Texas Insurance Code 1701.062 – Discretionary Clauses Prohibited
(a) An insurer may not use a document described by § 1701.002 in this state if the document contains a discretionary clause.
(b) A discretionary clause includes a provision that:
(1) purports or acts to bind the claimant to, or grant deference in subsequent proceedings to, adverse eligibility or claim decisions or policy interpretations by the insurer; or
(2) specifies:
(A) that a policyholder or other claimant may not contest or appeal a denial of a claim;
(B) that the insurer’s interpretation of the terms of a document or decision to deny coverage or the amount of benefits is binding upon a policyholder or other claimant;
(C) that in an appeal, the insurer’s decision about or interpretation of the terms of a document or coverage is binding; or
(D) a standard of review in any appeal process that gives deference to the original claim decision or provides standards of interpretation or review that are inconsistent with the laws of this state, including the common law.
Terms Used In Texas Insurance Code 1701.062
- Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.