Texas Insurance Code Title 4, Chapter 462 - Texas Property And Casualty Insurance Guaranty Association

SUBCHAPTER A GENERAL PROVISIONS

• Texas Section 462.001 - Short Title
  This chapter may be cited as the Texas Property and Casualty Insurance Guaranty Act. Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec....
• Texas Section 462.002 - Purposes
  The purposes of this chapter are to: (1) provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay...
• Texas Section 462.003 - Construction
  This chapter shall be liberally construed to implement the purposes of this chapter described by Section 462.002, which shall be used to aid and guide...
• Texas Section 462.004 - General Definitions
  In this chapter: (1) "Affiliate" means a person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common...
• Texas Section 462.005 - Description Of Control
  (a) For purposes of this chapter, control is the power to direct, or cause the direction of, the management and policies of a person, other...
• Texas Section 462.006 - Net Direct Written Premiums
  (a) Except as provided by Subsection (b) and subject to Subsection (c), in this chapter, "net direct written premiums" means direct premiums written in this...
• Texas Section 462.007 - Applicability In General; Exceptions
  (a) Except as provided by Subsection (b), this chapter applies to each kind of direct insurance. (b) Except as provided by Subchapter F, this chapter...
• Texas Section 462.008 - Applicability To Texas Mutual Insurance Company
  (a) This chapter applies to insurance written through the Texas Mutual Insurance Company only as provided by this section. (b) This chapter applies to the...
• Texas Section 462.009 - Applicability To Former Texas Workers' Compensation Insurance Facility And Successor
  (a) Notwithstanding any other provision of this chapter, this chapter applies to each insurance policy issued under Article 5.76 or 5.76-2, as those articles existed...
• Texas Section 462.010 - Conflict With Other Laws
  (a) Except as provided by Subsection (b), if this chapter conflicts with another statute relating to the association, this chapter controls. (b) This section does...
• Texas Section 462.011 - Immunity In General
  (a) Liability does not exist and a cause of action does not arise against any of the following persons for any good faith act or...
• Texas Section 462.012 - Immunity In Relation To Certain Reports And Recommendations
  Liability does not exist and a cause of action does not arise against any of the following persons for a statement made in good faith...
• Texas Section 462.013 - Immunity In Relation To Certain Negotiations
  (a) Liability does not exist and a cause of action does not arise against any of the following persons for an act or omission in...
• Texas Section 462.014 - Rules
  The commissioner shall adopt reasonable rules as necessary to implement and supplement this chapter and this chapter's purposes. Added by Acts 2005, 79th Leg., Ch....
• Texas Section 462.015 - Information Provided By Or To Commissioner
  (a) The commissioner shall notify the association of the existence of an impaired insurer not later than the third day after the date the commissioner...
• Texas Section 462.016 - Penalty For Failure To Pay Assessments Or Comply With Plan Of Operation
  (a) The commissioner shall suspend or revoke, after notice and hearing, the certificate of authority to engage in the business of insurance in this state...

SUBCHAPTER B GOVERNANCE OF ASSOCIATION

• Texas Section 462.017 - Appeals And Other Actions
  (a) A final action or order of the commissioner under this chapter is subject to judicial review by a court. (b) Venue in a suit...
• Texas Section 462.051 - Association As Legal Entity; Membership
  (a) The Texas Property and Casualty Insurance Guaranty Association is a nonprofit unincorporated legal entity. (b) The association is composed of all member insurers. A...
• Texas Section 462.052 - Board Of Directors
  (a) The association's powers are exercised through a board of directors consisting of nine individuals. (b) Member insurers shall select five insurance industry board members,...
• Texas Section 462.053 - Eligibility To Serve As Public Representative
  A board member who is a public representative may not be: (1) an officer, director, or employee of an insurer, insurance agency, agent, broker, adjuster,...
• Texas Section 462.054 - Eligibility To Serve As Industry Representative
  To be eligible to serve as an insurance industry board member, an individual must be a full-time employee of a member insurer. Added by Acts...
• Texas Section 462.055 - Term; Vacancy
  (a) A board member serves a term established by the plan of operation. (b) The remaining board members, by majority vote, shall fill a vacancy...
• Texas Section 462.056 - Reimbursement Of Board Members
  A board member may be reimbursed from the assets of the association for expenses the board member incurs as a board member. Added by Acts...
• Texas Section 462.057 - Financial Statement Of Board Member
  Each board member shall file with the Texas Ethics Commission a financial statement as provided by Subchapter B, Chapter 572, Government Code. Added by Acts...
• Texas Section 462.058 - Conflict Of Interest
  (a) A director of the association or a member insurer or other entity represented by the director may not receive money or another valuable thing...

SUBCHAPTER C GENERAL POWERS AND DUTIES OF ASSOCIATION

• Texas Section 462.059 - Meeting By Conference Call
  (a) Notwithstanding Chapter 551, Government Code, the board may hold an open meeting by telephone conference call if immediate action is required and convening of...
• Texas Section 462.101 - General Powers And Duties
  (a) The association may: (1) employ or retain persons as necessary to handle claims and perform other duties of the association; (2) borrow money necessary...
• Texas Section 462.102 - Association Not In Place Of Impaired Insurer
  In performing the association's statutory obligations under this chapter, the association is not considered: (1) to be engaged in the business of insurance; (2) to...
• Texas Section 462.103 - Plan Of Operation
  (a) The association shall perform the association's functions under a plan of operation necessary or suitable to ensure the fair, reasonable, and equitable administration of...
• Texas Section 462.104 - Notice To Insureds
  (a) The commissioner may require that the association notify an impaired insurer's insureds and any other interested parties of: (1) the designation of impairment; and...
• Texas Section 462.105 - Accounts
  For purposes of administration and assessment, the association is divided into: (1) the workers' compensation insurance account; (2) the automobile insurance account; and (3) the...
• Texas Section 462.106 - Administrative Expenses
  (a) The association may use money in the administrative account to pay administrative costs and other general expenses of the association. (b) The association may...
• Texas Section 462.107 - Examination Of Association
  Not later than April 30 of each year, the association shall submit an audited financial statement for the preceding calendar year to the state auditor...
• Texas Section 462.108 - Deposit Of Money
  The board may deposit the money the association collects into the Texas Treasury Safekeeping Trust Company in accordance with procedures established by the comptroller. The...
• Texas Section 462.109 - Delegation Of Powers And Duties
  (a) Except as provided by Subsection (b), the plan of operation may provide that, on approval of the board and the commissioner, the association may...
• Texas Section 462.110 - Exemption From Certain Fees And Taxes
  The association is exempt from payment of all fees and of all taxes levied by this state or a subdivision of this state, except taxes...
• Texas Section 462.111 - Access To Records Of Member Insurer In Receivership; Actuarial And Operational Analysis
  (a) The association shall have access to the books and records of a member insurer in receivership to determine the extent of the impact on...
• Texas Section 462.112 - Board Access To Records Of Impaired Insurer
  The receiver or statutory successor of an impaired insurer covered by this chapter shall give the board or the board's representative: (1) access to the...
• Texas Section 462.1121 - Action To Obtain Information Concerning Insurer In Receivership Authorized
  (a) The association may bring an action against any third-party administrator, agent, attorney, or other representative of an insurer for which a receiver has been...
• Texas Section 462.113 - Board Report On Conclusion Of Insolvency
  On the conclusion of the insolvency of a domestic insurer with respect to which the association was obligated to pay covered claims, the board may:...

SUBCHAPTER D ASSESSMENTS IN GENERAL

• Texas Section 462.114 - Duty Of Receiver
  The receiver shall periodically submit a list of claims to the association or similar organization in another state. Added by Acts 2005, 79th Leg., Ch....
• Texas Section 462.151 - Making Of Assessment; Amount
  (a) The association shall assess member insurers the amount necessary to pay: (1) the association's obligations under Section 462.302 and the expenses of handling covered...
• Texas Section 462.152 - Maximum Total Assessment
  (a) The total assessment of a member insurer in a year may not exceed an amount equal to two percent of the insurer's net direct...
• Texas Section 462.153 - Refund Of Contribution
  The association may refund to the member insurers in proportion to the contribution of each member insurer to the association the amount by which the...
• Texas Section 462.154 - Notice Of Assessment
  The association shall notify a member insurer of an assessment not later than the 30th day before the date the assessment is due. Added by...
• Texas Section 462.155 - Deferment
  (a) The association may defer wholly or partly an assessment of a member insurer that would cause the insurer's financial statement to show amounts of...
• Texas Section 462.156 - Use Of Assessments
  (a) The amounts provided under assessments made under this chapter supplement the marshalling of assets by the receiver under Chapter 442 to make payments on...
• Texas Section 462.157 - Tax Credit
  (a) An insurer is entitled to a credit against the insurer's premium tax under Chapter 221 for the total amount of an assessment paid by...
• Texas Section 462.158 - Advance As Loan
  Money advanced by the association under this chapter is considered a special fund loan to the impaired insurer for payment of covered claims and does...
• Texas Section 462.159 - Estimate Of Additional Money Needed On Impairment Of Insurer
  (a) If the commissioner determines that an insurer has become an impaired insurer, the association shall promptly estimate the amount of additional money, by lines...
• Texas Section 462.160 - Assessment For Additional Money For Accounts
  If the board determines that additional money is needed in any of the three accounts described by Section 462.105, the board shall make assessments as...
• Texas Section 462.161 - Amount Of Assessment; Proration Of Payment
  (a) The association, in determining the proportionate amount to be paid by individual insurers under an assessment under Section 462.160, shall consider the lines of...
• Texas Section 462.162 - Maximum Assessment Of Insurer; Additional Assessment Authority Under Certain Circumstances
  (a) Except as otherwise provided by this section, assessments under Section 462.160 during a calendar year may not exceed two percent of each insurer's net...
• Texas Section 462.163 - Payment Of Assessment
  An insurer shall pay the amount of an assessment under Section 462.160 or 462.162(b) to the association not later than the 30th day after the...
• Texas Section 462.164 - Participation Receipts
  (a) On receipt from a member insurer of payment of an assessment or partial assessment under Section 462.160 or 462.162(b), the association shall provide the...
• Texas Section 462.165 - Accounting; Reports; Refund
  (a) The association, with respect to an impaired insurer, shall adopt accounting procedures that reflect the use of all money and shall make a final...
• Texas Section 462.166 - Use Of Excess Money In Account
  (a) If the association determines that money in the account described by Section 462.164(b) for a line of business exceeds the amount reasonably necessary for...
• Texas Section 462.167 - Collection Of Assessments
  (a) The commissioner may collect an assessment on behalf of the association through a suit brought for that purpose. (b) Venue for a suit under...

SUBCHAPTER E COVERED CLAIMS; CLAIMANTS

• Texas Section 462.168 - Exemption For Impaired Insurer
  An impaired insurer is exempt from assessment from the date the insurer is designated an impaired insurer until the date the commissioner determines that the...
• Texas Section 462.201 - Covered Claims In General
  A claim is a covered claim if: (1) the claim is an unpaid claim; (2) the claim is made under an insurance policy to which...
• Texas Section 462.202 - Claim For Unearned Premiums
  (a) A claim for unearned premiums is a covered claim. A covered claim for unearned premiums may not exceed $25,000. (b) With respect to a...
• Texas Section 462.203 - Certain Expenses Of Receivership Or Conservatorship Estate Covered
  An administration expense incurred in processing or paying a claim against a receivership or conservatorship estate is a covered claim if the impaired insurer has...
• Texas Section 462.204 - Affiliate May Not Be Claimant
  A person who is an affiliate of an impaired insurer may not be a claimant of the insurer. Added by Acts 2005, 79th Leg., Ch....
• Texas Section 462.205 - Determination Of Residence Of Entities
  A corporation or other entity that is not an individual is considered to be a resident of the state in which the entity's principal place...
• Texas Section 462.206 - Claims Not Covered: Premium Under Retrospective Rating Plan
  An amount sought as a return of premium under a retrospective rating plan is not a covered claim. Added by Acts 2005, 79th Leg., Ch....
• Texas Section 462.207 - Claims Not Covered: Amounts Due Certain Entities
  (a) Any amount directly or indirectly due any reinsurer, insurer, self-insurer, insurance pool, or underwriting association, as a subrogation recovery, reinsurance recovery, contribution, or indemnification,...
• Texas Section 462.208 - Claims Not Covered: Supplementary Payment Obligations
  A supplementary payment obligation, including an adjustment fee or expense, attorney's fee or expense, court cost, interest or penalty, or interest or bond premium, incurred...
• Texas Section 462.209 - Claims Not Covered: Prejudgment Or Postjudgment Interest
  Prejudgment or postjudgment interest that accrues after an insurer is determined to be an impaired insurer is not a covered claim. Added by Acts 2005,...
• Texas Section 462.210 - Claims Not Covered: Certain Damages
  A claim against the insured, insurer, guaranty association, receiver, special deputy receiver, or commissioner for recovery of punitive, exemplary, extracontractual, or bad-faith damages awarded in...
• Texas Section 462.211 - Claims Not Covered: Late Filed Claims
  (a) Notwithstanding any other provision of this chapter or any other law to the contrary, and subject to Subsection (b), a claim that is filed...
• Texas Section 462.212 - Net Worth Exclusion
  (a) Except for a workers' compensation claim governed by Title 5, Labor Code, a covered claim does not include, and the association is not liable...
• Texas Section 462.213 - Amount Of Individual Covered Claim; Limit
  (a) Except as provided by Subsection (b) and Section 462.252, an individual covered claim may not exceed $300,000. (b) The association shall pay the full...

SUBCHAPTER F NONDUPLICATION OF RECOVERY

• Texas Section 462.214 - Certain Shareholders' Claims: Limit
  Notwithstanding any other provision of this chapter, the association's liability for shareholder derivative actions or other claims for economic loss incurred by a claimant in...
• Texas Section 462.251 - Exhaustion Of Rights Under Other Policy Required
  (a) Any person who has a claim under an insurance policy, other than an impaired insurer's policy, and whose claim arises from the same facts,...
• Texas Section 462.252 - Reduction In Amount Of Covered Claim For Other Policy
  (a) Except as provided by Subsection (b), an amount payable as a covered claim under this chapter is reduced by the full applicable limits of...
• Texas Section 462.253 - Effect On Insured Of Reduction In Amount Of Covered Claim
  To the extent that the association's obligation is reduced by the application of Sections 462.251 and 462.252, the liability of the person insured by the...
• Texas Section 462.254 - Recovery From More Than One Guaranty Association
  (a) Except as provided by Subsections (b) and (c), a person who has a claim that may be recovered from more than one insurance guaranty...

SUBCHAPTER G ASSOCIATION POWERS AND DUTIES RELATING TO COVERED CLAIMS

• Texas Section 462.255 - Certain Claims Subject To Lien Or Subrogation; Limit On Total Recovery
  (a) Notwithstanding Sections 462.252(c) and 462.254(e), if a claimant is seeking recovery of insurance policy benefits that, had the impaired insurer not been insolvent, would...
• Texas Section 462.301 - General Powers And Duties Of Association In Connection With Payment Of Covered Claims
  (a) The association shall investigate and adjust, compromise, settle, and pay covered claims to the extent of the association's obligation and deny all other claims....
• Texas Section 462.302 - Payment Of Covered Claims
  (a) The association shall pay covered claims that exist before the designation of impairment or that arise: (1) not later than the 30th day after...
• Texas Section 462.303 - Certain Determinations Not Binding
  (a) The association is not bound by: (1) a judgment taken before the designation of impairment in which an insured under a liability insurance policy...
• Texas Section 462.304 - Servicing Facility
  (a) The association shall handle claims through the association's employees or through one or more insurers or other persons designated, subject to the approval of...
• Texas Section 462.305 - Limitation Of Association's Liability
  The association is not liable to an insured or liability claimant for the association's failure to settle a liability claim within the limits of a...
• Texas Section 462.306 - Discharge Of Policy Obligation
  (a) The association shall discharge an impaired insurer's policy obligations, including the duty to defend insureds under a liability insurance policy, to the extent that...
• Texas Section 462.307 - Assignment Of Rights
  (a) A person recovering under this chapter assigns to the association the person's rights: (1) under the insurance policy; and (2) to recover for the...
• Texas Section 462.308 - Recovery From Certain Persons
  (a) The association is entitled to recover: (1) the amount of a covered claim and the cost of defense paid on behalf of a person:...
• Texas Section 462.309 - Stay Of Proceedings; Certain Decisions Not Binding
  (a) To permit the association to properly defend a pending cause of action, a proceeding in which an impaired insurer is a party or is...
• Texas Section 462.310 - Settlement By Association Binding; Priority Of Claim And Expenses
  (a) The settlement of a covered claim by the association or a similar organization in another state binds the receiver or statutory successor of an...

SUBCHAPTER H RELEASE FROM RECEIVERSHIP

• Texas Section 462.311 - Report To Receiver
  The association shall periodically file with the receiver of an impaired insurer a statement of covered claims paid by the association and an estimate of...
• Texas Section 462.351 - Issuance Of Policies After Release From Receivership
  (a) Except as provided by Subsection (b), an impaired insurer placed in receivership for which money has been advanced under this chapter may not be...

Last modified: September 28, 2016