In an important and increasingly rare victory for Texas consumers, the Insurance Commisioner, Mike Geeslin, has declared that insurance companies can no longer use “discretionary clauses” in certain policies. This new rule will apply to life, disability, and health insurance, but not to automobile liability insurance.

A discretionary clause essentially gives an insurance company the right to unilaterally decide what the policy covers, and therefore what benefits, if any, should be paid. What this has meant in the past is that regardless of what the insurance agent told you when you bought the policy, and regardless of what seemed to be clear language in the policy, when you filed for benefits you might simply be told that the insurance is not going to pay.

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