Texas law

Insurance Disputes Laws in Texas.

Texas insurance law is among the most insurance-friendly states following tort-reform limits. Texas recognizes common-law bad faith under the duty of good faith and fair dealing (*Arnold v. National County Mutual*, 725 S.W.2d 165 (Tex. 1987)). The Texas Insurance Code Chapter 541 (Unfair Methods of Competition and Unfair or Deceptive Acts or Practices) provides a private cause of action. Texas Prompt Pay Act (Tex. Ins. Code Chapter 542, Subchapter B) imposes 18% penalty on insurers who fail to timely pay. Texas DOI regulates insurers.

Last verified: 2026-04-17

State law

Key Texas Statutes

Common-Law Bad Faith (Arnold)Arnold v. National County Mutual, 725 S.W.2d 165 (Tex. 1987)

Texas recognizes common-law bad faith based on the duty of good faith and fair dealing. Plaintiffs may recover consequential damages, plus punitive damages for egregious conduct.

Texas Insurance Code Chapter 541Tex. Ins. Code § 541.001 et seq.

Private cause of action for unfair or deceptive acts or practices in the business of insurance. Damages include actual damages plus additional damages up to 3x for knowing violations, plus attorney fees.

Texas Prompt Pay ActTex. Ins. Code § 542.051 et seq.

Requires insurer to accept/deny claim within 15 days (property/casualty) or 30 days (first-party property) of receipt. Failure results in 18% penalty interest on the claim plus attorney fees.

DTPA Extension to InsuranceTex. Bus. & Com. Code § 17.50

DTPA may apply to insurance disputes, providing treble damages for knowing violations.

Uninsured / Underinsured MotoristTex. Ins. Code § 1952.101

Texas requires UM/UIM coverage to be offered; may be rejected in writing.

State law

Official Sources

TX Department of Insurance Texas Insurance Code

Not Legal Advice

This page summarizes publicly available statutes and rules for informational purposes only. It does not constitute legal advice, and no attorney-client relationship is created by viewing this content. Laws change — always verify with the primary source or consult a licensed attorney in Texas.

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Insurance Disputes Laws in Texas.

Key Texas Statutes

Official Sources

Not Legal Advice

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