Rocor International, Inc. v. National Union Fire Insurance Co. of Pittsburgh
77 S.W.3d 253 | Texas Supreme Court | 2002
What This Case Means for Subcontractors
Rocor International sued its excess liability insurance carrier for refusing to settle a claim, arguing the insurer violated Texas unfair claim settlement laws. The Texas Supreme Court ruled that an insured can sue an excess carrier for bad faith settlement practices, but only if the claimant made a formal settlement demand within the policy limits that a reasonable insurer would accept. The court found no such demand was made in this case, so the insured lost. For subcontractors, this means you can hold your excess insurance carrier accountable for refusing reasonable settlements—but you must have proof of a specific, reasonable settlement offer.
Key Takeaways
- •You can sue your excess liability carrier for unfair claim settlement practices under Texas law, but only if a proper settlement demand within policy limits was actually made to the insurer.
- •A vague or informal settlement discussion is not enough—the claimant must present a clear, formal demand that an ordinarily prudent insurer would accept to trigger the insurer's duty to settle.
- •Document all settlement offers and demands in writing and send them directly to your insurance carrier; verbal discussions or informal proposals will not support a bad faith claim.
An insurer's statutory duty to reasonably attempt settlement is not triggered until a proper settlement demand within policy limits is made.
Frequently Asked Question
Can I sue my excess liability insurance company if it refuses to settle a claim against me?
Yes, under Texas law you can sue for unfair claim settlement practices. However, you must prove that the claimant made a formal, written settlement demand within your policy limits and that a reasonable insurer would have accepted it. Informal discussions or vague settlement talks are not enough—the demand must be clear and specific for the insurer's duty to settle to kick in.
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