona fide claim to all or part of the proceeds of the policy before the applicable payment deadline under Subsection (a) shall pay the claim or properly file an interpleader action and tender the benefits into the registry of the court not later than the 90th day after the date the insurer receives all items, statements, and forms reasonably requested and required under Section 542.055. A life insurer that delays payment of the claim or the filing of an interpleader and tender of policy proceeds for more than 90 days shall pay damages and other items as provided by Section 542.060 until the claim is paid or an interpleader is properly filed.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 833 (S.B. 1812), Sec. 1, eff. June 19, 2009.

Sec. 542.059. EXTENSION OF DEADLINES. (a) A court may grant a request by a guaranty association for an extension of the periods under this subchapter on a showing of good cause and after reasonable notice to policyholders.

(b) In the event of a weather-related catastrophe or major natural disaster, as defined by the commissioner, the claim-handling deadlines imposed under this subchapter are extended for an additional 15 days.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.060. LIABILITY FOR VIOLATION OF SUBCHAPTER. (a) Except as provided by Subsection (c), if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable and necessary attorney's fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law.

(b) If a suit is filed, the attorney's fees shall be taxed as part of the costs in the case.

(c) In an action to which Chapter 542A applies, if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy, in addition to the amount of the claim, simple interest on the amount of the claim as damages each year at the rate determined on the date of judgment by adding five percent to the interest rate determined under Section 304.003, Finance Code, together with reasonable and necessary attorney's fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law. Interest awarded under this subsection as damages accrues beginning on the date the claim was required to be paid.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 2, eff. September 1, 2017.

Sec. 542.061. REMEDIES NOT EXCLUSIVE. The remedies provided by this subchapter are in addition to any other remedy or procedure provided by law or at common law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER C. PROVIDING CERTAIN CLAIMS INFORMATION ON REQUEST

Sec. 542.101. REQUEST BY NAMED INSURED UNDER LIABILITY INSURANCE POLICY. (a) In this section, "liability insurance" means:

(1) general liability insurance;

(2) professional liability insurance, including medical professional liability insurance;

(3) commercial automobile liability insurance; and

(4) the liability portion of commercial multiperil insurance.

(b) On written request of a named insured under a liability insurance policy, the insurer that wrote the policy shall provide to the insured information relating to the disposition of a claim filed under the policy. The information must include:

(1) the name of each claimant;

(2) details relating to:

(A) the amount paid on the claim;

(B) settlement of the claim; or

(C) judgment on the claim;

(3) details as to how the claim, settlement, or judgment is to be paid; and

(4) any other information required by rule of the commissioner that the commissioner considers necessary to adequately inform an insured with regard to any claim under a liability insurance policy.

(c) A request for information under this section must be transmitted to the insurer not later than six months after the date of disposition of the claim.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.102. REQUEST BY POLICYHOLDER UNDER PROPERTY AND CASUALTY INSURANCE POLICY. (a) On written request of a policyholder, an insurer that writes property and casualty insurance in this state shall provide the policyholder with a list of claims charged against the policy and payments made on each claim.

(b) This section does not apply to a workers' compensation insurance policy subject to Section 2051.151.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2D.009, eff. April 1, 2009.

Sec. 542.103. DEADLINE FOR PROVIDING REQUESTED INFORMATION. (a) An insurer shall provide the information requested under this subchapter in writing not later than the 30th day after the date the insurer receives the request for the information.

(b) For purposes of this section, information is considered to be provided on the date the information is deposited with the United States Postal Service or is personally delivered.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.104. RULES. The commissioner may by rule prescribe forms for requesting information and for providing requested information under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER C-1. REQUEST FOR CLAIMS INFORMATION BY CERTAIN OFFICIALS

Sec. 542.131. REQUEST BY CERTAIN OFFICIALS ENGAGED IN CRIMINAL INVESTIGATION. (a) This section applies only to a claim for a burglary or robbery loss or a death claim seeking life insurance proceeds that is filed with an insurance company on or after September 1, 2001.

(b) In the course of a criminal investigation and subject to Subsection (c), the state fire marshal, the fire marshal of a political subdivision of this state, the chief of a fire department in this state, a chief of police of a municipality in this state, or a sheriff in this state may request in writing that an insurance company investigating a claimed burglary or robbery loss or a death claim seeking life insurance proceeds release information in the company's possession that relates to that claimed loss. The company shall release the information to any official authorized to request the information under this subsection if the company has reason to believe that the insurance claim is false or fraudulent.

(c) An official who requests information under this section may not request anything other than:

(1) an insurance policy relevant to an insurance claim under investigation and the application for that policy;

(2) policy premium payment records;

(3) the history of the insured's previous claims; and

(4) material relating to the investigation of the insurance claim, including:

(A) statements of any person;

(B) proof of loss; or

(C) other relevant evidence.

(d) This section does not authorize a public official or agency to adopt or require any form of periodic report by an insurance company.

(e) In the absence of fraud or malice, an insurance company or a person who releases information on behalf of an insurance company is not liable for damages in a civil action or subject to criminal prosecution for an oral or written statement made, or any other action taken, that relates to the information required to be released under this section.

(f) An official or department employee receiving information under this section shall maintain the confidentiality of the information until the information is required to be released during a criminal or civil proceeding.

(g) An insurance company or the company's representative may not intentionally refuse to release to an official described by Subsection (b) the information required to be released to that official under this section.

Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 1D.001, eff. April 1, 2009.

SUBCHAPTER D. NOTICE OF SETTLEMENT OF CLAIM UNDER CASUALTY INSURANCE POLICY

Sec. 542.151. APPLICABILITY OF SUBCHAPTER. This subchapter applies only to the settlement of a claim under a casualty insurance policy that is delivered, issued for delivery, or renewed in this state, including a policy written by:

(1) a county mutual insurance company;

(2) a Lloyd's plan;

(3) an eligible surplus lines insurer; or

(4) a reciprocal or interinsurance exchange.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.152. EXCEPTION. This subchapter does not apply to:

(1) a casualty insurance policy that requires the insured's consent to settle a claim against the insured;

(2) fidelity, surety, or guaranty bonds; or

(3) marine insurance as defined by Section 1807.001.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Amended by:

Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 11.010(a), eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2D.010, eff. April 1, 2009.

Sec. 542.153. NOTICE REQUIRED. (a) Not later than the 10th day after the date an initial offer to settle a claim against a named insured under a casualty insurance policy issued to the insured is made, the insurer shall notify the insured in writing of the offer.

(b) Not later than the 30th day after the date a claim against a named insured under a casualty insurance policy issued to the insured is settled, the insurer shall notify the insured in writing of the settlement.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.154. RULES. The commissioner may adopt rules to implement this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER E. RECOVERY OF DEDUCTIBLE FROM THIRD PARTIES UNDER CERTAIN AUTOMOBILE INSURANCE POLICIES

Sec. 542.201. PURPOSE. This subchapter is intended to encourage insurers to take appropriate and necessary steps to collect from third parties or the insurers of the third parties.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.202. DEFINITION. In this subchapter, "action" includes taking various actions such as reasonable and diligent collection efforts, mediation, arbitration, and litigation against a responsible third party or the third party's insurer.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.203. APPLICABILITY OF SUBCHAPTER. This subchapter applies to any insurer that delivers, issues for delivery, or renews in this state a private passenger automobile insurance policy, including a reciprocal or interinsurance exchange, mutual insurance company, association, Lloyd's plan, or other insurer.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.204. ACTION TO RECOVER DEDUCTIBLE. (a) Notwithstanding any other provision of this code and except as provided by Subsection (b), if an insurer is liable to an insured for a claim that is subject to a deductible payable by the insured and a third party may be liable to the insurer or the insured for the amount of the deductible, the insurer shall:

(1) take action to recover the deductible against the third party not later than the first anniversary of the date the insured's claim is paid; or

(2) pay the amount of the deductible to the insured.

(b) An insurer is not required to take action or pay the amount of the deductible as required by Subsection (a) if, not later than the earlier of the first anniversary of the date the insured's claim is paid or the 90th day before the date the statute of limitations for a negligence action expires, the insurer:

(1) notifies the insured in writing that the insurer does not intend to take further collection actions against the third party; and

(2) authorizes the insured to take further collection actions.

(c) This section applies regardless of whether the third party who may be liable for the amount of the deductible is insured or uninsured.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

Sec. 542.205. ENFORCEMENT; RULES. The commissioner may enforce this subchapter and adopt and enforce reasonable rules necessary to accomplish the purposes of this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005.

SUBCHAPTER F. WATER DAMAGE CLAIMS

Sec. 542.251. PURPOSES. The purposes of this subchapter are to:

(1) provide for the prompt, efficient, and effective handling and processing of water damage claims filed under residential property insurance policies, including claims involving losses due to mold;

(2) reduce the confusion and inconvenience policyholders experience in filing and resolving water damage claims filed under residential property insurance policies, including claims involving losses due to mold; and

(3) reduce claim costs and premiums for residential property insurance issued in this state.

Added by Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 11.011(a), eff. September 1, 2005.

Sec. 542.252. APPLICABILITY OF SUBCHAPTER. This subchapter applies to any insurer that handles or processes water damage claims filed under residential property insurance policies.

Added by Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 11.011(a), eff. September 1, 2005.

Sec. 542.253. RULES. (a) The commissioner may adopt rules that identify the types of water damage claims that require more prompt, efficient, and effective processing and handling than the processing and handling required under Subchapter B.

(b) The commissioner by rule may regulate the following aspects of water damage claims:

(1) required notice;

(2) acceptance and rejection of a claim;

(3) claim handling and processing procedures and time frames;

(4) claim investigation requirements, procedures, and time frames;

(5) settlement of claims; and

(6) any other area of claim processing, handling, and response determined to be relevant and necessary by the commissioner.

(c) A rule adopted under this section supersedes the minimum standards described by Subchapter B.

Added by Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 11.011(a), eff. September 1, 2005.

SUBCHAPTER G. INSURER'S RECOVERY FROM UNINSURED THIRD PARTY

Sec. 542.301. APPLICABILITY OF SUBCHAPTER. This subchapter applies to any insurer that delivers, issues for delivery, or renews a private passenger automobile insurance policy in this state, including a county mutual, a reciprocal or interinsurance exchange, or a Lloyd's plan.

Added by Acts 2005, 79th Leg., Ch. 1074 (H.B. 1572), Sec. 1, eff. September 1, 2005.

Redesignated from Insurance Code - Not Codified, Art/Sec 21.79H and amended by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 3B.020(a), eff. September 1, 2007.

Redesignated from Insurance Code - Not Codified, Art/Sec 21.79H and amended by Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 9.020(a), eff. September 1, 2007.

Sec. 542.302. RECOVERY IN SUIT OR OTHER ACTION. An insurer that brings suit or takes other action described by Section 542.202 against a responsible third party relating to a loss that is covered under a private passenger automobile insurance policy issued by the insurer and for which the responsible third party is uninsured is entitled to recover, in addition to payments made by the insurer or insured, the costs of bringing the suit or taking the action, including reasonable attorney's fees and court costs.

Added by Acts 2005, 79th Leg., Ch. 1074 (H.B. 1572), Sec. 1, eff. September 1, 2005.

Redesignated from Insurance Code - Not Codified, Art/Sec 21.79H and amended by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 3B.020(a), eff. September 1, 2007.

Redesignated from Insurance Code - Not Codified, Art/Sec 21.79H and amended by Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 9.020(a), eff. September 1, 2007.

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES

CHAPTER 542A. CERTAIN CONSUMER ACTIONS RELATED TO CLAIMS FOR PROPERTY DAMAGE

Sec. 542A.001. DEFINITIONS. In this chapter:

(1) "Agent" means an employee, agent, representative, or adjuster who performs any act on behalf of an insurer.

(2) "Claim" means a first-party claim that:

(A) is made by an insured under an insurance policy providing coverage for real property or improvements to real property;

(B) must be paid by the insurer directly to the insured; and

(C) arises from damage to or loss of covered property caused, wholly or partly, by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm.

(3) "Claimant" means a person making a claim.

(4) "Insurer" means a corporation, association, partnership, or individual, other than the Texas Windstorm Insurance Association, engaged as a principal in the business of insurance and authorized or eligible to write property insurance in this state, including:

(A) an insurance company;

(B) a reciprocal or interinsurance exchange;

(C) a mutual insurance company;

(D) a capital stock insurance company;

(E) a county mutual insurance company;

(F) a farm mutual insurance company;

(G) a Lloyd's plan;

(H) an eligible surplus lines insurer; or

(I) the FAIR Plan Association, unless a claim-related dispute resolution procedure is available to policyholders under Chapter 2211.

(5) "Person" means a corporation, association, partnership, or other legal entity or individual.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

Sec. 542A.002. APPLICABILITY OF CHAPTER. (a) Except as provided by Subsection (b), this chapter applies to an action on a claim against an insurer or agent, including:

(1) an action alleging a breach of contract;

(2) an action alleging negligence, misrepresentation, fraud, or breach of a common law duty; or

(3) an action brought under:

(A) Subchapter D, Chapter 541;

(B) Subchapter B, Chapter 542; or

(C) Subchapter E, Chapter 17, Business & Commerce Code.

(b) This chapter does not apply to an action against the Texas Windstorm Insurance Association or to an action relating to or arising from a policy ceded to an insurer by the Texas Windstorm Insurance Association under Subchapter O, Chapter 2210. This chapter applies to an action that relates to or arises from a policy renewed under Section 2210.703.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

Sec. 542A.003. NOTICE REQUIRED. (a) In addition to any other notice required by law or the applicable insurance policy, not later than the 61st day before the date a claimant files an action to which this chapter applies in which the claimant seeks damages from any person, the claimant must give written notice to the person in accordance with this section as a prerequisite to filing the action.

(b) The notice required under this section must provide:

(1) a statement of the acts or omissions giving rise to the claim;

(2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and

(3) the amount of reasonable and necessary attorney's fees incurred by the claimant, calculated by multiplying the number of hours actually worked by the claimant's attorney, as of the date the notice is given and as reflected in contemporaneously kept time records, by an hourly rate that is customary for similar legal services.

(c) If an attorney or other representative gives the notice required under this section on behalf of a claimant, the attorney or representative shall:

(1) provide a copy of the notice to the claimant; and

(2) include in the notice a statement that a copy of the notice was provided to the claimant.

(d) A presuit notice under Subsection (a) is not required if giving notice is impracticable because:

(1) the claimant has a reasonable basis for believing there is insufficient time to give the presuit notice before the limitations period will expire; or

(2) the action is asserted as a counterclaim.

(e) To ensure that a claimant is not prejudiced by having given the presuit notice required by this chapter, a court shall dismiss without prejudice an action relating to the claim for which notice is given by the claimant and commenced:

(1) before the 61st day after the date the claimant provides presuit notice under Subsection (a);

(2) by a person to whom presuit notice is given under Subsection (a); and

(3) against the claimant giving the notice.

(f) A claimant who gives notice in accordance with this chapter is not relieved of the obligation to give notice under any other applicable law. Notice given under this chapter may be combined with notice given under any other law.

(g) Notice given under this chapter is admissible in evidence in a civil action or alternative dispute resolution proceeding relating to the claim for which the notice is given.

(h) The giving of a notice under this chapter does not provide a basis for limiting the evidence of attorney's fees, damage, or loss a claimant may offer at trial.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

Sec. 542A.004. INSPECTION. Not later than the 30th day after receiving a presuit notice given under Section 542A.003(a), a person to whom notice is given may send a written request to the claimant to inspect, photograph, or evaluate, in a reasonable manner and at a reasonable time, the property that is the subject of the claim. If reasonably possible, the inspection, photography, and evaluation must be completed not later than the 60th day after the date the person receives the presuit notice.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

Sec. 542A.005. ABATEMENT. (a) In addition to taking any other act allowed by contract or by any other law, a person against whom an action to which this chapter applies is pending may file a plea in abatement not later than the 30th day after the date the person files an original answer in the court in which the action is pending if the person:

(1) did not receive a presuit notice complying with Section 542A.003; or

(2) requested under Section 542A.004 but was not provided a reasonable opportunity to inspect, photograph, or evaluate the property that is the subject of the claim.

(b) The court shall abate the action if the court finds that the person filing the plea in abatement:

(1) did not, for any reason, receive a presuit notice complying with Section 542A.003; or

(2) requested under Section 542A.004 but was not provided a reasonable opportunity to inspect, photograph, or evaluate the property that is the subject of the claim.

(c) An action is automatically abated without a court order beginning on the 11th day after the date a plea in abatement is filed if the plea:

(1) is verified and alleges that the person against whom the action is pending:

(A) did not receive a presuit notice complying with Section 542A.003; or

(B) requested under Section 542A.004 but was not provided a reasonable opportunity to inspect, photograph, or evaluate the property that is the subject of the claim; and

(2) is not controverted by an affidavit filed by the claimant before the 11th day after the date the plea in abatement is filed.

(d) An affidavit described by Subsection (c)(2) controverting whether the person against whom the action is pending received a presuit notice complying with Section 542A.003 must:

(1) include as an attachment a copy of the document the claimant sent to give notice of the claimant's action; and

(2) state the date on which the notice was given.

(e) An abatement under this section continues until the later of:

(1) the 60th day after the date a notice complying with Section 542A.003 is given; or

(2) the 15th day after the date of the requested inspection, photographing, or evaluating of the property is completed.

(f) If an action is abated under this section, a court may not compel participation in an alternative dispute resolution proceeding until after the abatement period provided by Subsection (e) has expired.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

Sec. 542A.006. ACTION AGAINST AGENT; INSURER ELECTION OF LEGAL RESPONSIBILITY. (a) Except as provided by Subsection (h), in an action to which this chapter applies, an insurer that is a party to the action may elect to accept whatever liability an agent might have to the claimant for the agent's acts or omissions related to the claim by providing written notice to the claimant.

(b) If an insurer makes an election under Subsection (a) before a claimant files an action to which this chapter applies, no cause of action exists against the agent related to the claimant's claim, and, if the claimant files an action against the agent, the court shall dismiss that action with prejudice.

(c) If a claimant files an action to which this chapter applies against an agent and the insurer thereafter makes an election under Subsection (a) with respect to the agent, the court shall dismiss the action against the agent with prejudice.

(d) If an insurer makes an election under Subsection (a) but, after having been served with a notice of intent to take a deposition of the agent who is the subject of the election, fails to make that agent available at a reasonable time and place to give deposition testimony, Sections 542A.007(a), (b), and (c) do not apply to the action with respect to which the insurer made the election unless the court finds that:

(1) it is impracticable for the insurer to make the agent available due to a change in circumstances arising after the insurer made the election under Subsection (a);

(2) the agent whose liability was assumed would not have been a proper party to the action; or

(3) obtaining the agent's deposition testimony is not warranted under the law.

(e) An insurer's election under Subsection (a) is ineffective to obtain the dismissal of an action against an agent if the insurer's election is conditioned in a way that will result in the insurer avoiding liability for any claim-related damage caused to the claimant by the agent's acts or omissions.

(f) An insurer may not revoke, and a court may not nullify, an insurer's election under Subsection (a).

(g) If an insurer makes an election under Subsection (a) and the agent is not a party to the action, evidence of the agent's acts or omissions may be offered at trial and, if supported by sufficient evidence, the trier of fact may be asked to resolve fact issues as if the agent were a defendant, and a judgment against the insurer must include any liability that would have been assessed against the agent. To the extent there is a conflict between this subsection and Chapter 33, Civil Practice and Remedies Code, this subsection prevails.

(h) If an insurer is in receivership at the time the claimant commences an action against the insurer, the insurer may not make an election under Subsection (a), and the court shall disregard any prior election made by the insurer relating to the claimant's claim.

(i) In an action tried by a jury, an insurer's election under Subsection (a) may not be made known to the jury.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

Sec. 542A.007. AWARD OF ATTORNEY'S FEES. (a) Except as otherwise provided by this section, the amount of attorney's fees that may be awarded to a claimant in an action to which this chapter applies is the lesser of:

(1) the amount of reasonable and necessary attorney's fees supported at trial by sufficient evidence and determined by the trier of fact to have been incurred by the claimant in bringing the action;

(2) the amount of attorney's fees that may be awarded to the claimant under other applicable law; or

(3) the amount calculated by:

(A) dividing the amount to be awarded in the judgment to the claimant for the claimant's claim under the insurance policy for damage to or loss of covered property by the amount alleged to be owed on the claim for that damage or loss in a notice given under this chapter; and

(B) multiplying the amount calculated under Paragraph (A) by the total amount of reasonable and necessary attorney's fees supported at trial by sufficient evidence and determined by the trier of fact to have been incurred by the claimant in bringing the action.

(b) Except as provided by Subsection (d), the court shall award to the claimant the full amount of reasonable and necessary attorney's fees supported at trial by sufficient evidence and determined by the trier of fact to have been incurred by the claimant in bringing the action if the amount calculated under Subsection (a)(3)(A) is:

(1) greater than or equal to 0.8;

(2) not limited by this section or another law; and

(3) otherwise recoverable under law.

(c) The court may not award attorney's fees to the claimant if the amount calculated under Subsection (a)(3)(A) is less than 0.2.

(d) If a defendant in an action to which this chapter applies pleads and proves that the defendant was entitled to but was not given a presuit notice stating the specific amount alleged to be owed by the insurer under Section 542A.003(b)(2) at least 61 days before the date the action was filed by the claimant, the court may not award to the claimant any attorney's fees incurred after the date the defendant files the pleading with the court. A pleading under this subsection must be filed not later than the 30th day after the date the defendant files an original answer in the court in which the action is pending.

Added by Acts 2017, 85th Leg., R.S., Ch. 151 (H.B. 1774), Sec. 3, eff. September 1, 2017.

545 S.W.3d 479

Supreme Court of Texas.

USAA TEXAS LLOYDS COMPANY, Petitioner,

v.

Gail MENCHACA, Respondent

No. 14–0721

|

Argued October 11, 2016

|

Opinion delivered: April 13, 2018

Synopsis

Background: Insured sued homeowners insurer to recover for breach of contract and unfair settlement practices in violation of Insurance Code in connection with claim for wind damage. Following jury finding that insurer did not breach policy, but did violate Insurance Code, the 9th District Court, Montgomery County, Fred Edwards, J., rendered judgment for insured. Insurer appealed. The Corpus Christi–Edinburg Court of Appeals, 2014 WL 3804602, affirmed as modified. Insurer petitioned for review.

Holdings: On rehearing, the Supreme Court, Boyd, J., held that:

an insurer’s violation of a duty to timely investigate a claim does not provide an exception to the general rule that an insured cannot recover policy benefits as actual damages for an insurer’s violation of the Insurance Code if the insured does not have a right to those benefits under the policy, abrogating Toonen v. United Servs. Auto Ass’n, 935 S.W.2d 937;

trial court could not disregard jury’s answer on insurer’s compliance with policy;

jury’s answers were in fatal conflict; and

remand was appropriate.

Reversed and remanded.

Hecht, C.J., concurred in part, concurred in judgment, and filed opinion.

Green, J., dissented and filed opinion joined in part by Hecht, C.J., and Guzman and Brown, JJ.

Blacklock, J., concurred in judgment.

Procedural Posture(s): Petition for Discretionary Review; Judgment.

*483 ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS

Attorneys and Law Firms

Wallace B. Jefferson, Rachel A. Ekery, Alexander Dubose, Jefferson & Townsend LLP, Mary Margaret Roark, Thomas R. Phillips, Baker Botts LLP, Austin TX, Charles T. Frazier Jr., Alexander Dubose, Jefferson & Townsend LLP, Dallas TX, Bruce E. Ramage, Martin Disiere Jefferson & Wisdom LLP, Christopher W. Martin, Levon G. Hovnatanian, Paul Wayne Pickering, Robert T. Owen, Martin Disiere Jefferson & Wisdom LLP, Tanya Dugas, Raley & Bowick, LLP, Houston TX, for Petitioner USAA Texas Lloyds Company.

Jennifer Bruch Hogan, James C. Marrow, Richard P. Hogan Jr., Hogan & Hogan, Pennzoil Place, John Steven Mostyn, The Mostyn Law Firm, Houston TX, Gilberto Hinojosa, Law Offices of Gilberto, Hinojosa & Associates, P.C., Brownsville TX, Randal G. Cashiola, Cashiola & Bean, Beaumont TX, for Respondent Menchaca, Gail.

Michael A. Choyke, Thomas C. Wright, Lisa Wright, Wright, Close & Barger, LLP, Houston TX, for Amicus Curiae, Lexington Insurance Company.

Brendan K. McBride, The McBride Law Firm, Marc E. Gravely, Matthew R. Pearson, Gravely & Pearson, LLP, San Antonio TX, for Amicus Curiae, Brass Real Estate Funds, Texas Automobile Dealers Association, Texas Independent Automobile Dealers Association, Texas Organization of Rural & Community, Hospitals.

Russell S. Post, Beck Redden LLP, Houston TX, for Amicus Curiae, Cameron, a Schlumberger Company.

Dale Wainwright, Kendyl Taylor Hanks, Greenberg Traurig, LLP, Austin TX, Lindsay E. Hagans, Houston TX, for Amicus Curiae, Chamber of Commerce of the United States of America.

Catherine L. Hanna, Hanna & Plaut LLP, Austin TX 7870, for Amicus Curiae, Insurance Council of Texas.

Hugh Rice Kelly, Texans for Lawsuit Reform, Houston TX, for Amicus Curiae, Texans for Lawsuit Reform.

Marc S. Tabolsky, Penelope E. Nicholson, Schiffer Odom Hicks & Johnson PLLC, Houston TX, for Amicus Curiae, United Policyholders.

Opinion

Justice Boyd announced the Court’s judgment and delivered the Court’s opinion as to Parts I, II, and III.A, in which Chief Justice Hecht, Justice Green, Justice Guzman, Justice Lehrmann, Justice Devine, and Justice Brown joined, a plurality opinion as to Parts III.B and III.C, in which Chief Justice Hecht, Justice Lehrmann, and Justice Devine joined, and an opinion as to Parts III.D, III.E, III.F, and III.G, in which Justice Lehrmann and Justice Devine joined.

*484 Having granted Petitioner’s motion for rehearing, we withdraw the judgment and opinion we issued on April 7, 2017. We unanimously reaffirm the legal principles and rules announced in that opinion, but we disagree on the procedural effect of those principles in this case. Because a majority of the Court agrees to reverse the court of appeals’ judgment and remand the case to the trial court for a new trial, our disposition remains the same.

In our first opinion, we sought to fulfill our duty to eliminate confusion regarding the Court’s previous decisions addressing insureds’ claims against their insurance companies. As presented in this case, the primary issue is whether the insured can recover policy benefits based on the insurer’s violation of the Texas Insurance Code even though the jury failed to find that the insurer failed to comply with its obligations under the policy. We sought to clarify the Court’s previous decisions by announcing five rules addressing the relationship between contract claims under an insurance policy and tort claims under the Insurance Code. We unanimously reaffirm those rules today and provide additional guidance in response to the parties’ arguments on rehearing. We also concluded in our first opinion that the trial court erred in this case by disregarding the jury’s answer to Question 1, in which the jury failed to find that the insurer failed to comply with its obligations under the policy. We unanimously reaffirm that holding as well.

In light of the parties’ understandable confusion regarding the Court’s previous decisions, we decided in our first opinion to remand the case for a new trial in the interest of justice without addressing the procedural effect of our holdings in this case. We address those issues today, but we reach three different conclusions. JUSTICE GREEN, JUSTICE GUZMAN, and JUSTICE BROWN conclude that the jury’s answer to Question 1 is dispositive as to the plaintiff’s *485 ability to recover damages for the Insurance Code violation the jury found in answer to Question 2, so they would render judgment for the insurer. See post at 532 (GREEN, J., dissenting). THE CHIEF JUSTICE, JUSTICE LEHRMANN, JUSTICE BOYD, and JUSTICE DEVINE conclude that the jury’s answer to Question 1 creates a fatal conflict with its answers to Questions 2 and 3. THE CHIEF JUSTICE concludes that we must remand the case for a new trial because we cannot resolve that conflict on appeal. See post at 522 (HECHT, C.J., concurring). JUSTICE LEHRMANN, JUSTICE BOYD, and JUSTICE DEVINE conclude that, because the conflicting answers do not present a fundamental error, the insurer waived the conflict by failing to raise it before the trial court discharged the jury. See TEX. R. CIV. P. 295. Nevertheless, because the parties lacked the benefit of the clarity we provide today, they conclude that we should remand the case for a new trial in the interest of justice. JUSTICE BLACKLOCK agrees with that disposition, although he does not join any opinion. With five votes (JUSTICE JOHNSON not participating), the Court remands the case for a new trial.

I.

Background

After Hurricane Ike struck Galveston Island in September 2008, Gail Menchaca contacted her homeowner’s insurance company, USAA Texas Lloyds, and reported that the storm had damaged her home. The adjuster USAA sent to investigate Menchaca’s claim found only minimal damage. Based on the adjuster’s findings, USAA determined that its policy covered some of the damage but declined to pay Menchaca any benefits because the total estimated repair costs did not exceed the policy’s deductible.¹ About five months later, at Menchaca’s request, USAA sent another adjuster to re-inspect the property. This adjuster generally confirmed the first adjuster’s findings, and USAA again refused to pay any policy benefits. Menchaca sued USAA for breach of the insurance policy and for unfair settlement practices in violation of the Texas Insurance Code.² As damages for both claims, she sought only insurance benefits under the policy, plus court costs and attorney’s fees.³

The parties tried the case to a jury. Question 1 of the jury charge, which addressed Menchaca’s breach-of-contract claim, asked whether USAA failed “to comply with the terms of the insurance policy with respect to the claim for damages filed by Gail Menchaca resulting from Hurricane Ike.” The jury answered “No.” Question 2, which addressed Menchaca’s *486 statutory claims, asked whether USAA engaged in various unfair or deceptive practices, including whether USAA refused “to pay a claim without conducting a reasonable investigation with respect to” that claim. As to that specific practice, the jury answered “Yes.”⁴ Question 3 asked the jury to determine the amount of Menchaca’s damages that resulted from either USAA’s failure to comply with the policy or its statutory violations, calculated as “the difference, if any, between the amount USAA should have paid Gail Menchaca for her Hurricane Ike damages and the amount that was actually paid.”⁵ The jury answered “$11,350.”⁶

Both parties moved for judgment in their favor based on the jury’s verdict. USAA argued that because the jury failed to find in answer to Question 1 that USAA failed to comply with the policy, Menchaca could not recover for “bad faith or extra-contractual liability as a matter of law.” Menchaca argued that the court should enter judgment in her favor based on the jury’s answers to Questions 2 and 3, neither of which required a “Yes” answer to Question 1. The trial court disregarded Question 1 and entered final judgment in Menchaca’s favor based on the jury’s answers to Questions 2 and 3. The court of appeals affirmed, 2014 WL 3804602⁷ and we granted USAA’s petition for review.

II.

Recovering Policy Benefits for Statutory Violations

The parties agree that the damages the jury found in response to Question 3 represent the amount of insurance policy benefits the jury concluded USAA “should have paid” to Menchaca. USAA contends that Menchaca cannot recover any amount of policy benefits because the jury failed to find that USAA breached its obligations under the policy. Although the jury did find that USAA violated the Insurance Code, USAA contends that Menchaca cannot recover policy benefits based on that *487 finding alone.⁸ USAA primarily relies on Provident American Insurance Co. v. Castañeda, in which we stated that an insurance company’s “failure to properly investigate a claim is not a basis for obtaining policy benefits.” 988 S.W.2d 189, 198 (Tex. 1998). Menchaca argues that the jury’s findings that USAA violated the Code and that the violation resulted in Menchaca’s loss of policy benefits USAA “should have paid” sufficiently support the award of policy benefits. Menchaca primarily relies on Vail v. Texas Farm Bureau Mutual Insurance Co., in which we stated that an insurer’s “unfair refusal to pay the insured’s claim causes damages as a matter of law in at least the amount of the policy benefits wrongfully withheld.” 754 S.W.2d 129, 136 (Tex. 1988).

Courts and commentators have expressed confusion over our decisions in this area, and over our statements in Castañeda and Vail in particular.⁹ The Fifth Circuit, for example, concluded that Castañeda and other “decisions from the Supreme Court of Texas and Texas’s intermediate appellate courts arguably cast doubt on Vail’s continued vitality.” *488 In re Deepwater Horizon, 807 F.3d 689, 698 (5th Cir. 2015). In the Deepwater Horizon panel’s view, the Fifth Circuit had previously interpreted Castañeda as setting out “the opposite rule from that in Vail.” Id. (citing Great Am. Ins. Co. v. AFS/IBEX Fin. Servs. Inc., 612 F.3d 800, 808 & n.1 (5th Cir. 2010) ).¹⁰ Today’s case presents an opportunity to provide clarity regarding the relationship between claims for an insurance-policy breach and Insurance Code violations. In light of the confusing nature of our precedent in this area, we begin by returning to the underlying governing principles. See, e.g., U.S. v. New Mexico, 455 U.S. 720, 733, 102 S.Ct. 1373, 71 L.Ed.2d 580 (1982) (concluding that “the confusing nature of our precedents counsels a return to the underlying constitutional principle”).

The first of these principles is that an “insurance policy is a contract” that establishes the respective rights and obligations to which an insurer and its insured have mutually agreed. RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015); see also Tex. Ass’n of Ctys. Cty. Gov’t Risk Mgmt. Pool v. Matagorda Cty., 52 S.W.3d 128, 131 (Tex. 2000) (noting that an “insurance policy ... defines the parties’ rights and obligations”). Generally, we construe a policy using the same rules that govern the construction of any other contract. See Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008) (citing Forbau v. Aetna Life Ins., Co., 876 S.W.2d 132, 133 (Tex. 1994) ). An insurance policy, however, is a unique type of contract because an insurer generally “has exclusive control over the evaluation, processing[,] and denial of claims,” and it can easily use that control to take advantage of its insured. Arnold v. Nat’l Cty. Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987). Because of this inherent “unequal bargaining power,” we concluded in Arnold that the “special relationship” between an insurer and insured justifies the imposition of a common-law duty on insurers to “deal fairly and in good faith with their insureds.” Id.

Similar to that common-law duty, the Insurance Code supplements the parties’ contractual rights and obligations by imposing procedural requirements that govern the manner in which insurers review and resolve an insured’s claim for policy benefits. See, e.g., TEX. INS. CODE § 541.060(a) (prohibiting insurers from engaging in a variety of “unfair settlement practices”). The Code grants insureds a private action against insurers that engage in certain discriminatory, unfair, deceptive, or bad-faith practices, and it permits insureds to recover “actual damages ... caused by” those practices, court costs, and attorney’s fees, plus treble damages if the insurer “knowingly” commits the prohibited act. Id. §§ 541.151, .152; Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 441 (Tex. 2012).¹¹

*489 “Actual damages” under the Insurance Code “are those damages recoverable at common law,” State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 435 (Tex. 1995) (citing Brown v. Am. Transfer & Storage Co., 601 S.W.2d 931, 939 (Tex. 1980) ), which include “benefit-of-the-bargain” damages representing “the difference between the value as represented and the value received,” Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 817 (Tex. 1997) (citing Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 373 (Tex. 1984) ). But the Code does not create insurance coverage or a right to payment of benefits that does not otherwise exist under the policy. See Lyons v. Millers Cas. Ins. Co. of Tex., 866 S.W.2d 597, 600 (Tex. 1993) (discussing the necessity of distinguishing bad-faith issues from “the contract issue of coverage”).

An insured’s claim for breach of an insurance contract is “distinct” and “independent” from claims that the insurer violated its extra-contractual common-law and statutory duties. See Liberty Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996) (“Insurance coverage claims and bad faith claims are by their nature independent.”); Twin City Fire Ins. Co. v. Davis, 904 S.W.2d 663, 666 (Tex. 1995) (noting that a bad-faith claim is “distinct” from a suit for breach of the policy); Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995) (“[A] policy claim is independent of a bad faith claim.”). A claim for breach of the policy is a “contract cause of action,” while a common-law or statutory bad-faith claim “is a cause of action that sounds in tort.” Twin City, 904 S.W.2d at 666; see also Viles v. Sec. Nat’l Ins. Co., 788 S.W.2d 566, 567 (Tex. 1990) (“[A] breach of the duty of good faith and fair dealing will give rise to a cause of action in tort that is separate from any cause of action for breach of the underlying insurance contract.”). But the claims are often “largely interwoven,” and the same evidence is often “admissible on both claims.” Akin, 927 S.W.2d at 630.

The primary question in this case is whether an insured can recover policy benefits as “actual damages” caused by an insurer’s statutory violation absent a finding that the insured had a contractual right to the benefits under the insurance policy. Generally, the answer to this question is “no,” but the issue is complicated and involves several related questions. In an effort to clarify these issues, we distill from our decisions five distinct but interrelated rules that govern the relationship between contractual and extra-contractual claims in the insurance context. First, as a general rule, an insured cannot recover policy benefits as damages for an insurer’s statutory violation if the policy does not provide the insured a right to receive those benefits. Second, an insured who establishes a right to receive benefits under the insurance policy can recover those benefits as actual damages under the Insurance Code if the insurer’s statutory violation causes the loss of the benefits. Third, even if the insured cannot establish a present contractual right to policy benefits, the insured can recover benefits as actual damages under the Insurance Code if the insurer’s statutory violation caused the insured to lose that contractual right. Fourth, if an insurer’s statutory violation causes an injury independent of the loss of policy benefits, the insured may recover damages for that injury even if the policy does not grant the insured a right to benefits. And fifth, an insured cannot recover any damages based on an insurer’s statutory violation if the insured had no right to receive benefits under the policy and sustained no injury independent of a right to benefits.

A. The General Rule

*490 The general rule is that an insured cannot recover policy benefits for an insurer’s statutory violation if the insured does not have a right to those benefits under the policy. This rule derives from the fact that the Insurance Code only allows an insured to recover actual damages “caused by” the insurer’s statutory violation. See TEX. INS. CODE § 541.151; Minn. Life Ins. Co. v. Vasquez, 192 S.W.3d 774, 780 (Tex. 2006). We first announced this rule in Stoker, 903 S.W.2d at 341. The insurer in Stoker relied on an invalid reason to deny the insureds’ claim for benefits but later asserted a valid basis for denying the claim. See id. at 339. The insureds sued the insurer for breach of contract and for bad-faith denial of the claim, seeking only policy benefits as damages. Id. at 339–40. The trial court granted summary judgment for the insurer on the breach-of-contract claim because the policy did not cover the claim. Id. at 339. The jury, however, found the insurer liable on the extra-contractual claims, and based on that finding, the trial court awarded policy benefits as “extra-contractual damages.” Id. at 339–40. The court of appeals affirmed, but we reversed and rendered judgment for the insurer. We explained that as “a general rule there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered.” Id. at 341.¹²

Some courts have read Stoker to hold that no claim for any kind of bad-faith conduct can exist if the policy does not cover the insured’s loss. But Stoker involved only a claim for bad-faith denial of the insureds’ claim for benefits. We clarified this point the following year in Akin: “While Stoker held that a judgment for the insurer on the coverage claim prohibits recovery premised only on bad faith denial of a claim, it does not necessarily bar all claims for bad faith.” 927 S.W.2d at 631 (citing Stoker, 903 S.W.2d at 342) (emphases added). Thus, a more accurate statement of the rule we announced in Stoker is that “there can be no claim for bad faith [denial of an insured’s claim for policy benefits] when an insurer has promptly denied a claim that is in fact not covered.” Stoker, 903 S.W.2d at 341.

Although Stoker involved only a bad-faith-denial claim, we have since applied *491 its general rule to other types of extra-contractual violations. In doing so, we have confirmed that the rule is based on the principle that an insured who sues an insurer for statutory violations can only recover damages “caused by” those violations. In Progressive County Mutual Insurance Co. v. Boyd, for example, the insured alleged that the insurer breached the policy and violated the Code and its common-law duty by failing to promptly pay his claim, failing to fairly investigate the claim, and denying the claim in bad faith. 177 S.W.3d 919, 920, 922 (Tex. 2005) (per curiam). Because these extra-contractual claims were “predicated on [the] insurance policy and the accident being covered under the insurance policy,” we held that the trial court’s take-nothing judgment on the contract claim “negate[d]” the extra-contractual claims. Id. at 920–21. Specifically addressing the statutory prompt-payment claim, we explained that there “can be no liability [under the Code] if the insurance claim is not covered by the policy.” Id. at 922. Similarly, in Chrysler Insurance Co. v. Greenspoint Dodge of Houston, Inc., we quoted Stoker’s general rule and held that, because the insurer “did not breach the insurance contract, no basis supports” the insured’s recovery of “punitive and extra-contractual damages.” 297 S.W.3d 248, 253–54 (Tex. 2009) (per curiam). And in State Farm Lloyds v. Page, we said, “When the issue of coverage is resolved in the insurer’s favor, extra-contractual claims do not survive,” and there is “no liability under [the Insurance Code] if there is no coverage under the policy.” 315 S.W.3d 525, 532 (Tex. 2010) (citing Boyd, 177 S.W.3d at 921). Most recently, in JAW the Pointe, L.L.C. v. Lexington Insurance Co., we relied on Stoker for the proposition that when an insurance policy does not cover the insured’s claim for benefits, “the insured cannot recover for the insurer’s bad faith failure to effectuate a prompt and fair settlement of the claim.” 460 S.W.3d 597, 599, 602 (Tex. 2015).

In the present case, the jury found that USAA violated the Code by denying the claim without conducting a reasonable investigation. See TEX. INS. CODE § 541.060(a)(7) (providing that an insurer that “refus[es] to pay a claim without conducting a reasonable investigation with respect to the claim” commits an unfair settlement practice). In our early decisions, we mentioned this type of statutory violation but did not specifically address whether the general rule applies to such a claim. In Stoker, we expressly stated that the general rule should not “be understood as retreating from the established principles regarding the duty of an insurer to timely investigate its insureds’ claims.” 903 S.W.2d at 341. But we did not cite any authority for those “established principles.” Instead, we merely noted, “These circumstances are not present in this case.” Id.¹³ That same year, we noted in Twin City that “some acts of bad faith, such as a failure to properly investigate a claim or an unjustifiable delay in processing a claim, do not necessarily relate to the insurer’s breach of its contractual duties to pay covered claims, and may give rise to different damages.” 904 S.W.2d at 666 n.3 (emphases added). The following year, we noted in Akin that the insured alleged that the insurer violated its statutory duties by failing to “properly investigate” *492 the claim, 927 S.W.2d at 629, and we explained that the general rule “does not necessarily bar all claims for bad faith,” id. at 631 (citing Stoker, 903 S.W.2d at 342), but we did not specifically address whether the general rule applies to an improper-investigation claim.

We did address something akin to an improper-investigation claim, however, in Castañeda. The insured in that case sued her insurer alleging statutory violations “arising out of the denial of her claim for benefits under a health insurance policy and the manner in which her claim was handled.” 988 S.W.2d at 191. But she did not assert a claim for breach of contract or seek a finding that the policy covered her claim. Id. at 196, 201. Instead, she argued that she was entitled to recover damages “equivalent to policy benefits” based on the jury’s finding that the insurer violated the statute by failing to acknowledge communications about the claim and by failing “to adopt reasonable standards for investigating claims.” Id. at 198 (emphasis added). We found no evidence that the insurer violated the statute in either manner. Id. at 192. We also explained that, even if there had been evidence of a violation, a “failure to properly investigate a claim is not a basis for obtaining policy benefits.” Id. at 198 (citing Stoker, 903 S.W.2d at 341). We ultimately rendered judgment for the insurer because “no support in the evidence for any of the extra-contractual claims” existed and because the insured “did not plead and did not obtain a determination [that the insurer] was liable for breach of the insurance contract.” Id. at 201. We held similarly in Boyd, 177 S.W.3d at 922. Because the claim there was predicated on the accident being covered under the insurance policy, when the trial court granted a take-nothing judgment on the insured’s breach-of-contract claim, the insured’s failure-to-fairly-investigate claim failed as well. Id. at 920–21; see also In re Allstate Cty. Mut. Ins. Co., 447 S.W.3d 497, 501 (Tex. App.—Houston [1st Dist.] 2014, orig. proceeding) (citing Boyd for the proposition that an “insurer generally cannot be liable for failing to settle or investigate a claim that it has no contractual duty to pay”).

Here, Menchaca contends that she can recover policy benefits as damages resulting from USAA’s statutory violation because that claim is independent from her claim for policy breach. The court of appeals agreed, reasoning that the statute “imposes a duty on an insurer, above and beyond the duties established by the insurance policy itself, to conduct a reasonable investigation prior to denying a claim,” and thus “USAA could have fully complied with the contract even if it failed to reasonably investigate Menchaca’s claim.” 2014 WL 3804602. While we agree with the court’s premise that USAA could have complied with the policy even if it failed to reasonably investigate the claim, we reject its conclusion just as we expressly rejected it in Stoker. Although we accepted the argument’s premise that “a policy claim is independent of a bad faith claim,” we found that the “asserted conclusion ... does not necessarily follow,” at least when the claim seeks benefits “not covered by the policy.” Stoker, 903 S.W.2d at 340–41.

The reason we reject Menchaca’s independent-claims argument—indeed, the very reason for the general rule—derives from the fact that the Insurance Code only allows an insured to recover actual damages “caused by” the insurer’s statutory violation. TEX. INS. CODE § 541.151. “Actual damages” are the common-law damages the insured sustains “as a result of” the statutory violation. Kish v. Van Note, 692 S.W.2d 463, 466 (Tex. 1985) (citing Smith v. Baldwin, 611 S.W.2d 611, 617 (Tex. 1980) ). If the insurer violates a statutory provision, that violation—at least generally *493 ¹⁴—cannot cause damages in the form of policy benefits that the insured has no right to receive under the policy. We acknowledged this reasoning in Castañeda, noting that the “concurring Justices in Stoker agreed that the manner in which a claim is investigated must be the proximate cause of damages before there could be a recovery.” 988 S.W.2d at 198 (citing Stoker, 903 S.W.2d at 345 (Spector, J., concurring) ).¹⁵ We held that, in the absence of a finding that the insurer had breached the policy, the insured could not recover any damages because none of the insurer’s alleged statutory violations “was the producing cause of any damage separate and apart from those that would have resulted from a wrongful denial of the claim.” Id. Because the insured only sought damages that “flow[ed]” and “stemmed from the denial of benefits,” id. at 198, 199, she could not recover anything because she “did not plead and did not obtain a determination [that the insurer] was liable for breach of the insurance contract.” Id. at 201.¹⁶

Relying on these decisions, USAA contends that the general rule applies here and Menchaca cannot recover policy benefits based on a statutory violation because the jury failed to find that USAA “breached” the insurance contract. In response, Menchaca argues that she can avoid the general rule by obtaining a finding that the policy “covers” her losses, and she did not have to obtain a finding that USAA “breached” the policy to recover under the statute. Our precedent is confusing on this point because we have actually used both phrases to describe the general rule. See, e.g., JAW the Pointe, 460 S.W.3d at 599 (holding that insured could not recover benefits as statutory damages because “the policy did not cover the insured’s losses”) (emphasis added); Page, 315 S.W.3d at 532 (“There can be no liability under [the Insurance Code] if there is no coverage under the policy.”) (emphasis added); Chrysler, 297 S.W.3d at 254 (holding that insured could not recover extra-contractual damages because the insurer “did not breach the insurance contract”) (emphasis added); Boyd, 177 S.W.3d at 920–21 (concluding that a take-nothing judgment on a breach-of-contract claim negated recovery of benefits as statutory damages); Castañeda, 988 S.W.2d at 201 (holding that insured could not recover statutory damages “equivalent to policy benefits” because she did not plead or establish that the insurer “was liable for  *494 breach of the insurance contract”) (emphasis added); Stoker, 903 S.W.2d at 341 (“[T]here can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered.”) (emphasis added).

In at least a general sense, no relevant distinction exists between “breach” and “coverage” in this context because no breach can occur unless coverage exists, and a breach necessarily occurs if coverage exists and the insurer fails to pay the amount covered. If the policy does not cover the insured’s loss, the insurer does not breach the policy by failing to pay benefits for that loss because the insured is not entitled to those benefits. Conversely, if the policy does cover the loss,¹⁷ the insurer necessarily breaches the policy if it fails to pay benefits for the loss because the insured is entitled to those benefits.

In a more specific sense, however, an important distinction does exist, at least to the extent the term “breach” is used to refer specifically to a breach-of-contract claim. Here, for example, USAA contends that, even if its policy covered Menchaca’s loss, Menchaca could not recover policy benefits unless she prevailed on her breach-of-contract claim under Question 1. According to USAA, in other words, an insured can only recover policy benefits as damages on a breach-of-contract claim and can never recover policy benefits as damages on a statutory-violation claim.

We disagree. Although our prior decisions refer interchangeably to both “breach” and “coverage,” our focus in those cases was on whether the insured was entitled to benefits under the policy, because an insurer’s statutory violation cannot “cause” the insured to suffer the loss of benefits unless the insured was entitled to those benefits. But if the insured was entitled to the benefits and the insurer’s statutory violation caused the insured to lose those benefits, the statute authorizes the insured to recover those benefits as “actual damages ... caused by” the statutory violation, even if the insured does not submit a separate breach-of-contract claim. TEX. INS. CODE § 541.151. Thus, although we have referred to both “breach” and “coverage,” what matters for purposes of causation under the statute is whether the insured was entitled to receive benefits under the policy. While an insured cannot recover policy benefits for a statutory violation unless the jury finds that the insured had a right to the benefits under the policy, the insured does not also have to prevail on a separate breach-of-contract claim based on the insurer’s failure to pay those benefits. As we explain further in the following sections, if the jury finds that the policy entitles the insured to receive the benefits and that the insurer’s statutory violation resulted in the insured not receiving those benefits, the insured can recover the benefits as “actual damages ... caused by” the statutory violation. See id.

Nevertheless, an insurer’s obligation to pay policy benefits and the insured’s right to receive them derive solely from the insurance policy’s terms: “If the loss is *495 covered, then the insurer is obligated to pay the claim according to the terms of the insurance contract.” Moriel, 879 S.W.2d at 17. Because an insurer’s statutory violation permits an insured to receive only those “actual damages” that are “caused by” the violation, we clarify and affirm the general rule that an insured cannot recover policy benefits as actual damages for an insurer’s statutory violation if the insured has no right to those benefits under the policy.

B. The Entitled-to-Benefits Rule

The second rule from our precedent is that an insured who establishes a right to receive benefits under an insurance policy can recover those benefits as “actual damages” under the statute if the insurer’s statutory violation causes the loss of the benefits. This rule, a logical corollary to the general rule, is what we recognized in Vail. The insureds in Vail sued their insurer for common-law bad faith and statutory violations (but not for breach of contract), alleging a “bad faith failure to pay the claim” and seeking “the full amount” of policy benefits plus statutory damages. 754 S.W.2d at 130. The jury found that the insurer violated the statute by failing to “attempt[ ] in good faith to effectuate a prompt, fair, and equitable settlement” when “liability had become reasonably clear,” and breached its common-law duty of good faith and fair dealing by failing “to exercise good faith in the investigation and processing of the claim.” Id. at 134. Based on these findings, the trial court awarded benefits in the amount of the “full policy limit” plus treble that amount, attorney’s fees, and prejudgment interest. Id. at 131.

The insurer argued that the insureds could not recover policy benefits as damages for statutory violations because “the amount due under the policy solely represents damages for breach of contract and does not constitute actual damages in relation to a claim of unfair claims settlement practices.” Id. at 136. We rejected that argument and held that “an insurer’s unfair refusal to pay the insured’s claim causes damages as a matter of law in at least the amount of the policy benefits wrongfully withheld.” Id. We explained that the insureds “suffered a loss ... for which they were entitled to make a claim under the insurance policy,” and that loss was “transformed into a legal damage” when the insurer “wrongfully denied the claim.” Id. “That damage,” we held, “is, at minimum, the amount of policy proceeds wrongfully withheld by” the insurer. Id. Because the Insurance Code provides that the statutory remedies are cumulative of other remedies, we concluded that the insureds could elect to recover the benefits under the statute even though they also could have asserted a breach-of-contract claim. Id.

USAA contends, and some Texas courts have concluded, that we later rejected the Vail rule in Castañeda and Stoker, and thus an insured can never recover policy benefits as actual damages for statutory or common-law bad-faith violations. See, e.g., Mai v. Farmers Tex. Cty. Mut. Ins. Co., No. 14-07-00958-CV, 2009 WL 1311848, at *6 (Tex. App.—Houston [14th Dist.] May 7, 2009, pet. denied) (mem. op.) (“This position, that expected policy benefits can equate to bad faith damages, has been firmly rejected by the Texas Supreme Court.”). The Fifth Circuit reached the same conclusion in Parkans International, LLC v. Zurich Insurance Co., holding that, in light of Castañeda, there “can be no recovery for extra-contractual damages for mishandling claims unless the complained of actions or omissions caused injury independent of those that would have resulted from a wrongful denial of policy benefits.” 299 F.3d 514, 519 (5th Cir. 2002). The Fifth Circuit later relied on Parkans *496 to reject an insured’s argument that “it did not need to prove a separate injury in order to maintain its extra-contractual claims” because the insurer’s “denial of insurance proceeds, standing alone, entitled it to recover on its extra-contractual claims.” Great Am. Ins. Co., 612 F.3d at 808 n.1.¹⁸

We did not reject the Vail rule in Stoker or in Castañeda. While we could have made the point more clearly, the distinction between the cases is that the parties in Vail did not dispute the insured’s entitlement to the policy benefits, and the only issue was whether the insured could recover those benefits as actual damages caused by a statutory violation. Vail, 754 S.W.2d at 136. The rule we announced in Vail was premised on the fact that the policy undisputedly covered the loss in that case, and the insurer therefore “wrongfully denied” a “valid claim.” Id. at 136–37 (emphases added).¹⁹ If an insurer’s wrongful denial of a valid claim for benefits results from or constitutes a statutory violation, the resulting damages will necessarily include “at least the amount of the policy benefits wrongfully withheld.” Id. at 136. We confirmed this reading of Vail and reaffirmed the general rule in Twin City, 904 S.W.2d at 666. There, we explained that “Vail was only concerned with the insurer’s argument that policy benefits improperly withheld were not ‘actual damages in relation to a claim of unfair claims settlement practices.’ ” Id. (emphasis added) (quoting Vail, 754 S.W.2d at 136). We further explained that the Court rejected the insurer’s argument in Vail because “policy benefits wrongfully withheld were indeed actual damages” under the statute. Id. (emphasis added).

By contrast, in Castañeda, the insured did not establish and the insurer did not concede that the insured had a right to benefits under the policy. To the contrary, the insured “never sought and did not receive any contractual relief,” Castañeda, 988 S.W.2d at 196, and never even alleged that the insurer “was liable for breach of the insurance contract,” id. at 201. Instead, *497 she sought only to recover damages “equivalent to policy benefits” based solely on her statutory claims that the insurer failed to acknowledge communications about her claim and failed to “adopt reasonable standards for investigating claims.” Id. at 198 (emphasis added). We expressly refused to provide any opinion on “whether there was contractual coverage.” Id. at 196. We first addressed whether any evidence existed that the insurer violated the statute or its common-law duties, and in deciding that issue we concluded that, even assuming that there was coverage, the mere existence of coverage would not prove that the insurer violated the statute or its common-law duties by denying the claim. Id. at 196–97. We made no such assumption, however, when we later addressed the insured’s separate argument regarding “the damages that might be recoverable if an insurer failed to adequately investigate a claim.” Id. at 198. On that issue, we held that an insurer’s “failure to properly investigate a claim is not a basis for obtaining policy benefits,” but we did not assume that coverage existed when deciding that separate issue. Id. Instead, we relied on the fact that the insured “did not plead and did not obtain a determination [that the insurer] was liable for breach of the insurance contract.” Id. at 198, 201.

In short, Stoker and Castañeda stand for the general rule that an insured cannot recover policy benefits as damages for an insurer’s extra-contractual violation if the policy does not provide the insured a right to those benefits. Vail announced a corollary rule: an insured who establishes a right to benefits under the policy can recover those benefits as actual damages resulting from a statutory violation. We clarify and affirm both of these rules today.

C. The Benefits–Lost Rule

A third rule that our precedent recognizes is that an insured can recover benefits as actual damages under the Insurance Code even if the insured has no right to those benefits under the policy, if the insurer’s conduct caused the insured to lose that contractual right. We have recognized this principle in the context of claims alleging that an insurer misrepresented a policy’s coverage, waived its right to deny coverage or is estopped from doing so, or committed a violation that caused the insured to lose a contractual right to benefits that it otherwise would have had. In each of these contexts, the insured can recover the benefits even though it has no contractual right to recover them because the benefits are actual damages “caused by” the insurer’s statutory violation.

In the first context, we have recognized that an insurer that violates the statute by misrepresenting that its policy provides coverage that it does not in fact provide can be liable under the statute for such benefits if the insured is “adversely affected” or injured by its reliance on the misrepresentation. See Royal Globe Ins. Co. v. Bar Consultants, Inc., 577 S.W.2d 688, 694 (Tex. 1979).²⁰ Although the policy does not give the insured a contractual right to receive the benefits, the insurer’s misrepresentation of the policy’s coverage constitutes a statutory violation that causes actual damages in the amount of the benefits that the insured reasonably believed she was entitled to receive. Id. When, for example, a health insurer’s *498 agent represented that a policy “offered full coverage without qualification” for preexisting medical conditions, and the insured reasonably relied on that representation, the insured could recover the full coverage even though the policy actually limited such coverage to a specific maximum amount. Kennedy v. Sale, 689 S.W.2d 890, 891–92 (Tex. 1985); see also Tapatio Springs Builders Inc. v. Md. Cas. Ins. Co., 82 F.Supp.2d 633, 647 (W.D. Tex. 1999) (“A misrepresentation claim is independent, and may exist in the absence of coverage. To allege a misrepresentation claim under the DTPA, a plaintiff must plead a misrepresentation that caused actual damages.”) (citing TEX. BUS. & COM. CODE § 17.50(a); Castañeda, 988 S.W.2d at 199–200); In re Allstate Cty. Mut. Ins. Co., 447 S.W.3d 497, 502 (Tex. App.—Houston [1st Dist.] 2014, orig. proceeding) (“[M]isrepresentation claims ... are not dependent upon a determination that [the insurer] has a contractual duty to pay ... benefits to the [insureds], and will not be rendered moot if [the insurer] prevails on the breach of contract claim.”) (citing TEX. BUS. & COM. CODE § 17.46(b)(5), (12); TEX. INS. CODE § 541.061(3)–(5) ).

The second context in which the benefits-lost rule might apply involves claims based on waiver and estoppel. We have explained that waiver and estoppel cannot be used to re-write a policy so that it provides coverage it did not originally provide. Ulico, 262 S.W.3d at 775. But if the insurer’s statutory violations prejudice the insured, the insurer may be estopped “from denying benefits that would be payable under its policy as if the risk had been covered.” Id. Under such circumstances, the insured may recover “any damages it sustains because of the insurer’s actions,” even though the policy does not cover the loss. Id. at 787.

Finally, the benefits-lost rule may apply when the insurer’s statutory violation actually caused the policy not to cover losses that it otherwise would have covered. See, e.g., JAW the Pointe, 460 S.W.3d at 602. The insured in JAW the Pointe sought policy benefits to cover its costs to demolish and rebuild an apartment complex that sustained significant damage from Hurricane Ike. See id. at 599. The primary insurance policy covered three hundred otherwise unrelated apartment complexes but limited the total coverage to $25 million per occurrence. Id. When the insurer denied the insured’s claim for some of the losses, the insured filed suit asserting claims for both breach of contract and statutory violations. Id. at 601. As the parties continued efforts to resolve their dispute, the insurer continued paying claims filed by the other covered apartment complexes until the insurer reached the policy’s $25 million limit. Id. The insurer then filed for summary judgment on the insured’s contract claim, arguing that it no longer had a contractual duty to cover the losses because it had paid the policy limits. Id. at 600. The insured did not oppose the motion and the trial court granted it, leaving only the statutory claims for trial. Id. A jury found that the insurer had violated the statute, and based on those violations the trial court awarded the insured both actual damages in the form of the policy benefits and additional statutory damages based on the insurer’s “bad faith” statutory violations. Id. at 601–02.

The insurer appealed, arguing that the insured could not recover policy benefits or statutory damages because the policy did not cover the insured’s losses. See id. at 602. But instead of relying on the policy limits to defeat coverage, the insurer argued that the policy never covered the losses even before the insurer paid the limits because a policy exclusion *499 applied and negated any coverage. See id. We acknowledged that as “a general rule there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered.” Id. (quoting Stoker, 903 S.W.2d at 341) (internal quotation marks omitted). But we also noted that the insured argued that “the policy covered [the insured’s losses] and [the insurer] should have paid those costs before it made other payments that exhausted the policy limits.” Id. In other words, the insured argued that, although it could no longer prevail on its breach-of-contract claim because the insurer had paid its policy limits, the insurer’s statutory violations caused the insured to lose its contractual right to the policy benefits by delaying the payments until after the limits had been reached. We accepted this argument, but ultimately concluded that the insured was never entitled to the policy benefits because the exclusion negated any coverage under the policy. Because the policy “excluded coverage for [the insured’s] losses, [the insured] cannot recover against [the insurer] on its statutory bad-faith claims.” Id. at 610. Put simply, an insurer that commits a statutory violation that eliminates or reduces its contractual obligations cannot then avail itself of the general rule.

D. The Independent–Injury Rule

The fourth rule from our precedent derives from the fact that an insurer’s extra-contractual liability is “distinct” from its liability for benefits under the insurance policy. See Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 214 (Tex. 1988), overruled on other grounds by Ruttiger, 381 S.W.3d at 441. In Stoker, after we announced the general rule that “there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered,” we explained that we were not excluding “the possibility that in denying the claim, the insurer may commit some act, so extreme, that would cause injury independent of the policy claim.” 903 S.W.2d at 341 (citing Aranda, 748 S.W.2d at 214).

There are two aspects to this independent-injury rule. The first is that, if an insurer’s statutory violation causes an injury independent of the insured’s right to recover policy benefits, the insured may recover damages for that injury even if the policy does not entitle the insured to receive benefits. Id. We recognized this in Twin City, explaining that some extra-contractual claims may not “relate to the insurer’s breach of contractual duties to pay covered claims” and may thus “give rise to different damages.” 904 S.W.2d at 666 n.3. If such damages result from an independent injury “caused by” the insurer’s statutory violation, the insured can recover those damages, just as insureds have always been able to recover “compensatory damages for the tort of bad faith” under the common law. Moriel, 879 S.W.2d at 17. Thus, an insured can recover actual damages caused by the insurer’s bad-faith conduct if the damages “are separate from and ... differ from benefits under the contract.” Twin City, 904 S.W.2d at 666 (identifying mental anguish damages as an example). We reaffirmed this aspect of the independent-injury rule in Castañeda, recognizing that “there might be liability for damage to the insured other than policy benefits or damages flowing from the denial of the claim if the insured mishandled a claim.” 988 S.W.2d at 198. We concluded that the insured could not recover anything in that case, however, because “none of the [insurer’s] actions or inactions ... was the producing cause of any damage separate and apart from those that would have resulted from a wrongful denial of the claim.” Id.

This aspect of the independent-injury rule applies, however, only if the  *500 damages are truly independent of the insured’s right to receive policy benefits. It does not apply if the insured’s statutory or extra-contractual claims “are predicated on [the loss] being covered under the insurance policy,” Boyd, 177 S.W.3d at 920, or if the damages “flow” or “stem” from the denial of the claim for policy benefits, see Castañeda, 988 S.W.2d at 198–99. When an insured seeks to recover damages that “are predicated on,” “flow from,” or “stem from” policy benefits, the general rule applies and precludes recovery unless the policy entitles the insured to those benefits. See Boyd, 177 S.W.3d at 920–22 (concluding that insured’s common-law conversion claim, common-law bad-faith claim, and statutory claims were all “negated” because policy did not cover underlying losses and insured did “not allege that he suffered any damages unrelated to and independent of the policy claim”); Castañeda, 988 S.W.2d at 199 (holding that insured could not recover damages for loss of credit reputation because any such loss “stemmed from the denial of benefits” that were not owed under the policy).

The second aspect of the independent-injury rule is that an insurer’s statutory violation does not permit the insured to recover any damages beyond policy benefits unless the violation causes an injury that is independent from the loss of the benefits. Thus, we held in Twin City that an insured who prevails on a statutory claim cannot recover punitive damages for bad-faith conduct in the absence of independent actual damages arising from that conduct. 904 S.W.2d at 666; see also Powell Elec. Sys., Inc. v. Nat’l Union Fire Ins. Co., 2011 WL 3813278, at *9 (S.D. Tex. Aug. 29, 2011) (granting summary judgment for the insured on its breach-of-contract claim but for the insurer on common-law and statutory bad-faith claims because the insured “failed to allege damage independent of the damages arising from the underlying breach of the insurance contract”).

Our reference in Stoker to “the possibility” that a statutory violation could cause an independent injury suggested that a successful independent-injury claim would be rare, and we in fact have yet to encounter one. See, e.g., Mid–Continent Cas. Co. v. Eland Energy, Inc., 709 F.3d 515, 521–22 (5th Cir. 2013) (“The Stoker language has frequently been discussed, but in seventeen years since the decision appeared, no Texas court has yet held that recovery is available for an insurer’s extreme act, causing injury independent of the policy claim ....”). This is likely because the Insurance Code offers procedural protections against misconduct likely to lead to an improper denial of benefits and little else. See, e.g., TEX. INS. CODE § 541.060 (prohibiting an insurer from “requiring a claimant as a condition of settling a claim to produce the claimant’s federal income tax returns”). We have further limited the natural range of injury by insisting that an injury is not “independent” from the insured’s right to receive policy benefits if the injury “flows” or “stems” from the denial of that right. See Castañeda, 988 S.W.2d at 199. Today, although we reiterate our statement in Stoker that such a claim could exist, we have no occasion to speculate what would constitute a recoverable independent injury.

E. The No–Recovery Rule

The fifth and final rule is simply the natural corollary to the first four rules: An insured cannot recover any damages based on an insurer’s statutory violation unless the insured establishes a right to receive benefits under the policy or an injury independent of a right to benefits. Castañeda, 988 S.W.2d at 198; see also *501 Lundstrom v. United Servs. Auto. Ass’n–CIC, 192 S.W.3d 78, 96 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (rendering judgment for insurer because policy did not cover claim and insureds “have not alleged any act so extreme as to cause an injury independent of [the insurer’s] denial of their policy claim”); Bailey v. Progressive Cty. Mut. Ins. Co., No. 05-01-00822-CV, 2004 WL 1193917, at *1 (Tex. App.—Dallas June 1, 2004, no pet.) (mem. op., not designated for publication) (rendering judgment against insureds because policy did not cover claim and insureds demonstrated no “independent injury arising from” statutory violations); see also Alaniz v. Sirius Int’l Ins. Corp., 626 Fed.Appx. 73, 79 (5th Cir. 2015) (per curiam) (citing Boyd, 177 S.W.3d at 922) (affirming summary judgment for insurer on all claims because no coverage or breach and insured put forth no evidence of “extreme conduct or of damages suffered independent of those that would have resulted from an alleged wrongful denial of his claim”).

F. Submitting Claims for Policy Benefits

In its motion for rehearing in this case, USAA urges us to provide additional guidance on how parties should submit claims for policy benefits to a jury, particularly when the insured asserts both a breach-of-contract claim and a statutory-violation claim and seeks policy benefits as damages for both. The guidance we can provide at this point is necessarily limited, however, because the proper submission depends on the disputed facts and issues in each case. There is, for example, no one single proper way to submit a breach-of-contract claim to a jury. See Haas Drilling Co. v. First Nat’l Bank in Dall., 456 S.W.2d 886, 889 (Tex. 1970) (noting that “latitude is permitted in the wording of special issues” on breach-of-contract claims).

A breach-of-contract claim can involve any one or more of numerous discrete issues,²¹ but the jury need only be asked and instructed about those the parties actually dispute, and on which the pleadings and evidence actually “raise an issue.” Union Pac. R.R. Co. v. Williams, 85 S.W.3d 162, 166 (Tex. 2002) (citing TEX. R. CIV. P. 278).²² That is why the Texas Pattern Jury Charges offer a variety of proposed questions and instructions for breach-of-contract claims, including alternative questions and instructions on whether the defendant breached the alleged *502 agreement.²³ The same is true when the allegedly breached contract is an insurance policy.²⁴ But the question of whether the insurer complied with its policy obligations does not always depend on whether it paid the proper amount of benefits. An insurer may fail to comply even if it pays the proper amount of benefits if, for example, it paid the benefits late. See id., PJC 101.10. And an insurer may comply even if it fails to pay the proper amount of benefits if, for example, its noncompliance is excused, the insured committed a prior material breach, a condition precedent was unmet, or waiver, estoppel, or duress applies. See id., PJC 101.21, 101.22, 101.24, 101.25, 101.26, 101.60. As the Committee suggests, “[c]are must be taken to ensure that the question is appropriate under the facts of the particular case.” Id., PJC 101.2 cmt.

For statutory-violation claims, the Pattern Jury Charge (PJC) Committee recommends a question asking whether the insurer “engage[d] in any unfair or deceptive act or practice that caused damages to” the insured, along with instructions defining “unfair or deceptive practice” as to each alleged but disputed act the Insurance Code prohibits, like misrepresentations, false, deceptive, or misleading statements, and unfair settlement practices. See id., PJC 102.14, 102.16 102.17, 102.18. A second question is also required, predicated on a yes answer to the first, asking the jury to determine the amount of actual damages “caused by such unfair or deceptive act or practice.” Id., PJC 115.13. For this question, the Committee recommends that an insured who seeks to recover policy benefits for a statutory violation should expressly submit “policy benefits” as an element of damages, unless “both the amount and causation of policy benefits as damages are conclusively established.” Id., PJC 115.13 cmt. We generally agree with *503 the Committee’s recommendations, but our holdings today clarify that, to establish “causation of policy benefits as damages” on a statutory-violation claim, the jury must find that the violation caused the insured to lose benefits she was otherwise entitled to receive under the policy. A proper jury submission must include an appropriate question or instruction to establish that element.

As USAA points out, submitting both a breach-of-contract claim and a statutory-violation claim in the same jury charge can create the risk of conflicting answers. An insured who seeks to recover policy benefits on a breach-of-contract claim must ask the jury to determine the amount of policy benefits lost as a result of the insurer’s failure to comply with the insurance policy. Id., PJC 115.3 & cmt. And an insured who seeks to recover policy benefits on a statutory-violation claim must ask the jury to determine the amount of benefits lost as a result of the insurer’s act or practice that violates the statute. Id., PJC 115.13 & cmt. For both claims, the jury must find that the insured was entitled to the benefits under the policy. If the jury’s answers to questions on one liability theory establish that the insured was not entitled to any policy benefits or was paid all policy benefits to which she was entitled, an answer on the other liability theory that the insured was entitled to benefits would create an irreconcilable and even fatal conflict. See Arvizu v. Estate of Puckett, 364 S.W.3d 273, 276 (Tex. 2012).²⁵

To avoid such a conflict, the court should ensure that the jury answers the entitlement-to-benefits question only once. Here, the trial court may have done best to simply submit Question 2 (to establish that USAA violated the statute) and Question 3 (to establish both that the statutory violation caused Menchaca actual damages in the form of policy benefits and that USAA breached the contract by failing to pay benefits Menchaca was entitled to under the policy), without submitting Question 1 at all. Alternatively, the court might have first asked the jury whether Menchaca was entitled to receive benefits under the policy, and then conditioned the remaining questions on a “Yes” answer to that first question. Yet another effective alternative may have been to instruct the jury that, because Menchaca seeks only to recover benefits under the policy, USAA did not fail to comply with the policy and Menchaca incurred no damages as a result of any statutory violation unless Menchaca was entitled to benefits under the policy. We offer these proposals—without the benefit of the parties’ specific arguments or objections—as examples of how the court might have avoided a potential conflict, but we leave it to the parties and the trial court to determine how best to submit the claims on remand.

III.

Menchaca’s Claims Against USAA

Having clarified the governing rules, we now apply them to the case before us. As explained above, the jury in this case (1) failed to find in answer to Question 1 that USAA failed to comply with its obligations under the insurance policy; (2) found in answer to Question 2 that USAA violated *504 the Insurance Code by failing to pay Menchaca’s claim for policy benefits “without conducting a reasonable investigation with respect to” that claim; and (3) found in answer to Question 3 that USAA’s statutory violation resulted in Menchaca incurring damages of $11,350, representing the amount of policy benefits USAA “should have paid” Menchaca.

Ever since the jury returned its verdict, the parties have disputed the effect of its answers. Relying on the jury’s answer to Question 1, USAA has contended that Menchaca cannot recover any policy benefits for a statutory violation because she did not prevail on her breach-of-contract claim. Meanwhile, Menchaca has consistently argued that she can recover the award of policy benefits even though she did not prevail on her breach-of-contract claim because the jury found in answer to Questions 2 and 3 that USAA violated the statute and the violation caused Menchaca to incur damages in the form of policy benefits that USAA “should have paid” to Menchaca.

USAA’s argument overlooks the fact that—as we have clarified today—an insured need not prevail on a separate breach-of-contract claim to recover policy benefits for a statutory violation. Instead, as we have explained, the insured can prevail under the entitled-to-benefits rule or the benefits-lost rule if she establishes (1) the insurer violated the statute and (2) the violation resulted in her loss of benefits she was entitled to under the policy. Menchaca contends she obtained those findings through Questions 2 and 3. But if USAA “should have paid” policy benefits to Menchaca and did not, then the jury’s answers to Questions 2 and 3 conflicted with the jury’s answer to Question 1 because USAA necessarily failed to comply with the policy.

The trial court noted this apparent conflict before it dismissed the jury, but both parties took the position that no conflict existed. After the court received the verdict and asked for USAA’s response, USAA replied: “We accept the verdict, Your Honor.” Menchaca then began explaining why she did not believe the jury’s answers conflicted. The trial court asked USAA whether it believed the court should “call the jury back” and have it “reconcile” its answers. USAA replied that calling the jury back “would be totally inappropriate. If it was per se irreconcilable it never should have been submitted to them.” The trial court apparently agreed and discharged the jury. At the hearing on USAA’s motion for entry of judgment, the trial court raised the conflict issue again, asking whether the jury’s answers to Questions 1 and 2 conflicted. It asked Menchaca:

I mean, failure to be reasonable in the investigation of the incident and the behavior of the adjuster is a breach of contract, and so now you have one that says, no, there is no breach of contract, and the other one says, yeah, there was? Isn’t that a conflict between the two?

Menchaca responded, “no, there’s not [a conflict] based upon what the jury found in damages.” Ultimately, the trial court side-stepped the issue by disregarding the jury’s answer to Question 1 and entered judgment for Menchaca based on the jury’s answers to Questions 2 and 3.

USAA asserts that the trial court erred by disregarding the jury’s answer to Question 1. We unanimously agree. But a majority of the Court concludes that the answer to Question 1 creates an irreconcilable and fatal conflict with the answers to Questions 2 and 3. And a plurality concludes that a judgment based on a fatal conflict does not constitute fundamental error, so parties must preserve the error  *505 by objecting to the conflict before the trial court discharges the jury. Because the error was not preserved in this case, we cannot reverse the trial court’s judgment on that ground. Nevertheless, in light of the parties’ obvious confusion regarding our precedent and the clarifications we provide today, the plurality agrees that we should reverse the judgment and remand for a new trial in the interest of justice.

A. Disregarding Question 1

After both parties argued that the jury’s answers did not create a conflict, the trial court decided to disregard Question 1 because it was “poorly worded” and “incomprehensible.” Specifically, the court explained that Question 1:

says, “Breach of contract,” but it doesn’t say what kind of breach.²⁶ It doesn’t even explain breach of contract. It doesn’t even give a definition for breach of contract. There’s all kinds of other things that should have been put in there about what’s material breach, definition of material breach. The question fails altogether. It shouldn’t have been submitted in the first place. If you remember correctly, I didn’t want that question submitted. But it was insisted upon by the plaintiffs, so they’ve got to reap what they sow. But I think that I can easily ignore question number one as being incomprehensible to a layman and that it has no effect. I can go with what I wanted to go with in the first place which was question number two, damage question, then attorney’s fees. That’s what I’m going to do. I’m going to ignore question number one entirely because I think it was poorly worded.

The court of appeals affirmed the trial court’s decision to disregard Question 1 but for different reasons. First, the court concluded it was impossible to know why the jury answered “No” to the question. See 2014 WL 3804602. In the court of appeals’ view, the jury could have answered “No” because it mistakenly believed that USAA could only “fail to comply with the terms of the insurance policy” if it failed to pay the amount that USAA subjectively believed it had to pay. See id. Second, it concluded that the jury’s “No” answer to Question 1 did not “definitively establish that there was no coverage” because USAA agreed that the policy provided coverage for Menchaca’s losses and that the amount of the losses did not exceed the policy’s deductible. See id. Finally, the court concluded that the jury’s finding in answer to Question 2 that USAA violated the statute rendered its answer to Question 1 immaterial because Question 3 “instructed the jury to award the same damages regardless of which theory of liability was adopted.” See id.

We conclude that the trial court erred by disregarding the jury’s answer to Question 1. “A trial court may disregard a jury finding only if it is unsupported by evidence ... or if the issue is immaterial.” Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994) (citing C. & R. Transp., Inc. v. Campbell, 406 S.W.2d 191, 194 (Tex. 1966) ). Contrary to the court of appeals’ analysis, the fact that the court cannot determine the reasons for a jury’s answer does not permit the court to disregard that answer. Here, the jury’s answer to Question 1 was neither unsupported by the evidence nor immaterial.

First, in light of USAA’s evidence that Menchaca’s damages were less than the amount of her deductible, at least some *506 evidence supported the jury’s failure to find that USAA failed to comply with its obligations under the policy. Although USAA did not dispute that the policy provided “coverage” for the types of losses Menchaca suffered, it provided evidence that the amount of her loss was less than the policy’s deductible, and that evidence supports the jury’s failure to find that USAA “failed to comply” with its obligations under the policy.²⁷

Second, Question 1 was not immaterial. A jury answer is immaterial when the question “should not have been submitted, or when it was properly submitted but has been rendered immaterial by other findings.” Spencer, 876 S.W.2d at 157 (citing C. & R. Transp., 406 S.W.2d at 194). Contrary to the trial court’s conclusion, that a question is defective does not render the jury’s answer immaterial. See id. (concluding that, “while [a question] was defective, it was not immaterial.”). Question 1 was material because Menchaca sued USAA for breach of the insurance policy as well as for statutory violations, and she sought to recover on either claim. The jury’s answers to Questions 2 and 3 did not render its “No” answer to Question 1 immaterial because Menchaca chose to use Question 1 as the basis for prevailing on her breach-of-contract claim. We therefore conclude that the court of appeals erred by affirming the trial court’s decision to disregard the jury’s answer to Question 1.

B. The Effect of Questions 2 and 3

USAA insists that, in light of our agreement that the trial court erred in disregarding the jury’s answer Question 1, we must reverse and render judgment in USAA’s favor. It argues, correctly, that Menchaca effectively cannot recover policy benefits if USAA did not breach the policy. It also points out, correctly, that Menchaca did not secure that finding in Question 1. But USAA ignores—or at least misconstrues—the effect of the jury’s answers to Questions 2 and 3, in which the jury found that USAA’s Insurance Code violation caused Menchaca damages of $11,350, representing the difference “between the amount USAA should have paid Gail Menchaca for her Hurricane Ike damages and the amount that was actually paid.” This award, USAA agrees, constitutes an award of “policy benefits.” The jury’s finding that USAA’s statutory violation resulted in Menchaca’s loss of $11,350 in policy benefits that USAA “should have paid” necessarily constitutes a finding that Menchaca was entitled to receive those benefits under the policy.

USAA argues that we cannot read the jury’s answer to Question 3 as a finding that Menchaca was entitled to policy benefits because Question 3 was “merely a damages question.” In fact, however, Question 3 was a causation-and-damages question, requiring the jury to determine the amount of Menchaca’s loss “that resulted from” either USAA’s contractual breach or its statutory violation.²⁸ The jury *507 failed to find a contractual breach, but it did find a statutory violation. Thus, the jury’s answer to Question 3 can only constitute a finding that USAA’s statutory violation caused Menchaca to lose policy benefits that USAA “should have paid.” The trial court agreed on this as well. When it disregarded Question 1, it determined that Question 2 and Question 3 together contained all the elements of Menchaca’s Insurance–Code-violation claim:²⁹ (1) USAA violated the insurance code, (2) that violation caused Menchaca to lose policy benefits she otherwise would have been entitled to, and (3) the benefits she “should have” received were $11,350.

This holding does not “suggest[ ] an exception to the no-recovery rule,” as the Dissent proposes. Post at 526 (GREEN, J., dissenting). The no-recovery rule requires an insured to establish a right to receive benefits under the policy or an injury independent of a right to benefits. Castañeda, 988 S.W.2d at 198. Here, Menchaca obtained two conflicting findings: one, in Question 1, that she did not have the right to receive policy benefits, and two, in Question 3, that she did have the right to policy benefits. If Question 3 did not contain that finding, there no conflict would exist. The Dissent also tacitly acknowledges this by noting that the trial court “eliminated any conflict when it decided to disregard Question 1.” Post at 531 (GREEN, J., dissenting).

Nevertheless, relying primarily on our decisions in Castañeda and Missouri Pacific Railroad Co. v. Whittenburg & Alston, 424 S.W.2d 427, 430 (Tex. 1968), USAA contends that the answer to the “damages question” (Question 3) cannot conflict with or negate the answer to the “liability question” (Question 1). We do not agree that these cases are controlling here. Citing first to the court of appeals’ opinion in Castañeda, USAA notes that the portion of the damages question that related to the plaintiff’s alleged “loss of benefits” in that case instructed the jury that “ ‘loss of benefits’ means the amount of benefits due under the policy,” and yet we concluded there that the insured was not entitled to policy benefits. See Provident Am. Ins. Co. v. Castañeda, 914 S.W.2d 273, 281 (Tex. App.—El Paso 1996), rev’d, 988 S.W.2d 189.

USAA contends that this instruction is indistinguishable from the instruction the trial court gave here. We do not agree that the jury’s answer to the “damages question” in Castañeda was equivalent to the jury’s answer to Question 3 here. Nor do we agree that it could have independently constituted a finding that the insured in Castañeda was entitled to policy benefits. Although the Castañeda charge defined “loss of benefits” to mean benefits “due under the policy,” the charge in that case asked the jury to determine the amount that would compensate the insured for the damages, if any, resulting from both the insured’s “loss of credit reputation” and *508 the “loss of benefits ... due under the policy.” See Castañeda, 914 S.W.2d at 281. The jury answered with a single amount of $50,000, making it impossible to determine whether any, some, or all of that amount represented benefits “due under the policy,” as opposed to damages resulting from the insured’s loss of credit reputation. Id. (noting that “the jury’s $50,000 total verdict is made up of some unknown combination of past loss of credit reputation and policy benefits”). Here, by contrast, Question 3 instructed the jury to determine only the amount of benefits USAA “should have paid ... Menchaca for her Hurricane Ike damages.” By finding that USAA’s statutory violation resulted in damages consisting of policy benefits USAA should have paid, the jury necessarily determined that Menchaca was entitled to receive policy benefits totaling $11,350.

Whittenburg is distinguishable for similar reasons. Whittenburg involved a shipper’s action against a carrier for damages the carrier allegedly caused to the shipper’s tomatoes while transporting them by rail from Laredo to Canada. See 424 S.W.2d at 428. The first question asked the jury whether the tomatoes “were in worse condition” when they arrived in Canada “than they should have been, considering their quality and condition at Laredo,” and the jury answered “No.” Id. at 428–29. The second question presented the carrier’s defensive theory, asking whether “the condition of the tomatoes” when they arrived in Canada “was due entirely” to (a) their condition when delivered in Laredo, (b) the “operation of natural laws upon such tomatoes,” or (c) the “inherent tendency, if any there be, of the tomatoes to deteriorate and decay.” Id. at 429. To that question the jury answered “Yes.” Id. In answer to the third and fourth questions, the jury found that the tomatoes’ actual market value when they arrived in Toronto was $2,092.23, but would have been $3,339.28 if they had been delivered “in the condition in which they should have been delivered.” Id.

We see the distinction between Whittenburg and this case in Whittenburg’s second question, in response to which the jury found that the condition of the tomatoes when they arrived in Toronto was “due entirely” to a cause for which the carrier could not be liable. Id. Although the jury found the tomatoes were worth less upon arrival than they “should have been,” that finding could not support liability, causation, or damages because their condition upon arrival was “due entirely” to other causes. Here, by contrast, the jury’s finding in answer to Question 3 of an amount that USAA “should have paid” cannot be attributed to anything other than USAA’s obligation under the policy to pay that amount to Menchaca. We therefore conclude that the jury’s answer to Question 3 necessarily constitutes a finding that Menchaca was entitled to receive those benefits under the policy.

C. Fatal Conflict

We next consider whether the jury’s answer to Question 1 creates an irreconcilable and fatal conflict with its answers to Questions 2 and 3. “In reviewing the jury findings for conflict, the threshold question is whether the findings are about the same material fact.” Bender v. S. Pac. Transp. Co., 600 S.W.2d 257, 260 (Tex. 1980) (citing Pearson v. Doherty, 143 Tex. 64, 183 S.W.2d 453, 455 (1944) ). Here, the jury’s answer to Question 3 (USAA “should have paid” $11,350 in policy benefits to Menchaca) necessarily addresses the same material fact as its answer to Question 1 (USAA “fail[ed] to comply with the terms of the insurance policy”), because both requested findings on whether USAA failed to pay benefits Menchaca was entitled to under the policy. The answers *509 conflict because if USAA “should have paid” Menchaca benefits under the policy and did not, then USAA necessarily failed to comply with the policy’s terms.

A court “must ‘reconcile apparent conflicts in the jury’s findings’ if reasonably possible in light of the pleadings and evidence, the manner of submission, and the other findings considered as a whole.” Id. (quoting Ford v. Carpenter, 147 Tex. 447, 216 S.W.2d 558, 562 (1949) ). If the court can reasonably construe the findings in a way that harmonizes them, it must do so “when possible.” Id. Here, however, the findings are irreconcilable. Menchaca urges us to reconcile them by construing the jury’s “No” answer to Question 1 as merely “a failure to find” that USAA failed to comply with the policy, as opposed to an affirmative finding that USAA did not fail to comply with the policy. See Grenwelge v. Shamrock Reconstructors, Inc., 705 S.W.2d 693, 694 (Tex. 1986) (per curiam) (explaining that a failure to find liability is not the same as an affirmative finding of compliance). But we have previously rejected this very argument. Union Mut. Life Ins. Co. v. Meyer, 502 S.W.2d 676, 679 (Tex. 1973) (“The inconsistency [giving rise to a conflict] exists in this verdict whether the answer is a failure to find, or a finding, according to the preponderance of the evidence.”). Although the jury did not affirmatively find that USAA complied with its policy obligations, its answer to Question 1 confirms its conclusion that Menchaca “failed to carry [her] burden of proof” to establish that USAA failed to comply with the policy’s terms. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989).

Conversely, we could attempt to construe the jury’s answer to Question 3 as something other than a finding that Menchaca was entitled to policy benefits. We might, for example, speculate that the jury awarded $11,350 as the amount the jury believed USAA “should have paid” Menchaca as a matter of equity or charity, rather than as a policy obligation. But any such effort would require mere speculation and an assumption that the jury ignored the questions and instructions the trial court provided. The trial court asked the jury to determine the amount of damages Menchaca incurred as a result of USAA’s contractual breach or statutory violation and instructed the jury to determine that amount based on the difference “between the amount USAA should have paid Gail Menchaca for her Hurricane Ike damages and the amount that was actually paid.” As both parties agree, the amount the jury awarded represents the amount of benefits the jury determined USAA “should have paid” to Menchaca under the policy.

When an irreconcilable conflict involves one jury answer that would require a judgment in favor of the plaintiff and another that would require a judgment in favor of the defendant, the conflict is fatal. Little Rock Furniture Mfg. Co. v. Dunn, 148 Tex. 197, 222 S.W.2d 985, 991 (1949).³⁰ Here, both questions address the decisive issue—whether USAA failed to pay benefits Menchaca was entitled to under the policy. Without Questions 2 and 3, the jury’s answer to Question 1 would require a judgment in USAA’s favor. But without Question 1, the jury’s answers to Questions 2 and 3 would require a judgment *510 in Menchaca’s favor. We thus conclude that the answers created a fatal conflict.

D. Fundamental Error

Our determination that the verdict contained a fatal conflict does not end the inquiry. Of course, a trial court should not enter judgment based on a verdict containing a fatal conflict until “the disputed question of fact ... has been resolved.” Meyer, 502 S.W.2d at 679. But we must decide whether we can consider a trial court’s error in entering such a judgment when neither party has objected to the conflict.

Generally, as “a prerequisite to presenting a complaint for appellate review, the record must show that ... the complaint was made to the trial court by a timely request, objection, or motion.” TEX. R. APP. P. 33.1(a)(1)(A). This rule “conserves judicial resources by giving trial courts an opportunity to correct an error before an appeal proceeds,” promotes “fairness among litigants” by prohibiting them from surprising their opponents on appeal, and furthers “the goal of accuracy in judicial decision-making” by allowing the parties to “develop and refine their arguments” and allowing the trial court to “analyze the questions at issue.” In re B.L.D., 113 S.W.3d 340, 350 (Tex. 2003).³¹ Under, this rule, we will not consider an error that was not properly raised in the trial court “unless a recognized exception exists.” Id.

An exception to the preservation-of-error requirement applies when the alleged error is “fundamental.” “Except for fundamental error, appellate courts are not authorized to consider issues not properly raised by the parties.” Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 577 (Tex. 2006). Thus, “we have used the term ‘fundamental error’ to describe situations in which an appellate court may review error that was neither raised in the trial court nor assigned on appeal.” B.L.D., 113 S.W.3d at 350. Beginning in the 1800s, we held that a trial court’s entry of a judgment based on inconsistent or insufficient jury answers constitutes fundamental error because the error is “an error of law apparent on the face of the record,” Van Valkenberg v. Ruby, 68 Tex. 139, 3 S.W. 746, 748 (1887), courts are not “permitted to speculate” about a jury’s intentions, Moore v. Moore, 67 Tex. 293, 3 S.W. 284, 285–86 (1887), and the law deprives courts of “the power to render judgment, which is given by law and not by consent of the parties,” Radford v. Auto. Underwriters of Am., 299 S.W. 852, 853 (Tex. Comm’n App. 1927) (internal citations omitted).

In the decades that followed these decisions, the courts of appeals applied the fundamental-error doctrine in numerous cases, concluding that a jury verdict containing a fatal conflict constitutes fundamental error requiring a new trial even if no party complained of or preserved the error.³² In 1949, we at least appeared to *511 confirm these holdings in Little Rock Furniture, noting that the “law seems to be established that such a conflict cannot be waived by the parties and that a judgment on a verdict containing such a conflict must be set aside.” 222 S.W.2d at 991 (citing Radford 299 S.W. 852; Interstate Tr., 88 S.W.2d at 1110; Kilgore, 204 S.W.2d at 1005; Marshall, 151 S.W.2d at 919). But we had no opportunity to apply the exception in Little Rock Furniture because we concluded that the verdict in that case did not “disclose a fatal conflict.” Id.

Shortly before we decided Little Rock Furniture, however, we began to reconsider the fundamental-error doctrine in light of recent statutory revisions and our adoption of the Texas Rules of Civil Procedure. See Ramsey v. Dunlop, 146 Tex. 196, 205 S.W.2d 979, 982–83 (1947). The fundamental-error doctrine “in civil actions arose in Texas under old statutes that stated that cases on appeal could be reviewed ‘on an error in law either assigned or apparent on the face of the record.’ ” Pirtle, 629 S.W.2d at 920 (citing 2 GAMMEL’S LAWS OF TEXAS 1562 (1898); 3 GAMMEL’S LAWS OF TEXAS 393 (1898) ).³³ But after the Legislature repealed those statutes and we adopted the Rules of Civil Procedure in 1941, no law remained that authorized appellate courts to consider unpreserved or unassigned errors. Id. We concluded in Ramsey, however, that despite the lack of any express legal authorization, it remained “both the province and the duty” of appellate courts to consider errors that are “truly fundamental,” such as “an error which directly and adversely affects the interest of the public generally, as that interest is declared in the statutes or Constitution of this state.” Ramsey, 205 S.W.2d at 983. We later concluded that fundamental error also exists when “the record affirmatively and conclusively shows that the court rendering the judgment was without jurisdiction of the subject matter.” McCauley v. Consol. Underwriters, 157 Tex. 475, 304 S.W.2d 265, 266 (1957). Citing Ramsey and McCauley, we have since repeatedly explained that the fundamental-error doctrine applies only in those two “rare instances,” in which “the record shows the court lacked jurisdiction or that the public interest is directly and adversely affected as that interest is declared in the statutes or the Constitution of Texas.” In re L.D.C., 400 S.W.3d 572, 574 (Tex. 2013) (quoting *512 In re C.O.S., 988 S.W.2d 760, 765 (Tex. 1999) ).³⁴ Although we have not hesitated to apply the doctrine when the error is jurisdictional³⁵ or adversely affects the public’s (as opposed to the current parties’) interests,³⁶ we have repeatedly refused to apply the fundamental-error doctrine to other types of errors and have instead consistently restricted appellate review to properly preserved errors.³⁷ For this reason, *513 we have characterized the fundamental-error doctrine as “a rarity,” Am. Gen. Fire & Cas. Co. v. Weinberg, 639 S.W.2d 688, 689 (Tex. 1982), and “a discredited doctrine,” B.L.D., 113 S.W.3d at 350 (quoting Cox, 638 S.W.2d at 868).

Soon after our decisions in Little Rock Furniture and Ramsey, we warned that cases “discussing fundamental error decided before the adoption of the Rules of Civil Procedure in 1941 must be considered in the light of changes in the concept of fundamental error made by the adoption of the new rules.” Lewis v. Tex. Emp’rs’ Ins. Ass’n, 151 Tex. 95, 246 S.W.2d 599, 600 (1952). The result of those changes, we later explained, is that the scope of “truly fundamental” error is “much narrower” than it was before the 1941 amendments. McCauley, 304 S.W.2d at 266; see also Estate of Pollack v. McMurrey, 858 S.W.2d 388, 394 (Tex. 1993) (noting that we have since “taken a more restrictive view of fundamental error”).

Before we clearly restricted the application of the fundamental-error doctrine to jurisdictional and public-interest errors in McCauley, courts of appeals continued to rely on Little Rock Furniture to hold that a fatal conflict in jury answers creates a fundamental error that appellate courts may review even if unassigned.³⁸ But five years after McCauley, we rejected the statement in Little Rock Furniture and expressly held that, in light of the fundamental-error doctrine’s restricted scope, the “entry of judgment by a trial court on conflicting findings does not constitute fundamental error.” St. Paul Fire & Marine Ins. Co. v. Murphree, 163 Tex. 534, 357 S.W.2d 744, 749 (1962) (citing Ramsey, 205 S.W.2d at 979; McCauley, 304 S.W.2d at 265). We have since confirmed and reaffirmed that holding in several cases.³⁹ With *514 the exception of a few opinions that erroneously relied on Little Rock Furniture without citing or considering Murphree,⁴⁰ the courts of appeals have repeatedly done the same.⁴¹

*515 We did not hold otherwise in our 1973 opinion in Meyer, 502 S.W.2d at 679. The trial court in Meyer entered judgment for the defendant based on the jury’s verdict, but the court of appeals reversed and remanded the case “for further proceedings,” concluding, “There being a fatal and irreconcilable conflict in the jury’s answers, the verdict cannot stand, and the judgment based thereon must be set aside.” Meyer v. Union Mut. Life Ins. Co., 483 S.W.2d 7, 10 (Tex. Civ. App.—Dallas 1972), aff’d, 502 S.W.2d 676 (Tex. 1973). We agreed that the verdict contained a fatal conflict and affirmed, stating that such a verdict “cannot be regarded as an acceptable resolution of the disputed question of fact, and judgment should not be rendered until that fact issue has been resolved.” Meyer, 502 S.W.2d at 679. Neither the court of appeals in Meyer nor this Court, however, addressed the question of whether error based on conflicting jury answers is fundamental or must be preserved, nor did they cite Little Rock Furniture, Ramsey, McCauley, Murphree, or any other authorities on that issue. In fact, neither the court of appeals nor this Court cited any authority for reversing the trial court’s judgment in Meyer.

Until today, this Court has never cited, relied on, or discussed Meyer as authority on any issue. Only three courts of appeals have ever cited it, and none cited it as authority on the issue of whether error based on conflicting jury answers is fundamental or must be preserved.⁴² That is not to suggest that the Court wrongly decided Meyer; rather, it appears to simply confirm that the issue was not at issue in Meyer. Neither our opinion nor the court of appeals’ opinion in Meyer ever mentioned or addressed whether any party objected to the conflicting answers or whether they should have. As best we can tell, the plaintiff in Meyer never complained that the defendant did not preserve the error, and the Court simply never addressed that issue. We cannot agree that Meyer—which never addressed the preservation requirement—somehow overruled or trumps Murphree, Duke, Sunland Supply, and the dozens of other opinions that directly addressed the issue. Consistent with these numerous applicable precedents, we conclude that the fatal conflict in the jury’s verdict in this case does not constitute fundamental error, and as a result, we cannot consider that conflict unless the error was properly preserved. Mack Trucks, 206 S.W.3d at 577.

E. Preservation of Error

We next consider how and when a party must properly preserve error based on a fatal conflict in a jury verdict. rule 295, entitled “Correction of Verdict,” provides that if a jury’s answers “are in conflict,” the trial court must give the jury written instructions regarding the nature of the conflict “and retire the jury for further deliberations.” TEX. R. CIV. P. 295. In light of this rule, some early court of appeals decisions held that, to preserve error based on conflicting jury answers, the party must object to the conflict before the *516 trial court discharges the jury. See, e.g., Haddox v. Futrell, 321 S.W.2d 110, 112 (Tex. Civ. App.—Waco 1959, no writ) (“[P]laintiff, by not raising objection to the alleged conflict at the time the jury returned its verdict, has waived the matter.”); City Transp. Co. v. Vatsures, 278 S.W.2d 373, 377 (Tex. Civ. App.—Waco 1955, writ dism’d) (“Appellant waived any conflict by accepting the jury’s verdict as it was and in not directing the Trial Court’s attention to the alleged conflict at a time when it could have been corrected.”).

In Murphree, however, while holding that the jury answers in that case did not conflict, we noted that the petitioner admitted that “it did not assign in its motion for new trial any error as to conflict,” and that there “was no assignment of error contained in the motion for new trial sufficient to bring this question to the trial court’s attention.” Murphree, 357 S.W.2d at 748 (emphasis added). Based on these statements, some courts held that a party asserting a conflict on appeal must have preserved the argument by objecting to the conflict in its motion for new trial. See, e.g., Sands Motel, 358 S.W.2d at 674 (stating that Murphree “held that failure to assign the conflict as error in a motion for new trial waived any complaint and precluded a consideration of it on appeal”); Sutton, 405 S.W.2d at 833 (refusing to consider appellants’ conflict argument “since this point was not raised in their motion for new trial”). A few years later, in Duke, we cited Murphree in support of our holding that “it was necessary to file a motion for new trial assigning as error the entry of judgment on conflicting jury findings.” 424 S.W.2d at 898.

Following these decisions, the Fort Worth Court of Appeals held that an appellant can preserve a conflict objection by filing a motion for new trial and need not object before the court discharges the jury. McDonald, 762 S.W.2d at 939–40. The McDonald court expressed dissatisfaction with its own holding, however, opining that “Murphree neither explicitly nor implicitly stated such a rule” and was “simply misconstrued,” and that the “previous rule” requiring an objection before the jury is discharged was “better law.” Id. at 940. Nevertheless, the court concluded that its holding was required because it was “clearly made the law in Duke.” Id. The Fort Worth court later overruled McDonald, however, see Kitchen, 181 S.W.3d at 473, and since then, the courts of appeals have consistently held that “a party waives any complaint regarding any alleged conflict in the jury’s answers by failing to voice this complaint before the jury is discharged.” Meek v. Onstad, 430 S.W.3d 601, 605–06 (Tex. App.—Houston [14th Dist.] 2014, no pet.).⁴³

*517 We agree with the courts of appeals. Although we noted in Murphree that the petitioner had not raised the jury conflict in a motion for new trial, we did not consider or address whether the petitioner also had to object to the conflict under rule 295 before the court discharged the jury. Murphree, 357 S.W.2d at 748; see also Esparza, 2005 WL 3477826, at *2 (noting that Murphree did not consider “whether assigning error in a motion for new trial would be sufficient to preserve error”). Nor did we address that issue in Duke, 424 S.W.2d at 897–98. In that case, the plaintiff did in fact object before the trial court discharged the jury and “moved that the court retire the jury for further deliberations because of alleged conflicts.” Id. at 897. After the trial court denied that motion, the plaintiff filed a motion for mistrial based on the conflicting jury answers, but the court denied that motion as well and entered judgment for the defendant. Id. The plaintiff then appealed, asserting the conflicts as the sole error, and the defendant moved to dismiss the appeal, arguing that the plaintiff failed to preserve the error by filing a motion for new trial. Id. *518 The court of appeals disagreed, reversed the judgment because of the conflict, and remanded the case for a new trial. Id. We reversed the court of appeals’ judgment, holding that rule 324, as it then existed, required a motion for new trial as “a jurisdictional prerequisite to appeal from a case tried to a jury, with certain specific exceptions” that did not apply. Id. (applying earlier version of TEX. R. CIV. P. 324). We held that because conflicting jury answers do not constitute fundamental error, rule 324 required that, if “there was an irreconcilable conflict in the jury answers, it was necessary to file a motion for new trial assigning as error the entry of judgment on conflicting jury findings.” Id. at 898 (citing Murphree, 357 S.W.2d at 744).

As the courts of appeals have since explained, the issue of whether a new-trial motion is required is no longer relevant because the current, revised version of rule 324 “does not require that a party file a motion for new trial to complain on appeal that there is an alleged conflict in the jury’s answers.” Meek, 430 S.W.3d at 606–07; see also Roling, 840 S.W.2d at 109–10. But more importantly, while we held in Duke that a new-trial motion was necessary to preserve error, we did not address whether it was independently sufficient. See Meek, 430 S.W.3d at 607 n.2 (explaining that Duke does not support the proposition that “raising this complaint for the first time in a motion for new trial is sufficient” to preserve error). We did not address that issue in Duke because the petitioner had in fact objected to the conflicting answers before the trial court discharged the jury. 424 S.W.2d at 897; see also Torres, 928 S.W.2d at 245 (noting that, in Duke, “counsel for the plaintiffs did move that the jury retire for further deliberations based on an alleged conflict in the verdict”); Roling, 840 S.W.2d at 109 (noting that “the plaintiff in Duke had requested the trial court to retire the jury for further deliberations”). In short, as most all of the courts of appeals have recognized, we did not hold in Murphree or Duke that a party is not required to raise conflicting jury answers before the trial court discharges the jury to preserve error on that point, and the Fort Worth court “in McDonald misconstrued Duke” as holding otherwise. Roling, 840 S.W.2d at 110.

We agree with the courts of appeals that to preserve error based on fatally conflicting jury answers, parties must raise that objection before the trial court discharges the jury. As we have explained, our “procedural rules are technical, but not trivial.” Burbage v. Burbage, 447 S.W.3d 249, 258 (Tex. 2014). They require timely error preservation because affording trial courts an opportunity to consider and rule on alleged error “conserves judicial resources and promotes fairness by ensuring that a party does not neglect a complaint at trial and raise it for the first time on appeal.” Id. When the alleged error is an incomplete, nonresponsive, or conflicting jury verdict, rule 295 requires the trial court to correct that error by providing additional instructions and retiring the jury “for further deliberations.” TEX. R. CIV. P. 295. Once the court has discharged the jury, it cannot reform the conflicting answers as rule 295 requires. See Roling, 840 S.W.2d at 109 (“Once the jury is discharged, a conflict in the jury’s answers cannot be reformed.”). As the Austin Court of Appeals has explained, “What the jury intended by findings that potentially conflict is best determined by the jury itself,” and that is the solution rule 295 requires. Springs Window Fashions, 184 S.W.3d at 867.

The Dissent claims that rule 295 allows for other preservation mechanisms because the rule states that a trial court “may direct [the verdict] to be reformed.” *519 Post at 527 (GREEN, J., dissenting) (quoting TEX. R. CIV. P. 295). The rule does not mandate reformation because reformation is not always needed. The trial court’s first resort is to reconcile the jury’s findings. Bender, 600 S.W.2d at 260 (stating that the trial court “must” reconcile findings “when possible”). Should reconciliation fail, only then need the court recall the jury. We do not ignore the “may” in rule 295; we have applied the manners of recourse in the appropriate order.

As mentioned, rule 295 provides the procedure for resolving incomplete and nonresponsive jury verdicts as well as those containing conflicting answers. TEX. R. CIV. P. 295. Addressing incomplete verdicts, we have long held that a judgment will not be reversed “unless the party who would benefit from answers to the issues objects to the incomplete verdict before the jury is discharged, making it clear that he desires that the jury redeliberate on the issues or that the trial court grant a mistrial.” Fleet v. Fleet, 711 S.W.2d 1, 3 (Tex. 1986); see also Continental Cas. Co. v. Street, 379 S.W.2d 648, 650 (Tex. 1964) (holding party failed to preserve error because he “did not object to the acceptance of the jury verdict as incomplete, and thus by timely objection afford the trial court the opportunity, before the jury was discharged, of correcting the error (if such it was) of accepting the verdict with the issues unanswered”). We conclude that the same error-preservation requirement applies when a party complains of a judgment based on conflicting jury answers.

F. Effect of Failure to Preserve

Having concluded that the entry of a judgment based on fatally conflicting jury answers does not constitute fundamental error and that the error must be preserved by an objection asserted before the court discharges the jury, we must now address who bore the burden of preservation and the proper disposition of this case in light of the fact that neither USAA nor Menchaca timely objected. Amicus for USAA⁴⁴ argues that the fatal conflict “should preclude any recovery” by Menchaca. Although USAA does not agree that the jury’s answers fatally conflict, it argues that if they do conflict, it was Menchaca’s burden to object and she waived the error by failing to do so before the trial court dismissed the jury. We disagree. In the jury’s answers to Questions 2 and 3, Menchaca obtained all of the findings necessary to recover on her statutory-violation claim, and USAA is the party who must rely on the conflicting answer to Question 1 to prevent Menchaca from recovering based on the answers to Questions 2 and 3. As the party who must rely on the conflicting answer to avoid the effect of answers that establish liability, USAA bore the burden to object. See, e.g., Burbage, 447 S.W.3d at 256 (“The complaining party must object before the trial court and ‘must point out distinctly the objectionable matter and the grounds of the objection.’ ”) (emphasis added) (quoting TEX. R. CIV. P. 274; TEX. R. APP. P. 33.1); cf. Fleet, 711 S.W.2d at 3 (“The trial court will not be reversed for rendering judgment, however, unless the party who would benefit from answers to the issues objects to the incomplete verdict before the jury is discharged.”).

When we held in our early decisions that fatally conflicting jury answers constitute fundamental error, we reasoned that the error is fundamental in part because appellate courts lack the power to render a judgment based on conflicting answers. See Radford, 299 S.W. at 853 (stating that the law deprives the courts of “the power to render judgment ... which is given by *520 law and not by consent of the parties”) (internal citations omitted). We explained that when it is “impossible to determine from these irreconcilable statements, with any degree of certainty, what the jury really meant by these findings, ... no judgment can be rendered upon it.” Van Valkenberg, 3 S.W. at 748. Because fatally conflicting answers result in “no sufficient verdict to support the judgment of the court below, or any other judgment which might be rendered,” we concluded that the judgment “must be set aside, and the case remanded for a new trial.” Moore, 3 S.W. at 286.

Under our modern, rules-based, restricted fundamental-error doctrine, however, we have discarded these concerns in favor of the efficiency and fairness our error-preservation requirement provides. Now, as before, courts “must ‘reconcile apparent conflicts in the jury’s findings’ if reasonably possible in light of the pleadings and evidence, the manner of submission, and the other findings considered as a whole.” Bender, 600 S.W.2d at 260 (quoting Ford, 216 S.W.2d at 562). And if a trial court concludes it cannot reconcile the conflict, it must provide additional instructions and retire the jury for further deliberations. TEX. R. CIV. P. 295. But if the court does not identify a conflict and no party raises it before the court discharges the jury, the conflict provides no basis for reversal on appeal, even if it is “fatal.” The failure to preserve the error does not merely prevent the parties from raising the conflict on appeal, it prevents the appellate courts from considering the conflict or treating it as a basis for reversing the trial court’s judgment. Columbia Med. Ctr., 290 S.W.3d at 211 (“Appellate judges have much less discretion [than trial courts] because they are limited to the issues urged and record presented by the parties.”); Mack Trucks, 206 S.W.3d at 577 (“Except for fundamental error, appellate courts are not authorized to consider issues not properly raised by the parties.”); C.O.S., 988 S.W.2d at 765 (“Generally, our civil rules of procedure and our decisions thereunder require a party to apprise a trial court of its error before that error can become the basis for reversal of a judgment.”).

Here, USAA raised numerous objections, both to the proposed charge before its submission and to the jury’s answers after the jury returned its verdict. But USAA failed to properly preserve any error based on conflicting jury answers before the trial court discharged the jury. As a result, the trial court discharged the jury without giving it the opportunity to resolve its conflicting answers. The trial court then attempted to resolve the conflict by disregarding the jury’s failure to find a breach of contract. USAA properly preserved its argument that the court erred in disregarding that answer, and we have agreed with USAA that the trial court erred. We have disagreed, however, with USAA’s argument that Menchaca’s failure to prevail on her contract claim automatically negates the findings she obtained on her statutory claim. We are thus left with a judgment based on fatally conflicting jury answers, but since neither party preserved that error, we cannot consider the conflict as a basis for reversing the trial court’s judgment.

G. Remand in the Interest of Justice

Having concluded that the trial court and court of appeals erred in disregarding the jury’s answer to Question 1, we are left with findings that support the judgment in Menchaca’s favor based on statutory violations but that also contain a fatal conflict. We could render judgment for Menchaca based on the jury’s verdict because USAA failed to preserve that conflict. In the interest of justice, however, we could also “remand the case to the trial *521 court even if a rendition of judgment is otherwise appropriate.” TEX. R. APP. P. 60.3. Such a remand is particularly appropriate when it appears that one or more parties “proceeded under the wrong legal theory,” Boyles v. Kerr, 855 S.W.2d 593, 603 (Tex. 1993), especially when “the applicable law has ... evolved between the time of trial and the disposition of the appeal.” Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 162 (Tex. 2012); see Hamrick v. Ward, 446 S.W.3d 377, 385 (Tex. 2014) (remanding in the interest of justice “in light of our clarification of the law”); Moriel, 879 S.W.2d at 26 (same, in light of our “substantial clarification”). In light of the parties’ obvious and understandable confusion over our relevant precedent and the effect of that confusion on their arguments in this case, as well as our clarification of the requirements to preserve error based on conflicting jury answers, we conclude that a remand is necessary here in the interest of justice.

USAA has steadfastly maintained that Menchaca cannot recover policy benefits for a statutory violation unless she also obtains a finding that USAA “breached” the insurance policy or that USAA’s statutory violation caused an injury independent of her right to benefits. At trial, USAA objected to the charge’s failure to condition Question 2 on a “Yes” finding to Question 1 and objected to the submission of Question 3 on the ground that “Texas courts have held that extra[-]contractual damages need to be independent from policy damages.” After the jury returned its verdict, USAA argued that it should prevail because “the jury found ‘NO’ breach of contract” and awarded only policy benefits. After the trial court entered its judgment, USAA argued in its motion for new trial that Menchaca cannot recover in the absence of a finding of breach because she did not seek damages “separate and apart from those sought under the breach of contract theory.” Although we have clarified today that a plaintiff does not have to prevail on a separate breach-of-contract claim to recover policy benefits for a statutory violation, the confusing nature of our precedent precludes us from faulting USAA for the position it has maintained throughout this litigation. Moreover, although USAA failed to preserve any objection based on the jury’s conflicting answers, Menchaca agreed with USAA that the answers did not conflict, and neither the parties nor the trial court had the benefit of the guidance we have provided today regarding the preservation of such error. Under these circumstances, we conclude that justice requires that we reverse and remand the case to the trial court for a new trial.

IV.

Conclusion

For the reasons explained, we reverse the court of appeals’ judgment and remand the case to the trial court for a new trial in the interest of justice.

Chief Justice Hecht filed a concurring opinion.

Justice Blacklock concurs in the judgment without opinion.

Justice Green filed a dissenting opinion in which Justice Guzman and Justice Brown joined as to Parts I, II, and IV, and a plurality opinion as to Part III, in which Chief Justice Hecht, Justice Guzman, and Justice Brown joined.

Justice Johnson did not participate in the decision.

Chief Justice Hecht, concurring in the judgment.

I join Parts I, II, III–A, III–B, and III–C of JUSTICE BOYD’s plurality opinion and *522 Part III of JUSTICE GREEN’s opinion, also a plurality. I join in the Court’s judgment remanding the case to the trial court for a new trial, but for reasons different from those expressed in JUSTICE BOYD’s opinion.

USAA and Menchaca have both argued, each consistently throughout, in the trial court, the court of appeals, and now this Court, that the jury answers in the verdict do not conflict. The Court unanimously disagrees. JUSTICE BOYD would hold that the trial court cannot render judgment on fatally conflicting jury answers, and I agree. The trial court erred in rendering judgment for Menchaca. But JUSTICE BOYD would also hold that the error is not reversible unless the appellant objected in the trial court. Since USAA was the appellant and did not object in the trial court, JUSTICE BOYD concludes that it is not entitled to reversal. But USAA could not object, consistent with its position that the jury answers do not conflict. Menchaca took the same position, and had the trial court picked USAA to win, she, too, could not complain on appeal because she, like USAA, could not have objected. Thus, in JUSTICE BOYD’s view, if neither side thinks jury answers conflict, and an appellate court later disagrees, the party for whom the trial court erroneously rendered judgment wins. I disagree that an objection was necessary in this situation for the reasons given by JUSTICE GREEN in Part III of his dissent. In my view, because USAA and Menchaca each insists on rendition of a favorable judgment, and judgment cannot be rendered for either based on the conflicting answers in the jury verdict, the case must be retried. I do not agree with JUSTICE BOYD that the parties’ confusion about the law requires a retrial in the interest of justice. Rather, a retrial is the only way to correct the trial court’s error given the parties’ erroneous positions.

JUSTICE GREEN would render judgment for USAA because Menchaca, as plaintiff, had the burden of obtaining findings to support a judgment in her favor and failed to do so. I disagree. Menchaca obtained the findings she needed. The jury’s answers to Questions 2 and 3—that USAA underpaid her $11,350 in policy benefits because it did not reasonably investigate her claim—supported a judgment in her favor. But the jury’s answers to those questions conflicted with its answer to Question 1. The answers to Questions 2 and 3 establish that USAA failed to comply with its policy, yet the jury refused to make that finding in answer to Question 1. Menchaca cannot prevail because the jury answers were conflicting, not because they were insufficient.

Accordingly, I join in the Court’s judgment remanding the case to the trial court for further proceedings.

JUSTICE GREEN, joined by JUSTICE GUZMAN and JUSTICE BROWN as to Parts I, II, and IV, dissenting, and joined by CHIEF JUSTICE HECHT, JUSTICE GUZMAN, and JUSTICE BROWN as to Part III, delivering a plurality opinion.

The Court’s opinion outlines five rules governing the relationship between contractual and statutory claims. See 545 S.W.3d at 489. Under those five rules, I would hold that USAA Texas Lloyds Company is entitled to judgment in its favor because the plaintiff, Gail Menchaca, failed to prove that USAA was contractually obligated to pay benefits under the homeowners policy—a requisite showing to recover policy benefits for a violation of the Texas Insurance Code. See id. at 521. Because Menchaca failed to meet her burden of proof and failed to obtain a jury verdict that could support judgment in her favor, I would render judgment for USAA. *523 Accordingly, I dissent from the Court’s judgment remanding the case for a new trial for the reasons expressed in Parts I, II, and IV below. Additionally, I write separately to explain the plurality view on the issue of preservation of complaints of conflicting jury findings, in Part III below.

I. Background

Three jury questions and answers are relevant here. Jury Question 1, which Menchaca insisted upon submitting despite the trial court’s concerns and later urged the trial court to disregard,¹ relates to contractual liability:

1. Did USAA Texas Lloyd’s Company (“USAA”) fail to comply with the terms of the insurance policy with respect to the claim for damages filed by Gail Menchaca resulting from Hurricane Ike?

Answer “Yes” or “No”.

Answer: NO

In answering “no,” the jury thus rejected Menchaca’s assertion that USAA breached the policy.

Jury Question 2 relates to extra-contractual liability and provided a list of potential statutory violations:

2. Did USAA engage in any unfair or deceptive act or practice that caused damages to Gail Menchaca?

Answer “Yes” or “No” as to each subpart.

“Unfair or deceptive act or practice” means any one or more of the following:

A. Failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim when the liability under the insurance policy issued to Gail Menchaca had become reasonably clear; or

Answer: NO

B. Failing to promptly provide to Gail Menchaca a reasonable explanation of the factual and legal basis in the policy for the denial of a claim(s); or

Answer: NO

C. Failing to affirm or deny coverage within a reasonable time; or Answer: NO

D. Refusing to pay a claim without conducting a reasonable investigation with respect to a claim(s); or

Answer: YES

E. Misrepresenting to Gail Menchaca a material fact or policy provision relating to the coverage at issue.

Answer: NO

Thus, the only liability finding against USAA was for failure to conduct a reasonable investigation. See TEX. INS. CODE § 541.060(a)(7) (“It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary: ... refusing to pay a claim without conducting a reasonable investigation with respect to the claim ....”).

Concerned about a potential conflict between the jury’s answers to Questions 1 and 2,² the trial court ultimately disregarded *524 the jury’s answer to Question 1, concluding that the jury charge did not explain or define breach of contract, the question “fails altogether,” “shouldn’t have been submitted in the first place,” was “incomprehensible to a layman,” and “was poorly worded.” I agree with the Court’s conclusion that the trial court erred in disregarding Question 1. See id. at 505.

Finally, Question 3, which was submitted over USAA’s objection:³

If you answered “Yes” to Question 1 or any part of Question 2 or both questions, then answer the following question. Otherwise, do not answer the following question.

3. What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Gail Menchaca for her damages, if any, that resulted from the failure to comply you found in response to Question number 1 and/or that were caused by an unfair or deceptive act that you found in response to Question number 2.

The sum of money to be awarded is the difference, if any, between the amount USAA should have paid Gail Menchaca for her Hurricane Ike damages and the amount that was actually paid.

In answering questions about damages, answer each question separately. Do not increase or reduce the amount in one answer because of your answer to any other question about damages. Do not speculate about what any party’s ultimate recovery may or may not be. Any recovery will be determined by the court when it applies the law to your answers at the time of judgment. Do not add any amount for interest on damages, if any.

Answer in dollars and cents for damages, if any.

Answer: $ 11,350.00

USAA contends that Question 3 was merely a damages question, and the trial court seemed to agree.⁴ I also tend to agree.⁵ The Court seems to view Question 3 as another liability question about whether USAA owed Menchaca unpaid policy benefits—in other words, whether USAA failed to comply with the policy—concluding that the answer to Question 3 conflicts irreconcilably with the jury’s answer to Question 1. Id. at ––––. Either way, considering the jury’s answers to all three questions, I would hold that USAA is entitled to judgment in its favor.

II. Right to Receive Policy Benefits

In answer to Question 2, the jury found that USAA violated the Insurance Code by failing to investigate Menchaca’s claim properly. As the Court’s opinion explains, to recover for that statutory violation, *525 Menchaca was required to prove either (1) she suffered damages independent of the loss of policy benefits, or (2) the statutory violation caused her to lose policy benefits to which she was entitled. Id. at 504. Menchaca abandoned claims for extra-contractual damages and sought only policy benefits as damages.⁶ Thus, Menchaca can recover damages in this case only if she established a right to receive unpaid benefits due under the policy. Because she did not, I would render judgment in favor of USAA.

The jury’s answer to Question 1 represents the jury’s conclusion that Menchaca failed to satisfy her burden of proof on her claim that USAA breached the policy. See id. at 509 (agreeing that the answer to Question 1 “confirms [the jury’s] conclusion that Menchaca ‘failed to carry [her] burden of proof’ to establish that USAA failed to comply with the policy’s terms” (citing Sterner v. Marathon Oil Co., 767 S.W.2d 686 (Tex. 1989) ) ). In other words, the jury rejected Menchaca’s claim that the policy required USAA to do something that it failed to do. Had the jury determined that USAA owed Menchaca any unpaid benefits due under the policy, the jury could only have answered Question 1 “yes.” More specifically, had the jury determined that Menchaca’s damages from Hurricane Ike exceeded her deductible, the jury would have had to return a “yes” answer to Question 1. Because the jury answered “no,” however, we can conclude only that USAA’s Insurance Code violation did not cause Menchaca to lose any benefits that she was due under the policy. In fact, as the Court acknowledges, the jury’s answer is supported by evidence that the amount of Menchaca’s loss was less than the policy’s deductible, id. at 505–06, so the policy did not obligate USAA to pay Menchaca anything. Menchaca cannot use a statutory violation theory of recovery to recover the very same contract damages that the jury specifically rejected. Cf. City of Brownsville v. Alvarado, 897 S.W.2d 750, 752–53 (Tex. 1995) (holding that jury’s “no” answer to liability question rendered submission of question involving plaintiff’s negligence immaterial).

This result is consistent with the Court’s no-recovery rule, 545 S.W.3d at 486–87, and with our holding in Provident American Insurance Co. v. Castañeda, 988 S.W.2d 189 (Tex. 1998), which I believe govern this case. Under the no-recovery rule, an insured cannot recover any damages for an insurer’s statutory violation without establishing either the right to receive policy benefits or an independent injury. 545 S.W.3d at 500. An insurer’s statutory violation does not, by itself, establish an entitlement to policy benefits. See Castañeda, 988 S.W.2d at 198, 201 (recognizing that “failure to properly investigate a claim is not a basis for obtaining policy benefits” and rendering judgment for the insurer whose conduct was not “the producing cause of any damage separate and apart from those that would have resulted from a wrongful denial of the claim”); Twin City Fire Ins. Co. v. Davis, 904 S.W.2d 663, 666 n.3 (Tex. 1995) (“[S]ome acts of bad faith, such as a failure to properly investigate a claim or an unjustifiable delay in processing a claim, do not necessarily relate to the insurer’s breach of its contractual duties to pay covered claims, and may give rise to different damages.”). Menchaca could have sought damages for an independent injury, but she chose not to. Instead, she sought *526 only policy benefits, and the jury did not find that USAA breached the policy—an answer supported by evidence that the damages were less than Menchaca’s deductible. See 545 S.W.3d at –––– (acknowledging that some evidence supports the jury’s answer to Question 1). Because Menchaca failed to establish a right to receive policy benefits, she is not entitled to recover any damages for USAA’s Insurance Code violation under Castañeda and the Court’s no-recovery rule.

The Court’s general rule yields the same result. Under the general rule, if the insured does not have a right to benefits under the policy, she cannot recover policy benefits as damages for an insurer’s statutory violation. Id. at ––––. The jury’s answer to Question 1 rejected Menchaca’s claim that she has a right to unpaid benefits under the policy. Therefore, under the general rule, Menchaca is not entitled to recover policy damages for USAA’s Insurance Code violation.

The plaintiff bears the burden of proving her case and obtaining jury findings to support a judgment in her favor. See United Scaffolding, Inc. v. Levine, 537 S.W.3d 463, 480–81 (Tex. 2017) (recognizing that the burden to secure proper findings to support a theory of recovery is on the plaintiff); BP Am. Prod. Co. v. Red Deer Res., LLC, 526 S.W.3d 389, 395 n.4 (Tex. 2017) (explaining that the Court did not need to resolve the issue of conflicting jury findings because the plaintiff did not obtain a finding in its favor that could support a judgment against the defendant); Grenwelge v. Shamrock Reconstructors, Inc., 705 S.W.2d 693, 694 (Tex. 1986) (holding that the jury’s failure to find that the defendant breached the contract “merely means that the [plaintiffs] failed to carry their burden of proving the fact”); Vestal v. Gulf Oil Corp., 149 Tex. 487, 235 S.W.2d 440, 442 (1951) (recognizing that on an ultimate issue, “the burden rested on the petitioners to plead and prove and secure a jury finding”); Little Rock Furniture Mfg. Co. v. Dunn, 148 Tex. 197, 222 S.W.2d 985, 990 (1949) (explaining that before a party is entitled to judgment in its favor, it must satisfy its burden of obtaining jury findings in its favor on every essential element of its claim). When the plaintiff does not discharge that burden, judgment cannot be rendered in her favor. See Union Mut. Life Ins. Co. v. Meyer, 502 S.W.2d 676, 679 (Tex. 1973); Little Rock Furniture Mfg. Co., 222 S.W.2d at 990. Here, Menchaca has not discharged her burden and is not entitled to a damages award for USAA’s statutory violation. As a result, there is no reason to remand the case.

The Court’s remand suggests an exception to the no-recovery rule—that an insured may recover policy benefits as damages for a statutory violation despite an insured’s failure to prove entitlement to policy benefits and a jury’s answer that the insurer did not breach any of its obligations under the policy. When the jury found liability on only one basis—a statutory violation—and the plaintiff failed to prove entitlement to policy benefits and failed to seek damages for an independent injury, the plaintiff is not entitled to recover any damages. Applying the Court’s five rules to the facts of this case, I would hold that USAA is entitled to judgment in its favor.

III. Preservation

Generally, a party should object to conflicting answers before the trial court dismisses the jury. The absence of such an objection, however, should not prohibit us from reaching the issue of irreconcilable conflicts in jury findings. I disagree with JUSTICE BOYD’s suggestion that a defendant’s failure to object in a case such as this requires judgment for the plaintiff or *527 prohibits us from ruling in the defendant’s favor.

Texas Rule of Civil Procedure 295 provides a mechanism for trial courts to resolve conflicting jury findings by sending the jury back for further deliberations. That rule provides that “[i]f [a] purported verdict is defective, the court may direct it to be reformed.” TEX. R. CIV. P. 295 (emphasis added). The rule goes on to explain how the court must direct reformation if it chooses to do so:

If it is incomplete, or not responsive to the questions contained in the court’s charge, or the answers to the questions are in conflict, the court shall in writing instruct the jury in open court of the nature of the incompleteness, unresponsiveness, or conflict, provide the jury such additional instructions as may be proper, and retire the jury for further deliberations.

Id. JUSTICE BOYD focuses on “shall” in that sentence, concluding that the only remedy for conflicting jury answers is for the trial court to direct further jury deliberations. 545 S.W.3d at 518. But that ignores “may” in the preceding sentence—“the court may direct [the verdict] to be reformed.” TEX. R. CIV. P. 295 (emphasis added). The comment to Rule 295 explains:

The amendment [effective January 1, 1988] makes it clear that the court may direct a complete yet defective verdict to be reformed. The amendment also makes it clear that in the event the verdict is incomplete or otherwise improper, the court is limited to giving the jury additional instructions in writing.

Id. cmt. (emphasis added). So if the jury’s answers conflict, the trial court may direct the jury to deliberate further, and if the trial court chooses to do so, additional jury instructions must be given in writing. Rule 295 does not mandate that conflicts not resolved through further deliberations are waived; the rule simply mandates written instructions in the event that the court decides to have the jury deliberate further to reform the verdict. Rule 295 does not prohibit a court from exercising another option, however: If the plaintiff insisted on submitting its claims in a way that cannot support the plaintiff’s claim for recovery in light of the jury’s answers, nobody objects to the jury’s answers, and both parties insist there is no conflict, the trial court may enter judgment for the defendant without running afoul of the rule.⁷

If the trial court opts not to direct reformation of the verdict, as Rule 295 allows, but instead enters judgment, an option JUSTICE BOYD does not recognize, JUSTICE BOYD believes that Rule 295 prohibits an appellate court from disturbing that judgment absent an objection to conflicting jury answers. 545 S.W.3d at ––––. According to JUSTICE BOYD, the Rule 295 verdict-reformation process is the only remedy for conflicting jury answers, and that process is triggered only if the party who would later challenge judgment on the verdict *528 objects before the jury has been dismissed. Id. at ––––. If that process is never triggered, the issue of conflicting jury answers has not been preserved for appellate review and cannot be considered even if the jury’s answers fatally conflict and cannot support the judgment. Id. at ––––. This analysis misconstrues Rule 295, misapplies our precedent, and ignores trial realities, as this case demonstrates.

JUSTICE BOYD bases his preservation standard on cases involving incomplete verdicts, extending the rule in those cases to cases involving conflicting jury answers. Id. at 519. We have held that a “party who would benefit from answers” to questions the jury left blank must object to the incomplete verdict, “making it clear that he desires that the jury redeliberate on the issues or that the trial court grant a mistrial.” Fleet v. Fleet, 711 S.W.2d 1, 3 (Tex. 1986); see Cont’l Cas. Co. v. Street, 379 S.W.2d 648, 650 (Tex. 1964) (holding that error was not preserved when the plaintiff “did not object to the acceptance of the jury verdict as incomplete, and thus by timely objection afford the trial court the opportunity, before the jury was discharged, of correcting the error (if such it was) of accepting the verdict with the issues unanswered”). This is because “a judgment cannot be based on a verdict containing unanswered issues, supported by some evidence, unless the issues are immaterial.” Fleet, 711 S.W.2d at 3 (citing Powers v. Standard Acc. Ins. Co., 144 Tex. 415, 191 S.W.2d 7 (1946) ); see TEX. R. CIV. P. 301 (“The judgment of the court shall conform to the pleadings, the nature of the case proved and the verdict, if any ....”). So it makes sense to require a party to object to an incomplete verdict when answers to additional questions are necessary to a judgment in that party’s favor. In that context, as soon as the jury returns its verdict, both the nature of the objection and the party who must object become clear. The same cannot be said in the case of conflicting jury answers, where the jury has answered all necessary and material questions, each party reasonably believes the verdict supports a judgment, neither party believes it would benefit from additional jury deliberations, and “the complaining party” cannot be ascertained until after the trial court enters its judgment, sometimes days or weeks later.⁸ See Burbage v. Burbage, 447 S.W.3d 249, 256 (Tex. 2014) (requiring “the complaining party” to object and point out the specific grounds of the objection).

Recognizing that difficulty, Menchaca’s counsel raised the possibility of conflicting answers before the jury was dismissed, attempting to argue that any conflict would not be irreconcilable. When the trial court made clear its view that the proper time for that argument would be later at a *529 separate hearing, Menchaca’s counsel stated: “If I’m understanding the Court correctly, I don’t need to request that the Court call the jury back and have them reconcile these two issues.” The trial court answered that Menchaca “wanted question no. 1,” “insisted,” “knew this was going to happen,” “saw it coming,” and was “stuck with it.” Under JUSTICE BOYD’s analysis, despite Menchaca’s presentation of the conflict issue and suggestion of further deliberations to resolve any conflict, and the trial court’s rejection of that suggestion, the issue of conflicting answers was not preserved, preventing an appellate court from being able to determine whether a judgment on that verdict could stand. It defies reason to hold that we cannot review the trial court’s judgment because USAA, which did not yet know that it would be the party complaining of the judgment, failed to object when the conflict issue had already been raised in the trial court and the court rejected further jury deliberations to reform the judgment. Under these circumstances, when each party argues on appeal that it is entitled to judgment in its favor based on jury answers that may conflict, and the trial court and both parties were satisfied that further deliberations were unnecessary, I would hold that the appellate court is not prohibited from considering whether a judgment on the verdict can stand.

The Court reviewed conflicting answers under just such circumstances in Little Rock Furniture Manufacturing Co. v. Dunn, 222 S.W.2d at 988–91. In that case, the trial court asked both parties before dismissing the jury whether there was a conflict between answers, and both parties said no. Id. at 988. Before receiving the verdict, the trial court again asked the parties if they thought there were any conflicts, and the parties again said no. Id. When the issue of irreconcilable conflict was later raised, the trial court refused to grant a mistrial or a new trial. Id. Despite the trial court having given the parties multiple opportunities to object to conflicting jury answers and the parties choosing not to do so, this Court considered the issue of conflicting findings and whether the judgment must be set aside. Id. at 988–91. Although the disposition in that case was based on the holding that the conflict in jury answers not fatal, the Court was very clear that its ruling should not be interpreted as support for waiver in the case of an irreconcilable conflict: “We do not hold, however, that in a case of a fatal conflict in answers the parties can waive the conflict.”⁹ Id. at 991. Years later, this Court analyzed conflicting findings when neither party raised the issue before jury dismissal and both sought “outright victory.” C. & R. Transp., Inc. v. Campbell, 406 S.W.2d 191, 195–96 (Tex. 1966); see Meyer, 502 S.W.2d at 679–80 (affirming the court of appeals’ order of new trial because of a fatal conflict in jury answers, without any mention of waiver, preservation, or St. Paul Fire & Marine Ins. Co. v. Murphree, 163 Tex. 534, 357 S.W.2d 744 (1962) ). If the only way to obtain appellate review of a judgment entered on conflicting jury findings were to *530 object before the jury is dismissed and have the jury resolve the conflict through further deliberations, this Court would never have recognized, as we have for almost fifty years, that appellate courts can review by mandamus trial court orders that grant a new trial based solely on an irreconcilable conflict. See In re Columbia Med. Ctr. of Las Colinas, 290 S.W.3d 204, 208–09 (Tex. 2009); Johnson v. Court of Civil Appeals for Seventh Supreme Judicial Dist., 162 Tex. 613, 350 S.W.2d 330, 331 (1961).

As support for a preservation standard requiring an objection to conflicting findings before jury dismissal, JUSTICE BOYD cites the inapplicability of the fundamental-error exception to our preservation of error rules. 545 S.W.3d at ––––. JUSTICE BOYD relies primarily on a single sentence in a 1962 case: “The entry of judgment by a trial court on conflicting findings does not constitute fundamental error.” Murphree, 357 S.W.2d at 749. But the Court in Murphree never applied that sentence to the facts of the case, and the Court certainly never held that only an objection before jury dismissal would allow an appellate court to consider whether a judgment based on conflicting findings can stand. In fact, the opinion suggests that “assignment of error contained in [a] motion for new trial sufficient to bring this question to the trial court’s attention” might have avoided a waiver problem. Id. at 748–49. This Court later explained our Murphree ruling, but again we did not hold that only an objection before jury dismissal would preserve error as to conflicting answers. See St. Louis Sw. Ry. Co. v. Duke, 424 S.W.2d 896, 898 (Tex. 1967). Rather, we explained that “[a]ssuming, without deciding, that there was an irreconcilable conflict in the jury answers, it was necessary to file a motion for new trial assigning as error the entry of judgment on conflicting jury findings” when no motion for judgment notwithstanding the verdict or to disregard special issue findings had been filed. Id. (explaining Murphree, 357 S.W.2d at 744). Thus, to the extent that preservation is required under Murphree, this Court has recognized other mechanisms by which the conflict complaint can be preserved for appeal, including a motion to disregard specific findings, motion for judgment notwithstanding the verdict, and motion for new trial alleging erroneous entry of judgment based on entry of conflicting jury findings. Although I do not believe our preservation requirements prevent us from ruling in USAA’s favor or even from considering the issue of conflicting jury answers in this case, I do believe that USAA’s post-verdict motions were sufficient “to bring this question [of conflicting answers] to the trial court’s attention” and thus preserved error.¹⁰ See Murphree, 357 S.W.2d at 748.

*531 While JUSTICE BOYD provides a thorough discussion of the evolution of our fundamental-error doctrine, 545 S.W.3d at ––––, it is not relevant to this case. The “discredited doctrine” is relevant only when a party challenges on appeal an alleged error that it did not preserve in the trial court, requiring us to decide whether our narrow fundamental-error doctrine permits appellate review of the unpreserved complaint. See In re B.L.D., 113 S.W.3d 340, 350 (Tex. 2003) (“Historically, we have used the term ‘fundamental error’ to describe situations in which an appellate court may review error that was neither raised in the trial court nor assigned on appeal.”) (citing McCauley v. Consolidated Underwriters, 157 Tex. 475, 304 S.W.2d 265, 266 (1957) (per curiam) ). Here, USAA does not complain about conflicting jury answers in presenting its appeal.¹¹ And although USAA also did not take the position in the trial court that a judgment could not stand because of an irreconcilable conflict in the jury’s answers, USAA’s post-verdict motions preserved the issue of the legal fallacy of the jury’s answer to Question 3 in light of its answer to Question 1. The judgment in this case was not based on conflicting answers—the trial court eliminated any conflict when it decided to disregard Question 1, before it entered judgment based on the jury’s answers to Questions 2 and 3. This Court is the first to consider the answers to all three jury questions together, and the parties maintain their no-conflict position. This simply is not a case in which a party raises an issue on appeal but failed to preserve it in the trial court. We should not resolve this case by misapplying preservation rules, getting distracted by the fundamental-error doctrine, or ignoring the realities of the trial proceeding. Nor should we hold a defendant to a preservation standard that forces it to “forfeit a winning hand” or “ask the trial court to fix an error that would, as here, ultimately result in a judgment in its favor.” United Scaffolding, Inc., 537 S.W.3d at 481.

As in Little Rock Furniture, the trial court here practically invited the parties to object before the jury was dismissed. See 222 S.W.2d at 987–88. Despite Menchaca’s counsel noting a conflict in the jury’s answers, neither party objected because they each believed they had won. And as in Little Rock Furniture, that should not prevent us from considering whether the verdict can support a judgment in the plaintiff’s favor. Id. at 989–91. This is especially true when a judgment has never been based on the entire verdict, but on the jury answers that had not been disregarded.

IV. Conclusion

We should resolve this case by deciding the simple question of whether Menchaca met her burden to prove and obtain findings that USAA’s statutory violation caused her to lose benefits that USAA owed under the policy. Based on the jury’s answers to Questions 1, 2, and 3, the answer is no.¹² Applying the Court’s five *532 rules governing the relationship between contractual and statutory claims, I would hold that, under the no-recovery rule, Menchaca cannot prevail on her claim for unpaid policy benefits as damages for USAA’s statutory violation.

Just as we can affirm a judgment in the plaintiff’s favor when we determine that the answers do not conflict irreconcilably, id. at 991, I would hold that we can enter judgment in the defendant’s favor when the answers establish that the plaintiff did not satisfy her burden of proof and is not entitled to any recovery.

For the reasons expressed above, I would render judgment that Menchaca take nothing on her claims.

All Citations

545 S.W.3d 479, 61 Tex. Sup. Ct. J. 743

Jenny, a Texas resident, contacted Myra, a licensed Texas agent for Delaware Insurance Company ("DelInsCo"), in January to obtain premises liability and property damage insurane coverage for her high-end furniture store, Classic Furniture ("Classic"). DelInsCo is licensed to do business in Texas but is a resident of Delaware. When Myra, a resident of Texas, came to inspect the building, Jenny showed her a detached building located behind Classic where restorations were performed on valuable antiques ("Restoration Building"). Myra delivered to Jenny a policy of insurance issued by Insurance and assured Jenny it would cover the entire business and its contents. When Jenny received the policy, she noted that there was to reference made to the Restoration Building. She called Myra, who told her that the omission was simply a mistake and that the policy did include coverage for the Restoration Building. Jenny made the required premium payment on behalf of Classic.

On July 1, a fire destroyed the Restoration Building and its contents. The fire department investigator determined that the fire was caused by a short circuit in an electrical switch that may have been weakened by a thunderstorm the day before. Jenny sent the appropriate completed claim forms to DelInsCo's office on July 5, including a copy of the fire department's final investigation report. 

DelInsCo never conducted an investigation into the cause of the fire. Jenny called TexInsCo several times and left messages inquiring about the status of Classic's claim. Her calls were never returned. On August 15, Jenny received a letter from DelInsCo advising her that Classic's claim was being denied because: (1) the policy did not cover the Restoration Building; (2) it suspected that the fire was caused by arson (which was not covered by the policy) or, (3) if immediately caused by the short circuit, Classic's neglect in failing to examine the electrical system following the thunderstorm contributed to the loss.

Jenny hired an attorney, Albert, to help her with Classic's claim on the policy. Albert agreed to represent Classic on a 33% contingency fee basis on whatever he collected from Insurance.

1. What causes of action under Texas consumer laws, if any, does Classic have against Insurance for denying coverage under the policy and denying Classic's claim for the loss of the Restoration Building? Explain fully.

2.Assume Classic files its case in state court. What procedural defenses does Insurance have available to any actions filed here? Is there a way that DelInsCo could remove the case to federal court? Will DelInsCo be able to argue successfully that Texas consumer laws do not apply to it because it is a Delaware Corporation?

3. What remedies, if any, is Classic entitled to obtain against DelInsCo.