CHAPTER 462. TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY ASSOCIATION

State Codes and Statutes

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INSURANCE CODE

TITLE 4. REGULATION OF SOLVENCY

SUBTITLE D. GUARANTY ASSOCIATIONS

CHAPTER 462. TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY

ASSOCIATION

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 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, Sec. 1, eff. April 1, 2007.

Sec. 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 in payment;

(2) avoid financial loss to claimants or policyholders because

of an insurer's impairment;

(3) assist in the detection and prevention of insurer

insolvencies; and

(4) provide an association to assess the cost of that protection

among insurers.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

interpretation of this chapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 control with an impaired insurer on December

31 of the year preceding the date the insurer becomes an impaired

insurer.

(2) "Association" means the Texas Property and Casualty

Insurance Guaranty Association.

(3) "Board" means the board of directors of the association.

(4) "Claimant" means an insured making a first-party claim or a

person instituting a liability claim.

(5) "Impaired insurer" means a member insurer that is:

(A) placed in:

(i) temporary or permanent receivership or liquidation under a

court order, including a court order of another state, based on a

finding of insolvency; or

(ii) conservatorship after the commissioner determines that the

insurer is insolvent; and

(B) designated by the commissioner as an impaired insurer.

(6) "Member insurer" means an insurer, including a stock

insurance company, a mutual insurance company, a Lloyd's plan, a

reciprocal or interinsurance exchange, and a county mutual

insurance company, that:

(A) writes any kind of insurance to which this chapter applies

under Sections 462.007 and 462.008, including reciprocal or

interinsurance exchange contracts; and

(B) holds a certificate of authority to engage in the business

of insurance in this state.

(7) "Person" means an individual, corporation, partnership,

association, or voluntary organization.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 than power

that results from an official position with the person or a

corporate office held by the person. The power may be possessed

directly or indirectly by any means, including through the

ownership of voting securities or by contract, other than a

commercial contract for goods or nonmanagement services.

(b) A person is presumed to control another person if the person

directly or indirectly owns, controls, holds with the power to

vote, or holds proxies representing 10 percent or more of the

voting securities of the other person. This presumption may be

rebutted by a showing that the person does not in fact control

the other person.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 state on insurance policies to which this chapter

applies, less return premiums on those policies and dividends

paid or credited to policyholders on that direct business.

(b) Subject to Subsection (c), for assessing the workers'

compensation line of business, the term "net direct written

premiums" includes the modified annual premium before the

application of a deductible premium credit, less return premiums

on those policies and dividends paid or credited to policyholders

on that direct business.

premiums on contracts between insurers or reinsurers.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 does not

apply to:

(1) life, annuity, health, or disability insurance;

(2) mortgage guaranty, financial guaranty, or other kinds of

insurance offering protection against investment risks;

(3) a fidelity or surety bond, or any other bonding obligation;

(4) credit insurance, vendors' single-interest insurance,

collateral protection insurance, or similar insurance protecting

a creditor's interest arising out of a creditor-debtor

transaction;

(5) insurance of warranties or service contracts;

(6) title insurance;

(7) ocean marine insurance;

(8) a transaction or combination of transactions between a

person, including an affiliate of the person, and an insurer,

including an affiliate of the insurer, that involves the transfer

of investment or credit risk unaccompanied by the transfer of

insurance risk, including transactions, except for workers'

compensation insurance, involving captive insurers, policies in

which deductible or self-insured retention is substantially equal

in amount to the limit of the liability under the policy, and

transactions in which the insured retains a substantial portion

of the risk; or

(9) insurance provided by or guaranteed by government.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.005(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.005(a), eff. September 1, 2007.

Sec. 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 Mutual Insurance Company

on a prospective basis on and after January 1, 2000. The Texas

Mutual Insurance Company is only liable for assessments for a

claim with a date of injury that occurs on or after January 1,

2000. The association, with respect to an insolvency of the

Texas Mutual Insurance Company, is only liable for a claim with a

date of injury that occurs on or after January 1, 2000.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 before their repeal.

(b) Notwithstanding any other provision of this chapter, the

stock insurance company that resulted from the transfer of the

former Texas workers' compensation insurance facility is

considered an impaired insurer for purposes of this chapter if

any action described by Section 462.004(5) is taken with respect

to the company.

(a) is a covered claim for purposes of this chapter if the claim

is a covered claim for purposes of Sections 462.201-462.203,

462.205-462.210, 462.213, 462.214, and 462.305 without regard to

whether the stock insurance company described by Subsection (b):

(1) issued or assumed the policy; or

(2) was authorized to engage in business in this state at the

time:

(A) the policy was written; or

(B) the company became an impaired insurer.

(d) If a conflict exists between this section and any other

statute relating to the former Texas workers' compensation

insurance facility or the association, this section controls.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 not apply to a conflict between this

chapter and:

(1) Subtitle A, Title 5, Labor Code, except as described by

Subsection (c); or

(2) Subtitle E, Title 10.

an insurance carrier under Chapter 417, Labor Code, against an

impaired insurer's insured or the association.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 omission in

performing the person's powers and duties under this chapter:

(1) the commissioner or the commissioner's representative;

(2) the association or the association's agent or employee;

(3) a member insurer;

(4) the board;

(5) the receiver; or

(6) a special deputy receiver or the special deputy receiver's

agent or employee.

(b) The attorney general shall defend any action to which this

section applies that is brought against the commissioner or the

commissioner's representative, the association or the

association's agent or employee, a member insurer or the

insurer's agent or employee, a board member, or a special deputy

receiver or the special deputy receiver's agent or employee,

including an action instituted after the defendant's service with

the association, commissioner, or department has terminated.

This subsection does not require the attorney general to defend a

person with respect to an issue other than the applicability or

effect of the immunity created by Subsection (a). The attorney

general is not required to defend the association or the

association's agent or employee, a member insurer or the member

insurer's agent or employee, a board member, or a special deputy

receiver or the special deputy receiver's agent or employee

against an action regarding the disposition of a claim filed with

the association under this chapter or any issue other than the

applicability or effect of the immunity created by Subsection

(a). The association may contract with the attorney general under

Chapter 771, Government Code, for legal services not covered by

this subsection.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 by the person in a report or

recommendation made under Section 462.111 or 462.113:

(1) the commissioner or the commissioner's representative;

(2) the association or the association's agent or employee;

(3) a member insurer; or

(4) the board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

the performance of an activity related to the negotiations

relating to the privatization of the former Texas workers'

compensation facility:

(1) the commissioner or the commissioner's representative;

(2) the association or the association's agent or employee;

(3) a member insurer; or

(4) a board member.

(b) This section applies to each activity undertaken by a person

described by Subsection (a), regardless of the date of the act or

omission.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 gives notice of the designation of impairment.

The association is entitled to a copy of any complaint seeking an

order of receivership with a finding of insolvency against a

member insurer at the time the complaint is filed with a court.

(b) On the board's request, the commissioner shall provide the

association with a statement of the net direct written premiums

of each member insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 of a member

insurer that:

(1) fails to pay an assessment at the time the assessment is

due; or

(2) otherwise fails to comply with the plan of operation.

(b) As an alternative to action under Subsection (a), the

commissioner may assess a fine on a member insurer that fails to

pay an assessment at the time the assessment is due. The fine

may not exceed the lesser of:

(1) five percent of the unpaid assessment per month; or

(2) $100 per month.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 by or against the commissioner or

association relating to an action or ruling of the commissioner

or association under this chapter is in Travis County. The

commissioner or association is not required to give an appeal

bond in an appeal of a cause of action arising under this

chapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.008(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.008(a), eff. September 1, 2007.

SUBCHAPTER B. GOVERNANCE OF ASSOCIATION

Sec. 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 member

insurer must remain a member of the association as a condition of

engaging in the business of insurance in this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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, subject to the approval of the commissioner. In

approving selections to the board, the commissioner shall

consider whether all member insurers are fairly represented.

by the commissioner.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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, or any other business entity

regulated by the department;

(2) a person required to register with the Texas Ethics

Commission under Chapter 305, Government Code, in connection with

the person's representation of clients in the field of insurance;

(3) related to a person described by Subdivision (1) or (2)

within the second degree of affinity or consanguinity.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 on the board for the unexpired term, subject to the

commissioner's approval.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

directly, indirectly, or through any substantial interest in any

other corporation, firm, or business unit for negotiating,

procuring, participating in, recommending, or aiding in a

reinsurance agreement, merger, or other transaction, including

the purchase, sale, or exchange of assets, insurance policies, or

property made by the association or the supervisor, conservator,

or receiver on behalf of an impaired insurer.

(b) The director, member insurer, or entity may not be

pecuniarily or contractually interested, as principal,

coprincipal, agent, or beneficiary, directly, indirectly, or

through any substantial interest in any other corporation, firm,

or business unit, in the reinsurance agreement, merger, purchase,

sale, exchange, or other transaction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 a quorum of the board at a single location is not

reasonable or practical.

(b) The meeting is subject to the notice requirements that apply

to other meetings.

the meeting the location at which meetings of the board are

usually held, and each part of the meeting that is required to be

open to the public must be audible to the public at that location

and must be tape recorded. The tape recording shall be made

available to the public.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION

Sec. 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 to implement this chapter in

accordance with the plan of operation;

(3) sue or be sued;

(4) negotiate and enter into a contract as necessary to

implement this chapter; and

(5) perform other acts as necessary or proper to implement this

chapter.

(b) A contract authorized by Subsection (a)(4) includes a

lump-sum or structured compromise and settlement agreement with a

claimant who has a claim for medical or indemnity benefits for a

period of three years or more, other than a settlement or

lump-sum payment in violation of Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 have assumed or succeeded to a liability of the impaired

insurer; or

(3) to otherwise stand in the place of the impaired insurer for

any purpose, including for the purpose of determining whether the

association is subject to personal jurisdiction of the courts of

another state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 the association. The plan of

operation must:

(1) be submitted to and approved in writing by the commissioner;

(2) establish:

(A) procedures under which the powers and duties of the

association are performed;

(B) procedures for handling assets of the association;

(D) acceptable forms of proof of covered claims;

(E) regular places and times for board meetings;

(F) procedures for records to be kept of each financial

transaction of the association, the association's agents, and the

board; and

(G) procedures under which selections for the board are

submitted to the commissioner;

(3) provide:

(A) for the establishment of a claims filing procedure that

includes:

(i) notice by the association to claimants;

(ii) procedures for filing claims seeking recovery from the

association; and

(iii) a procedure for appealing the denial of claims by the

association; and

(B) that a member insurer aggrieved by a final action or

decision of the association may appeal to the commissioner not

later than the 30th day after the date of the action or decision;

and

(4) contain additional provisions necessary or proper for the

execution of the association's powers and duties.

(b) The association shall submit to the commissioner any

amendment to the plan of operation necessary or suitable to

ensure the fair, reasonable, and equitable administration of the

association. The amendment takes effect on the commissioner's

written approval.

the plan of operation, the commissioner after notice and hearing

shall adopt reasonable rules as necessary or advisable to

implement this chapter. A rule continues in effect until

modified by the commissioner or superseded by an amendment

submitted by the association and approved by the commissioner.

(d) Each member insurer shall comply with the plan of operation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

(2) the insureds' and other parties' rights under this chapter.

(b) The association shall give notice as the commissioner

directs under this section. The association shall mail the

notice to the last known address, if available. If sufficient

information for notification by mail is not available, notice by

publication in a newspaper of general circulation is sufficient

notice.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 account for all other lines of insurance to which this

chapter applies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 transfer income from investment of the

association's money to the administrative account.

additional money needed for the administrative account, the

association shall assess member insurers in the manner provided

by Sections 462.159-462.168 for that money. The commissioner

shall consider the net direct written premiums collected in this

state for all lines of business covered by this chapter. An

assessment for administrative expenses incurred by a supervisor

or conservator appointed by the commissioner or a court-appointed

receiver for a nonmember of the association or unauthorized

insurer operating in this state may not exceed $1 million each

calendar year.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 in a form approved by the state auditor's office.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 comptroller shall account to the association

for the deposited money separately from all other money.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 delegate by contract any or all powers or duties

of the association to a corporation or other organization that:

(1) performs or will perform in two or more states functions

similar to those of the association or the association's

equivalent; and

(2) provides protection not substantially less favorable and

effective than that provided by this chapter.

(b) The association may not delegate a power or duty under

Section 462.101(a)(2), 462.151, 462.154, 462.155, or 462.302(d)

under this section.

(1) reimburse the corporation or other organization as a

servicing facility would be reimbursed; and

(2) pay the corporation or other organization for the

performance of any other functions of the association.

(d) A contract entered into under this section is subject to the

performance standards imposed under Section 442.112.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

levied on real or personal property.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 the association if the member becomes impaired.

(b) The association may:

(1) perform or cause to be performed an actuarial and

operational analysis of the member insurer; and

(2) prepare a report on matters relating to the impact or

potential impact on the association in the event of impairment.

document.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 insurer's records as necessary for the board

to perform the board's functions under this chapter relating to

covered claims; and

(2) copies of those records on the board's request and at the

board's expense.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

appointed to obtain custody and control of all information,

including files, records, and electronic data, related to the

insurer that is appropriate or necessary for the association, or

a similar association in other states, to carry out its duties

under this chapter or a similar law of another state. The

association has the absolute right to obtain information under

this section through emergency equitable relief, regardless of

where the information is physically located.

(b) In bringing an action under this section, the association is

not subject to any defense, possessory lien or other type of

lien, or other legal or equitable ground for refusal to surrender

the information that may be asserted against the receiver of the

insurer.

attorney's fees and costs incurred by the association in any

action to obtain information under this section.

(d) The rights granted to the association under this section do

not affect the receiver's title to information, and information

obtained under this section remains the property of the receiver

while in the custody of the association.

Added by Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.007(b), eff. September 1, 2007.

Added by Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.007(b), eff. September 1, 2007.

Sec. 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:

(1) prepare a report on the history and causes of the

insolvency, based on information available to the association;

and

(2) submit the report to the commissioner.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER D. ASSESSMENTS IN GENERAL

Sec. 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 claims subsequent to an insolvency;

and

(2) other expenses authorized by this chapter.

(b) The assessment of each member insurer must be in the

proportion that the net direct written premiums of the insurer

for the calendar year preceding the assessment bear to the net

direct written premiums of all member insurers for that year.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 written premiums

for the calendar year preceding the assessment.

(b) If the maximum assessment and the association's other assets

are insufficient in a year to make all necessary payments, the

money available shall be prorated and the association shall pay

the unpaid portion as soon as money becomes available.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

association's assets exceed the association's liabilities, if at

the end of a calendar year the board finds that the assets of the

association exceed the liabilities of the association as

estimated by the board for the next year.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 capital or

surplus less than the minimum amounts required for a certificate

of authority in any jurisdiction in which the insurer is

authorized to engage in the business of insurance.

(b) The member insurer shall pay the deferred assessment at the

time payment will not reduce capital or surplus below required

minimums. The payment shall be refunded to or credited against

future assessments of any member insurer receiving a larger

assessment because of the deferment, as elected by that insurer.

a dividend to shareholders or policyholders.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 the impaired insurer's behalf.

(b) This section does not require the receiver to exhaust the

assets of the impaired insurer before an assessment is made or

before money derived from an assessment may be used to pay

covered claims.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 the insurer under this

chapter.

(b) The tax credit may be taken at a rate of 10 percent each

year for 10 successive years after the date of assessment. At

the option of the insurer, the tax credit may be taken over an

additional number of years.

may be reflected in the books and records of the insurer as an

admitted asset of the insurer for all purposes, including

exhibition in an annual statement under Section 862.001.

(d) Available credit against premium tax allowed under this

section may be transferred or assigned among insurers if:

(1) a merger, acquisition, or total assumption of reinsurance

among the insurers occurs; or

(2) the commissioner by order approves the transfer or

assignment.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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

not become an asset of the impaired insurer. The loan is

repayable to the extent money from the impaired insurer is

available.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 of business,

needed to supplement the immediately available assets of the

impaired insurer to pay covered claims.

(b) The board shall make additional money available as the

actual need arises for each impaired insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 needed to produce the necessary money.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 business written by the

impaired insurer and shall assess individual insurers in

proportion to the ratio that the total net direct written

premiums collected in this state by the insurer for those lines

of business bears to the total net direct written premiums

collected by all insurers, other than impaired insurers, in this

state for those lines of business.

(b) The association shall determine the total net direct written

premiums of an individual insurer and of all insurers in the

state from the insurers' annual statements for the year preceding

assessment.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 direct written premiums for the preceding calendar

year in the lines of business for which the assessments are made.

(b) In the event of a natural disaster or other catastrophe, the

association may apply to the governor, in the manner prescribed

by the plan of operation, for authority to assess each member

insurer that writes insurance coverage, other than automobile

insurance coverage or workers' compensation insurance coverage,

an additional amount not to exceed two percent of the insurer's

net direct written premiums for the preceding calendar year.

provide an amount sufficient for payment of covered claims of

impaired insurers, the association may make assessments in

successive calendar years.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 date the

association gives notice of the assessment.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 insurer with a participation receipt. A

participation receipt creates liability against the account

described by Section 462.105 for the line or lines of business

for which the assessment was made.

(b) The account from which an advance is made to an impaired

insurer for the payment of covered claims is a general creditor

of the impaired insurer for the money advanced. With reference

to the remaining balance of an advance not used to pay covered

claims, the claim of the account has preference over other

general creditors.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 report of the use of the money to the commissioner.

The final report must state any remaining balance from the money

advanced to an impaired insurer for the payment of covered

claims.

(b) The association shall make interim accounting reports as

required by the commissioner or requested by the conservator.

the association shall refund by line of business the remaining

balance of those advances to the association's accounts.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 efficient future operation under this

chapter, the association shall, after deducting any premium tax

credit taken under Section 462.157, return the excess money pro

rata to the holders of participation receipts:

(1) on which an outstanding balance exists; and

(2) that were issued for an assessment on the same line of

business as the line for which the excess money is found to

exist.

(b) The association shall transfer an excess amount that exists

in the account described by Section 462.164(b) to the comptroller

to be deposited to the credit of the general revenue fund if:

(1) after a distribution under this section the association

finds that an excess amount still exists; or

(2) participation receipts on which there is an outstanding

balance do not exist.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 this section is in Travis County.

The appeal is at once returnable to the appellate court. The

appeal has precedence in the appellate court over all causes of a

different character pending before the court.

(d) The commissioner is not required to give an appeal bond in

any cause of action arising under this section.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 insurer is no longer an impaired insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER E. COVERED CLAIMS; CLAIMANTS

Sec. 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 this

chapter applies that is:

(A) issued by an insurer authorized to engage in business in

this state; or

(B) assumed by an insurer authorized to engage in business in

this state that issues an assumption certificate to the insured;

(3) the claim arises out of the policy and is within the

coverage and applicable limits of the policy;

(4) the insurer that issued the policy or assumed the policy

under an assumption certificate issued to the insured is an

impaired insurer; and

(5) the claim:

(A) is made by a liability claimant or insured who is a resident

of this state at the time of the insured event; or

(B) is a first-party claim for damage to property that is

permanently located in this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 covered claim for unearned premiums, a

person has a covered claim under this chapter if the person is a

resident of this state at the time:

(1) the policy is issued; or

(2) the insurer is determined to be an impaired insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 insufficient assets to pay the expenses of

administering the estate.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 of business is located.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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.

727, Sec. 1, eff. April 1, 2007.

Sec. 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, or otherwise, is not a covered

claim.

(b) An impaired insurer's insured is not liable, and the

reinsurer, insurer, self-insurer, insurance pool, or underwriting

association is not entitled to sue or continue a suit against the

insured, for a subrogation recovery, reinsurance recovery,

contribution, indemnification, or any other claim asserted

directly or indirectly by a reinsurer, insurer, insurance pool,

or underwriting association to the extent of the applicable

liability limits of the insurance policy written and issued to

the insured by the insolvent insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.006(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.006(a), eff. September 1, 2007.

Sec. 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 before

an insurer is determined to be an impaired insurer is not a

covered claim.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 a court judgment against an insured or insurer is not

a covered claim.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 with the association on a date that is later than 18

months after the date of the order of liquidation or that is

unknown and unreported as of the date is not a covered claim.

(b) This section does not apply to a claim for workers'

compensation benefits governed by Title 5, Labor Code, and the

applicable rules of the commissioner of workers' compensation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.007(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.007(a), eff. September 1, 2007.

Sec. 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 for,

any claim arising from an insurance policy of any insured whose

net worth on December 31 of the year preceding the date the

insurer becomes an impaired insurer exceeds $50 million.

(b) For purposes of this section, an insured's net worth

includes the aggregate net worth of the insured and of the

insured's parent, subsidiary, and affiliated companies computed

on a consolidated basis.

(1) to third-party claims against an insured that has:

(A) applied for or consented to the appointment of a receiver,

trustee, or liquidator for all or a substantial part of the

insurer's assets;

(B) filed a voluntary petition in bankruptcy; or

arrangement with creditors or to take advantage of any insolvency

law; or

(2) if an order, judgment, or decree is entered by a court of

competent jurisdiction, on the application of a creditor,

adjudicating the insured bankrupt or insolvent or approving a

petition seeking reorganization of the insured or of all or a

substantial part of its assets.

(d) In an instance described by Subsection (c), the association

is entitled to assert a claim in the bankruptcy or receivership

proceeding to recover the amount of any covered claim and costs

of defense paid on behalf of the insured.

(e) The association may establish procedures for requesting

financial information from an insured or claimant on a

confidential basis for the purpose of applying sections

concerning the net worth of first-party and third-party

claimants, subject to any information requested under this

subsection being shared with any other association similar to the

association and with the liquidator for the impaired insurer on

the same confidential basis. If the insured or claimant refuses

to provide the requested financial information, the association

requests an auditor's certification of that information, and the

auditor's certification is available but not provided, the

association may deem the net worth of the insured or claimant to

be in excess of $50 million at the relevant time.

(f) In any lawsuit contesting the applicability of Section

462.308 or this section when the insured or claimant has declined

to provide financial information under the procedure provided in

the plan of operation under Section 462.103, the insured or

claimant bears the burden of proof concerning its net worth at

the relevant time. If the insured or claimant fails to prove

that its net worth at the relevant time was less than the

applicable amount, the court shall award the association its full

costs, expenses, and reasonable attorney's fees in contesting the

claim.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.010(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.010(a), eff. September 1, 2007.

Sec. 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 amount of a covered claim

arising out of a workers' compensation claim made under a

workers' compensation insurance policy.

includes any derivative claims by more than one person that arise

from the same occurrence. The claims shall be considered

collectively as a single claim under this chapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 the

claimant's capacity as a shareholder under an insurance policy

placed in force on or after January 1, 1992, is limited to

$300,000 for each policy, including defense costs, regardless of

the number of claimants under each policy.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER F. NONDUPLICATION OF RECOVERY

Sec. 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, injury, or loss giving rise to a claim against an

impaired insurer or the insurer's insured, must first exhaust the

person's rights under the insurance policy, including:

(1) a claim for benefits under a workers' compensation insurance

policy or a claim for indemnity or medical benefits under a

health, disability, uninsured motorist, personal injury

protection, medical payment, liability, or other insurance

policy; and

(2) the right to defense under the insurance policy.

(b) Subsection (a) applies without regard to whether the

insurance policy is issued by a member insurer.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 another insurance policy described by

Section 462.251, and the association shall receive a full credit

in the amount of the full applicable limits of the other policy.

(b) A covered claim for workers' compensation benefits is

subject to reduction only by a third-party liability recovery

under Section 417.002, Labor Code.

the association is the damages incurred by the claimant, less the

association's credit or offset under this section, except that

the association's liability may not exceed the lesser of:

(1) $300,000; or

(2) the limits of the insurance policy under which the claim is

made.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 impaired insurer's

policy for the claim is reduced in the same amount.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 association or the equivalent shall seek recovery first

from the association of the insured's residence.

(b) A claimant shall seek recovery of a first-party claim for

damage to property with a permanent location first from the

association of the location of the property.

claim first from the association of the claimant's residence.

(d) The association has a credit or offset against the benefits

under this chapter in the amount of the claimant's recovery under

this section.

(e) Subject to Section 462.255, the maximum amount payable by

the association is the amount of damages incurred by the

claimant, less the credit or offset, except that the

association's liability may not exceed $300,000.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 be subject to lien or subrogation by any other

insurer, including a workers' compensation insurer or health

insurer, regardless of whether the other insurer is impaired, the

association's credit or offset is deducted from the lesser of the

damages incurred by the claimant or the limits of the policy

under which the claim is made.

(b) A claimant's recovery under this chapter may not result in a

total recovery to the claimant that is greater than the recovery

that would have resulted had the impaired insurer not been

insolvent.

462.213, 462.214, and 462.305 of this code and Title 5, Labor

Code, a claim for workers' compensation benefits under this

chapter may not result in a recovery to the claimant that is less

than the recovery that would have resulted had the impaired

insurer not been insolvent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

SUBCHAPTER G. ASSOCIATION POWERS AND DUTIES RELATING TO COVERED

CLAIMS

Sec. 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.

(b) The association may review a settlement, release, or

judgment to which an impaired insurer or the impaired insurer's

insured was a party to determine the extent to which the

settlement, release, or judgment may be properly contested.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 the date of the

designation of impairment;

(2) before the insurance policy expiration date, if that date is

not later than the 30th day after the date of the designation of

impairment; or

(3) before the insured replaces the insurance policy or causes

the policy's cancellation, if the insured does so not later than

the 30th day after the date of the designation of impairment.

(b) The association satisfies the obligation to pay a covered

claim by paying the claimant the full amount of a covered claim

for benefits.

covered claims. The association is not liable for any other

claim or damages against the insured, an impaired insurer, the

association, the receiver, the special deputy receiver, the

commissioner, or the liquidator, including a claim for:

(1) recovery of attorney's fees, prejudgment or postjudgment

interest, or penalties;

(2) extracontractual damages, multiple damages, or exemplary

damages; or

(3) any other amount sought in connection with the assertion or

prosecution of a claim, without regard to whether the claim is a

covered claim, by or on behalf of:

(A) an insured or claimant; or

(B) a provider of goods or services retained by an insured or

claimant.

(d) The association shall pay claims in the order the

association considers reasonable, including paying as claims are

received from the claimants or in groups or categories of claims.

(e) This section does not exclude the payment of workers'

compensation benefits or other liabilities or penalties

authorized by Title 5, Labor Code, arising from the association's

processing and paying workers' compensation benefits after the

designation of impairment.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 1, eff. April 1, 2007.

Sec. 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 or the

insurer failed to exhaust all appeals;

(2) a judgment taken by default or consent against an insured or

the impaired insurer; or

(3) a judgment, settlement, or release entered into by the

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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