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.
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.