Under TIC 701.001, which of the following correctly describes a "fraudulent insurance act" in Texas?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
TIC 701.001(2) defines a fraudulent insurance act as an act that is a violation of a penal law and is committed or attempted while engaging in the business of insurance, committed or attempted as part of or in support of an insurance transaction, or part of an attempt to defraud an insurer. Two elements must therefore be present: the act must violate a penal law, and it must have the insurance nexus the statute describes. A coverage denial is a contract dispute rather than a penal violation, an innocent mistake lacks the penal element, and disobeying a commissioner's order is an administrative matter that the enforcement chapters address separately.
Why the other options are wrong
- A) A claim denial for lack of coverage is a contract determination, not a violation of a penal law.
- B) An unintentional misstatement does not violate a penal law; the definition requires a penal violation plus the insurance connection.
- D) Violating a commissioner's order is an administrative matter handled under the enforcement chapters, not a fraudulent insurance act under TIC 701.001.
Memory hook
Fraud = penal law violation + insurance connection.